and Your Family
Nassau County Special Needs Trust
All parents are concerned about their children's futures. However, if you have children with special needs you have a particular concern about your children's future and what will happen to them when you are no longer around to take care of them. Fortunately, with careful estate planning using such tools as a special needs trust, you can plan now for the future care of your child or other relative who has a disability or special needs. A special needs trust is a trust that is designed specifically to help provide for the needs of physically or mentally challenged people. NY EPTL § 7-1.12 . A Nassau 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 estate plan that will help you ensure the personal and financial well-being of your loved ones.
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Care must be taken when setting up a special needs trust to ensure that it complies with federal and state law. It also must be set up properly to ensure that the beneficiary will maintain eligibility for needs-based governmental benefits such as Medicaid and Social Security Income despite the existence of the assets in the special needs trust. Another goal is to minimize tax liability. There are several types of special needs trusts including self-settled special needs trusts, third party special needs trusts, and pooled trusts. A special needs trust can be funded in a several different ways. For example, parents and other family members and friends can help fund a special needs trust by naming the trust as a beneficiary of life insurance, IRAs or retirement benefits. Many parents fund special needs trusts by simply making regular gifts to the trust over a number of years. A special needs trust can also be funded by a gift left in a will. If the beneficiary receives a court settlement or funds from some other source, then that money can be used to fund the special needs trust.
Third Party Special Needs trust. The most common type of special needs trust is the third party special needs trust. If you have a child or other family member with special needs and you would like to give them property to help with their long-term care, a third party special needs trust may be an option to consider. Examples of ways that you can fund the special needs trust include through your will, by creating a living trust, through life insurance, or through some other type of beneficiary designation.
Self-Settled Special Needs Trust. A self-settled special needs trust is funded using the assets of the beneficiary. This may be the appropriate type of special needs trust in cases where the person with special needs has significant assets, such as where the person has won a large settlement, for example. Even though the beneficiary's assets would be used to fund the trust, the trust would have to be set up by you as the parent, grandparent or guardian of the beneficiary. If the trust is set up correctly, the beneficiary will be able to receive Medicaid benefits. However, the trust must provide that upon the death of the beneficiary if there are still assets in the trust, those assets will revert to Medicaid up to the amount of benefit Medicaid paid to the beneficiary.
Pooled Special Needs Trust. A pooled special needs is similar to a self-settled special needs trust in that it is funded by the assets of the beneficiaries. However, it is different from a self-settled special needs trust in that a pooled special needs trust is created for the benefit of more than one beneficiary. The assets of the multiple beneficiaries are used to fund the trust. The reason for "pooling" the assets is for administration purposes. Each beneficiary's funds, however, are segregated into subaccounts. This type of trust allows the beneficiaries to qualify for governmental need-based benefits, despite being beneficiaries to the funds in the trust.
A New York Special Needs Trust Lawyer will be able to help you determine the best type of special needs trust for your particular circumstances.Selecting a Trustee
When establishing a special needs trust, you must designate a trustee. Typically, parents will serve as the trustees, with successors trustee named in the event of the death of the parents. Successors are often other family members or close friends. A corporate trustee can also be named. However, corporate trustees are expensive and only manage trusts with significant assets. The trustee is responsible for managing the trust assets, including investing the assets and determining what expenditures should be made from the trust assets. Care must be taken in selecting the trustee for a special needs trust. While it is important for the trustee to care about the beneficiary, it is also important that the trustee be fiscally responsible and understand the rules related to SSI and Medicaid.
Willingness and Ability to Serve. The trust must be willing and able to serve as trustee. The job of a trustee can require a significant amount of detailed work. While you may feel that someone would be honored to serve as trustee, it is possible that due to time constraints some may simply not be able or willing to serve. Thus, it is important to discuss the role before nominating someone as the trustee. You do not want to name someone who then refuses to serve.
Good Relationship with the Beneficiary. While the trustee does not necessarily need to have a close personal relationship with the beneficiary, it is a good idea to make sure the trustee has a good understanding of the beneficiary's condition, abilities and needs. The trustee also should have the patience and empathy to interact with the beneficiary in an appropriate manner.
Strong Financial Background. The trustee of a special needs trust should have a proven track record of financial competence. After all, the trustee will have sole responsibility for a significant sum of money that is critical to pay the expenses of a disabled person. Part of the job of the will also include filing returns, maintaining accurate financial records, issuing reports, and making wise investments.
Familiarity with Medicaid and SSI. While it is not necessary for the trustee to be familiar with the rules related to Medicaid and SSI, the trustee must be willing to learn those rules and get outside help with understanding the rules if necessary. If the trustee manages the trust in a manner that is inconsistent with the requirements of Medicaid and SSI, he or she may jeopardize both the eligibility of the beneficiary for governmental benefits and the financial status of the trust.
Co-Trustees. In some circumstances naming co-trustees may be a good idea. For example, naming a couple as co-trustees, or siblings as co-trustees will allow the duties to be shared by two people.Eligible Expenses
Assets in a special needs trust are to be used to pay expenses that will improve or enrich the quality of life for the beneficiary. Examples of eligible expenses include:
Medical Services. If the beneficiary of the special needs trust receives Medicaid, then Medicaid will cover many of his or her medical costs. For medical care that is not covered by Medicare, trust funds can be used to pay for these expenses. Such costs may include doctor's visits, dental care, eye exams, and hearing exams.
Medication and Devices. In addition to prescription and over-the-counter medication, funds from a special needs trust can be used to pay for health and medical devices such as eye glasses, hearing aids, prosthetic devices, and expenses for maintenance of these devices.
Assistive Technology. Assistive technology includes assistive, adaptive, and rehabilitative devices for people with disabilities. Trust fund assets can be used to pay for such devices, including computers, computer software, tablets, amplifiers, wheelchairs and other mobility devices.
Education. A special needs trust can provide funds for vocational training and educational expenses such as tuition, books, supplies, computer and software, and training in their use.
Transportation. The special needs trust can provide funds for the purchase of a car titled in the name of the beneficiary.
Home Improvements. Funds from a special needs trust can be used to pay for home modifications such as ramps and rails to accommodate the Beneficiary, and similar items of expense.
Care should be taken in using special needs trust fund assets to make purchase of 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.Beneficiaries of Special Need Trusts
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.
A special needs trust may be just one of several tools in your estate plan necessary to provide for your child or other relative with special needs. You may also need a last will and testament, a durable power of attorney, a living will, additional trusts, and an advanced health care directive. To ensure that your will, trust, and other estate planning documents are properly drafted and executed, it is important for you to have experienced representation. The staff at Stephen Bilkis and Associates will help you develop an overall estate plan that reflects your individual goals. Contact us at 800.696.9529 to schedule a free, no obligation consultation regarding your estate plan.