Many families have members who have special needs due to some type of disability. Where it is likely that the disabled person might receive government benefits like Medicaid or SSI, the existence of assets in the disabled person’s name could disqualify him or her from receiving or keeping such benefits. Through the use of Special Needs Trusts and/or Supplemental Needs Trusts, money can be held for the benefit of the disabled person without jeopardizing his or her benefits.
In addition, individuals who are disabled from birth or later become disabled and are unable to manage their affairs may also need a guardianship. A guardian may be necessary to make medical and financial decisions for the incapacitated person.
We can assist families with setting up special and supplemental needs trusts to protect assets for the disabled person and/or guardianships if necessary.
Special and Supplemental Needs Trusts: There are a number of Special Needs (also known as Supplemental Needs) Trusts. SNT’s are used to hold assets for the benefit of disabled persons in order to preserve their right to obtain benefits from government programs such as Medicaid and SSI. The would otherwise be disqualified if they held the assets outright.
Special Needs Trust: A Special Needs Trust is a trust created for the benefit of a disabled person under the age of 65 by a parent, grandparent, guardian or by a court. The disabled person’s assets are used to fund the trust. Any funds not used for the needs of the disabled person must first be used to repay the government for any Medicaid benefits received by the disabled person. Any remaining assets must be paid to the estate of the disabled person. These are commonly used in conjunction with settlement of personal injury lawsuits. These are also called First Party Special Needs Trusts and Payback Trusts.
Supplemental Needs Trust: Any person may create a Supplemental Needs Trust for another person with disabilities using the creator’s own assets. It can be created in a will or in a lifetime trust, except that an SNT created for a spouse can only be created in a will. If it is created in the will, it is usually funded with assets of the creator at his or her death. If it is created by a lifetime trust, the creator can transfer assets to the trust while he or she is alive. Because the creator’s assets are used to fund the trust, this is considered a third party SNT and no part of it has to be paid back to the government at the death of the disabled beneficiary if the disabled beneficiary was receiving Medicaid or SSI.
Pooled Income Trust: A Pooled Income Trust can be set up through NYSARC. This is especially useful when a person is receiving homecare Medicaid benefits. The Medicaid recipient’s income in excess of that allowed by Medicaid can be paid to the trust and used to pay household and other expenses incurred by the Medicaid recipient without affecting his or her benefits.