There are many options for a person to consider when creating an estate plan. This allows them to not only prepare for their own future, but the future of their loved ones as well. There are many people with loved ones dependent on them that face certain challenges, such as disabilities. Often times, these loved ones need some extra assistance, such as caretaking, financial assistance, and receiving public benefits. It is because of this that trusts can be set up for those with special needs so that they can be taken care of in their future.
New York Special Needs Trusts
A special needs trust, also known as a supplemental needs trust, allows a trustee the right to manage property and assets that are placed in a trust to benefit a third party with a disability. This also preserves that individual’s eligibility for government benefits, including Supplemental Security Income (SSI) and/or Medicaid. Government benefits are important as they provide the individual with life-enhancing funds and supplemental needs that the person creating the trust cannot with their own benefits. This ensures a disabled loved one receives the assistance they need throughout their life.
There are different requirements that must be met when establishing a special needs trust. This can include:
- The trustee must be given absolute control over the distribution of the trust assets
- The beneficiary cannot have the authority to revoke or amend the trust
- The trustee should not give cash outright to a beneficiary receiving SSI
Types of Special Needs Trusts
In the state of New York, there are three main types of special needs trusts that can be created for a loved one:
- Self Funded Special Needs Trusts: This trust is self-funded with assets owned by the trust beneficiary. They are commonly required when a disabled individual received a settlement from a personal injury action or inheritance from a loved one. This is also used for divorce alimony, property division, and child support payments for a child with a disability.
- Third-Party Special Needs Trusts: This trust can be created by another person for a beneficiary. It can be made during an individual’s lifetime or in the event of a death, as they are generally funded by life insurance. Relatives such as grandparents, siblings, aunts, uncles, and friends can make gifts to this trust.
- Pooled Special Needs Trusts: This trust is also funded with assets owned by the trust beneficiary. They are established and managed by nonprofit organizations. The assets are pooled together for investment purposes. However, the nonprofit organization manages a sub-account for the beneficiary. An individual with disabilities can establish a pooled trust sub-account on their own, which is why this is a common choice for beneficiaries who have no living relatives or guardians.
Contact our Firm
If you or a loved one needs assistance creating an estate plan and wish to speak with an experienced attorney, contact the Law Office of Andres D. Gil, PLLC today.