There are many situations where a person who is disabled has assets available for his or her present use or may be in the position to receive assets at a later date such as a beneficiary under a Last Will or Trust.
While owning assets is usually beneficial, persons suffering from disabilities are often recipients of, or are qualified to receive, government benefits such as Medicaid or Supplemental Security Income. As a result, a conflict arises because the ownership of assets typically disqualifies a person from receiving the governmental benefits that would otherwise pay for the services that the private funds would be expended on.
In a perfect world a planner would want the disabled person to receive the maximum benefit from governmental resources and preserve or reserve the private and personal assets to spend on extras items and services that the government does not provide.
A Supplemental Needs Trust (SNT) can provide a mechanism whereby someone who is disabled can be the recipient of both government benefits and private assets. Truly the best of both worlds.
New York Estates, Powers and Trusts Law Section 7-1.12 provides the statutory requirements for the creation of these trust fund agreements. Paragraph (a)(5) of the statute defines a Supplemental Needs Trust as “a discretionary trust established for the benefit of a person with a severe and chronic or persistent disability (the “beneficiary”) which conforms to” the statute’s guidelines.
The rules and intricacies for the establishment and use of a Supplemental Needs Trust can be complex. For example, the trust can be set up in the Last Will of a parent or other individual who wants to benefit the disabled person without interfering with the payment of governmental benefits. Another example of the use of a SNT is in a situation when the person who is disabled is the recipient of funds from a personal injury action or inheritance. A Court, in the context of the settlement of the action or within an Article 81 Guardianship Proceeding, may allow the establishment of the SNT so that the assets can be available during the person’s lifetime to provide added benefits and improve his or her quality of life and the activities of daily living. In these Court created trust situations, the assets remaining in the trust following the death of the disabled person may be subject to a lien to reimburse the government for benefits it had previously paid.
Depending upon your situation, a Supplemental Needs Trust can be very useful in any plan for the care and benefit of a person with disabilities. It is important to carefully examine each situation so as to avoid trust disputes at a later date such as government claims that the assets are not protected.
Jules Martin Haas, Esq. has been representing clients in New York in Trust and Estates and Guardianship proceedings throughout the past 30 years. If you or someone you know is involved with or has questions about a New York Supplemental Needs Trust, please contact me at (212) 355-2575 or email: firstname.lastname@example.org, for an initial consultation.