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A New York Supplemental Needs Trust May Be Approved by the Court To Hold Guardianship Assets

A Supplemental Needs Trust (“SNT”) is a trust that is typically created to provide a protected fund for persons who receive benefits from governmental sources. Ordinarily, if an individual is the recipient of benefits from Medicaid or social security disability or other governmental programs, the receipt of private funds by such individual would disqualify them from obtaining future benefits. The private monies would either need to be paid to the government as repayment for past benefits or spent down before government subsidies could resume. The SNT allows a person to have the best of both worlds. Funds can be held in a SNT while the government benefits continue to be paid.

A SNT can be created and utilized in many different situations.  For example, in estate planning, where a parent has a child or potential beneficiary that is a recipient of benefits such as Medicaid, a SNT can be established as a provision in a Last Will or Living Trust to provide a source of extra financial benefit for such person without risking any loss of benefits.  New York Estates, Powers and Trusts Law Section 7-1.12 entitled “Supplemental needs trusts established for persons with severe and chronic or persistent disabilities” provides the requirements for the creation of such trusts.

I have assisted many clients with creating a SNT. A recent decision in the Estate of Justin Rischowsky provides another interesting example of when a SNT may be utilized. In Rischowsky a person named Peter was the named beneficiary of an insurance policy the proceeds of which become payable when Peter’s father died. A Guardian had been appointed for Peter who was developmentally disabled and the Guardian filed a petition with the Surrogate’s Court in Suffolk County to create a SNT to receive the insurance proceeds. In its decision the Court approved the creation of the SNT and allowed the named trustee to fund it with the insurance proceeds. By depositing the insurance proceeds in the trust it would appear that any governmental benefits Peter was receiving or would later obtain would not be diminished due to these private assets.

A SNT can play an important role in estate planning and also in the preservation of funds that are involved in Guardianship matters. It is important that the terms of the trust comply with the guidelines of EPTL 7-1.12. In Rischowsky the Court reviewed the terms of the proposed SNT and directed that some of the trust provisions be changed so that it comply with the statute.

If you are involved in a situation concerning a SNT such as a Guardianship proceeding or the preparation of an estate plan, call me now if you have any questions regarding the use of a SNT. I will provide a free discussion about your SNT concerns.

New York Guardianship Attorney Jules Martin Haas, Esq. has been representing clients in New York Guardianship Proceedings, throughout the past 30 years in New York, including Queens and Nassau Counties. If you or someone you know is involved with or has questions about a New York Guardianship matter or SNT, please contact me at (212) 355-2575 or email: jules.haas@verizon.net, for an initial consultation.

Jules Martin Haas provides his clients and members of the community with a free monthly e-newsletter which contains articles covering a variety of legal topics including estate planning, financial matters and real estate. If you wish to be placed on the e-newslist, simply e-mail me at jules.haas@verizon.net.  You can cancel receiving the newsletter at anytime.

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