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What is a Special Needs Trust and How Does it Work?

What is a Special Needs Trust and How Does it Work?

One of the most important things you can do for a loved one with special needs receives the attention and care he or she deserves after your gone is to establish a special needs trust. Please read on and reach out to our firm to learn more about special needs trusts in New York.

Why would I establish a special needs trust?

Establishing special needs trusts are a fantastic way to ensure your loved one with special needs is taken care of after your passing. Many parents simply think that since their loved one is already in their will and listed as a beneficiary, and that they already receive certain benefits from the government, such as Supplemental Security Income and Medicaid, the truth is, the state only offers these benefits to those who have a certain amount of assets, or fewer. Therefore, if your child inherits a large number of assets, or even any assets at all, the state may try and take those benefits away.

By creating a special needs trust, you allow your assets to be transferred over to a trustee, the person who manages the trust, instead of directly towards the beneficiary. When this happens, since trusts are not specifically counted as resources of the beneficiary, he or she will generally get to keep his or her government-issued assistance through programs like Medicaid. Rather obviously, the trustee has to be someone you deeply trust, which is why most people generally elect family members for the position.

What are the different types of special needs trusts available to those living in New York?

There are three primary types of special needs trusts. They are as follows:

  • First-party special needs trusts: These are only established by parents, grandparents, or legal guardians, and they are funded with the beneficiary’s funds. If the beneficiary is under 65, he or she will qualify for this irrevocable trust.
  • Third-party special needs trusts: These trusts are created for beneficiaries, and may either be created during a lifetime or upon death. Generally, these trusts are funded through life insurance, though family members, and even friends, can contribute gifts to these trusts.
  • Pooled special needs trusts: This is when a group of individuals pool their assets together into a larger investment fund. However, to qualify for a pooled special needs trusts, you must first establish a disability and the need for the trust in question to be developed through a nonprofit organization.

Contact our experienced New York firm

The Lauterbach Law Firm is proud to serve clients throughout Rockland County who are faced with legal matters related to estate planning, real estate, foreclosure defense, landlord-tenant law, business law, and criminal defense. If you require the services of an experienced team of attorneys, contact The Lauterbach Law Firm today to schedule a consultation.

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