Making an estate plan can be stressful for anyone, but it can be especially difficult when you have a loved one with special needs, and you are concerned about how you can best protect them. It’s important to understand that leaving assets outright to a beneficiary with special needs can result in their unintentional disqualification from essential public support programs. As such, utilizing a properly structured special needs estate plan can help you provide support for your loved one without jeopardizing their government assistance eligibility. A Rockland County trusts attorney from our firm can help you find the arrangement that works best for you and your family.

Why a Standard Will or Direct Inheritance Is Not Enough in New York

When you create a traditional will, the assets left will be outright distributed to your beneficiaries. This means that individuals who rely on needs-based government benefits may become ineligible for these essential programs. As such, direct distribution can:

  • Push a beneficiary above the Supplemental Security Income (SSI) asset limit, which is generally $2,000
  • Disqualify them from Medicaid eligibility
  • Trigger a review of benefits, which can result in overpayment recovery
  • Require them to “spend down” assets in order for benefits to resume

What Is a Special Needs Trust in New York and How Does It Work?

A special needs trust, also referred to as a supplemental needs trust in New York, holds assets for the benefit of a person with disabilities without transferring the assets directly to them. Because they are not in control of the funds, this reserves their eligibility to obtain needs-based government assistance programs. The trust fund is intended to serve as supplemental support, not replacement, for these essential programs.

How Can Funds Held in a Trust Be Used?

  • Therapies not covered by Medicaid
  • Education
  • Travel and recreation
  • Quality of life enhancements
  • Transportation
  • Personal care
  • Dental and vision care

Who May Benefit From a Special Needs Estate Plan in Rockland County?

Special needs estate planning is generally ideal for those who have a disability that prevents them from living independently or those who rely on long-term public assistance.

Individuals Who May Qualify

  • Those diagnosed with autism spectrum disorder
  • Those with cerebral palsy
  • Those with intellectual disabilities
  • Those who have suffered a traumatic brain injury
  • Those with Down syndrome
  • Children with developmental disabilities who will need lifelong support
  • Those diagnosed with conditions like ALS, Parkinson’s, or Alzheimer’s
  • Adults receiving Supplemental Security Income or Medicaid Benefits

Are There Different Types of Special Needs Trusts in New York?

New York recognizes that there are different types of needs and, therefore, recognizes a number of supplemental needs trusts. Determining the option that best suits your needs depends on both the circumstances of your beneficiary and the source of the funds.

Third-Party Supplemental Needs Trust

  • Funded by parents, grandparents, or other relatives
  • Established during the lifetime or through the instructions in a will
  • May be funded by life insurance assets
  • Frequently used in family planning
  • No Medicaid payback requirements upon the death of the beneficiary

First-Party Special Needs Trust

  • Funded using the beneficiary’s own assets
  • Most commonly established following personal injury settlements
  • Can be used when a disabled individual directly inherits assets
  • Medicaid payback is required upon the death of the beneficiary
  • Must comply with New York State and federal trust rules and regulations

Pooled Special Needs Trust

  • Managed by a non-profit organization
  • Funds are “pooled” for investment purposes
  • Sub-accounts are individually maintained for beneficiaries
  • This is an option if no family member is available to serve as the trustee

Support Trust vs. Special Needs Trust: How Do They Differ?

Though they may seem similar, a support trust and a special needs trust do have differences. Primarily, however, this can impact distribution requirements and subsequent eligibility for need-based assistance. When properly drafted, a supplemental needs trust:

  • Gives the trustee broad authority
  • Avoids mandatory distribution clauses
  • Prevents funds from being considered as available resources
  • Helps ensure eligibility for programs like SSI or housing assistance

Should You Appoint a Guardian, a Trustee, or Both in Rockland County?

When planning for someone with special needs, you may wish to appoint an individual to help oversee personal caregiving and financial assistance for your loved one. A guardian can help manage the personal affairs of your loved one, while the trustee is responsible for managing the trust fund on their behalf.

In Rockland County, guardianship appointments can be handled through the New York Supreme Court or the County Surrogate’s Court, depending on the circumstances of the appointment.

Trustee Duties

  • Manage and invest assets held in the trust
  • File tax returns on behalf of the trust
  • Maintain compliance with SSI and Medicaid requirements
  • Keep a detailed financial account
  • Approve distributions as necessary

Guardian Responsibilities

  • Make healthcare decisions on behalf of the individual
  • Oversee daily living
  • Ensure compliance with state and federal assistance programs
  • Coordinate medical care

Consult a Rockland County Estate Planning Lawyer

Planning an estate can be a difficult task in New City, Nanuet, Valley Cottage, and other communities in and around Rockland County, especially when you have a loved one with additional needs to consider. As such, if you are ready to set up trusts and explore other ways to provide for loved ones when you are gone, the Lauterbach Law Firm is here to help. Contact our firm to learn how we can represent you.