If someone you care for has is disabled or has special needs, consider setting up a special needs trust as part of your estate plan. A special needs trust (SNT) is a unique type of trust arrangement that is designed to ensure that the beneficiary's medical, education, and recreational needs are met. To qualify as a SNT the trust must be set up with the clear intent that it is not to be used to supplant, impair or diminish government benefits that the beneficiary is currently receiving or government benefits for which the beneficiary might otherwise qualify. Once it is set up, it must be administered property. If a SNT trust is not set up or managed correctly, the beneficiary with special needs may lose critical government benefits. A Westchester County Special Needs Trust Lawyer will be able to set up the special needs trust for you and also help you set up any other components of your special needs estate plan that will help make sure that your loved one with special needs enjoys a high quality of life even after you have passed away.
A trust is a legal arrangement set up by a trustor of the benefit of a beneficiary. The trustor is also referred to as the grantor or the settler. The trustor transfers property into the trust that will be managed by a trustee. When the trust agreement is drafted it will include instructions regarding how the assets of the trust should be managed and distributed. A trust can be set up to serve a number of different estate planning goals including providing for someone with special needs.
What does special needs trust do?A SNT is a trust established for the benefit of a person with a severe and chronic or persistent disability. NY EPTL § 7-1.12. People with such conditions as downs syndrome, blindness, chronic mental illness, cerebral palsy, autism, or quadriplegia may benefit from a SNT. People with such disabilities often qualify for government benefits based both on the severity of the disability and on financial status. Those with disabilities but who also have significant assets may not meet the financial requirements for certain benefits. A SNT is designed to preserve a beneficiary's assets and at the same time ensure that the beneficiary remains eligible for government benefits. The assets that can be used to fund a SNT can come from a variety of sources including from family assets, a bequest in a will, a lawsuit settlement, or some other source. If the assets of a person with special needs are transferred into a SNT, then the funds can be used for the benefit of the beneficiary without those funds counting as a financial asset for benefit eligibility purposes.
For what purposes can SNT fund be used?However, the funds in SNT cannot be used for just anything that the beneficiary needs or wants. The funds in a SNT can only be used for specific purposes related to the beneficiary's care, education, therapy, as well as for products and services that will add to his or her quality of life.
On the other hand, money from a SNT cannot be used to pay for everyday living items such as groceries, restaurant meals, mortgage or rent payments, property taxes and utilities. Paying such expenses from the trust may cause a financial penalty if the beneficiary is also receiving governmental benefits. In addition, even of the funds are used for eligible expenses, the cash should not be given to the beneficiary from the trust fund. Instead, the vendor should be paid directly.
How should I select a trustee for the SNT I set up?A good SNT trustee is critical to a successful special needs estate plan. The trustee of an SNT typically has very broad discretionary powers and authority over the management of SNT funds. The trustee will be responsible for spending the money in the trust for the benefit of the beneficiary. It is important that the trustee is not only trustworthy, but that he or she also has the financial acumen and organization to prudently manage trust assets as well as an understanding of the rules and regulations related to special needs trusts. Typically the trustee are parents, grandparents, siblings, other family members are close family friends. In some cases the trustee is a corporation or institution. However, using a institutional trustee may be quite expensive.
Here are some issues to consider when selecting the trustee for your special needs trust:
While special needs trusts are often established by parents for children with disabilities, they can be set up for the benefit of anyone who has a special need and requires resources for their long-term care. You can set up a special needs trust for other relatives such as a sibling. Some spouses or children set up special needs trusts for a spouse or parent who has Alzheimer's disease, dementia, or other degenerative ailment or disability.
When does a Special Needs Trust terminate?A SNT trust will remain in effect until one of the following conditions occur:
A SNT may be just one of several tools in your special needs estate plan necessary to provide for a loved one who has special needs. For example, every estate plan should include a will in your will you can choose to can leave assets to the SNT for the benefit of your disabled loved one. To ensure that your SNT and other estate planning documents are properly drafted and executed, it is important for you to have experienced representation. One possible consequence of a poorly drafted SNT is that your loved one with special needs loses government benefits. The staff at Stephen Bilkis & Associates, PLLC will help you develop an overall special needs estate plan that reflects your specific family needs. Contact us at 800.696.9529 to schedule a free, no obligation consultation regarding your estate plan.