The New York Probate Lawyer Blog has had many posts regarding issues and requirements of an Article 81 Guardianship Proceeding. These proceedings involve a determination as to whether an individual is incapacitated and, if so, the appointment of an appropriate Guardian.
The determinations that are made by the Court involve many different persons which may include the alleged incapacitated person; a petitioner (usually a family member); and a Court Evaluator. In some cases third parties are involved such as a Nursing Home, Adult Protective Services, New York State Mental Hygiene Legal Service and Medicaid.
A Supplemental Needs Trust ("SNT") is often a critical component of the Guardianship process. In a typical situation a person who is incapacitated may be entitled to a large monetary award due to a personal injury action. Since the incapacitated person would also qualify for government benefits such as Medicaid and SSI, the SNT provides a means by which the monetary funds can be set aside for extra benefits without the loss of the governmental entitlements. In the Guardianship proceeding, the Court authorizes the Guardian to establish the SNT and to transfer the funds into the Trust thus avoiding any loss of benefits. The SNT trustees, who are also designated by the Court, then administer the trust for the benefit of the disabled person. The trustees selected are commonly the family members who are the Guardians.
Once the SNT is established, the trustees can make expenditures for such things as computers, vacations, extra care and other items which the governmental benefits do not pay for without losing the governmental coverage for other items such as medical care. A good explanation of this process is provided in a recent case decided by Justice Howard H. Sherman on April 19, 2012 and reported in the New York Law Journal on May 14, 2012 entitled Matter of Geraldine R. In this case the Department of Social Services (Medicaid) claimed that the Supplemental Needs Trust trustees did not need to obtain prior Court approval to pay for items such as a vacation, purchase of a computer, printer and television, and educational programs. The Court found that it had authority to approve these items prior to the expenditure.
In fact, it is the usual and appropriate manner for trustees of a SNT to obtain prior Court approval of their expenditures. The trustees can then avoid a later denial by the Court and the requirement that they reimburse the trust for improper expenses.
I have represented many clients in connection with Guardianship proceedings and the establishment of a Supplemental Needs Trust. These cases require a Court hearing and I work closely with my clients and their families to help them through what can be a complex court process.