Special Needs Trusts and Special Needs Planning

Our attorneys have been helping individuals with special needs protect their assets for years. A common planning technique to shelter the assets of a disabled person (more commonly referred to as a supplemental needs beneficiary) is a supplemental needs trust. A supplemental needs trust is a special type of discretionary trust created for the benefit of a person under the age of 65 with a “severe and chronic or persistent disability.” If the trust is properly created, the assets of the trust will not be considered available resources for Medicaid eligibility. Thus, the assets of the trust will only be used in the discretion of the trustee to supplement, not supplant, the supplemental needs beneficiary’s care.

There are two types of supplemental needs trust: First Party and Third Party.

First Party Supplemental Needs Trust

A first party supplemental needs trust is a discretionary trust that is funded with the assets of a supplemental needs beneficiary.  The law provides that a first party supplemental needs trust can only be created by certain parties which include a parent, grandparent, guardian or if none of the foregoing parties exist, a Court.

A properly drafted first party supplemental needs trust will provide that the local Department of Social Services will be repaid for any benefits correctly paid on behalf of the supplemental needs beneficiary upon that individual’s death. A first party trust is also referred to as a “Payback Trust”.

We can assist you in creating a special needs trust plan to protect your disabled loved ones and their future.  Contact us or call us at 914-925-1010 (Rye Office) or 914-225-2440 (Yorktown Heights Office) to schedule a consultation.

Third Party Supplemental Needs Trust

A third party supplemental needs trust is a discretionary trust created for a supplemental needs beneficiary with the assets someone other than the supplemental needs beneficiary or the spouse of the supplemental needs beneficiary.  The protection afforded by a third party discretionary trust was first recognized in the seminal case Matter of Escher and then later codified in EPTL Section 7-1.12.

Parents commonly create third party supplemental needs trusts for disabled children during their lifetimes. These trusts can be used to hold some of the parent’s assets but a larger benefit is to allow other family members to name the trust as a beneficiary of their estate plans. By doing so, other family members can leave assets to disabled relatives without jeopardizing their Medicaid eligibility. Mr. Di Costanzo often recommends incorporating a third party supplemental needs trust into your Last Will and Testament.  This is commonly referred to as a “Trigger Trust” in that it only comes into existence if one of your beneficiaries is disabled.  Often, beneficiaries becomes disabled after a client has prepared a Will.  By incorporating a Trigger Trust, you are planning today for tomorrow’s unknown.

The attorneys at Plan Today for Tomorrow will explain how these trusts will help provide a wide array of needs, from necessities to comforts and luxuries. Additionally, we will discuss how these trusts can be used in your particular situation. We will advise you on the Federal and State government benefits that are available to a disabled person such as Medicaid, Social Security Disability (SSD) and Supplemental Social Security Income (SSI) within New York.

We can give you peace of mind that your loved one will be cared for should you pass away. Call us at 914-206-1418 (Rye Office) or 914-222-5740 (Yorktown Heights Office) to schedule a consultation or complete our online form.

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“As the parent of a child with multiple disabilities there are many days and sleepless nights filled with anxiety and in desperate need of hope for the future. One of the most important challenges of raising our son is to find the best advocate for his needs. Our son needs someone that will go the distance for him, and we are happy to say that we have found Salvatore Di Costanzo to be the most caring and trustworthy attorney in New York. Sal takes a special interest in our family and our son's needs come first. Sal focuses on Special Needs Trusts and we are grateful for his skill in accounting. Sal listens intently to our concerns and guides us to the best decision for our son. We wholeheartedly recommend Sal to parents who need to find peace and confidence in their child's future.”

-Mary S.-

Special Needs Planning Testimonial