Westchester County Special Needs Trust Attorneys

Special needs trusts help empower and protect Westchester County individuals with special needs. The experienced attorneys at Littman Krooks can help.

Those with special needs often require lifelong care. Their needs include both daily needs common to all humans and needs unique to their physical, mental, or emotional health. Accessing Medicaid and other benefits to meet these needs can be challenging, however. 

A Special Needs Trust (SNT) helps individuals with special needs ensure that those needs are met – without depriving them of access to Medicaid and similar benefits. An experienced attorney can help families meet New York’s legal requirements for a special needs trust. 

Table of Contents

Who Needs a Special Needs Trust (SNT)?

Federal law limits access to Medicaid based on resources. A person who has “excess resources,” as defined by Medicaid, cannot access Medicaid benefits. Federal Supplemental Security Income (SSI) benefits have similar resource limits. 

A special needs trust (SNT) allows a disabled person to access existing resources while also receiving help from Medicaid. The “excess resources” are placed in the SNT, which is managed by another party (the “trustee”) on behalf of the disabled person (the “beneficiary”). Since the SNT legally “owns” the resources, they are not counted as the disabled person’s possessions when Medicaid reviews the person’s eligibility. 

A special needs trust provides maximum support for a person with special needs. It creates a “best of both worlds” situation. The beneficiary can receive Medicaid assistance and also access resources they already own or that family members have contributed to their care and support.

A special needs trust is a legal arrangement, which may be subject to court orders and oversight. Certain other requirements, such as an annual accounting, must also be met. Talk to an experienced Westchester County special needs trust attorney to learn more. 

What Costs Can a Special Needs Trust Cover?

A special needs trust can cover many costs associated with daily living. The trust can pay for items that are necessities and things that improve a person’s quality of life. 

A few common examples of costs that can be covered by SNT funds include:

• Housing. A special needs trust can cover housing for its beneficiary. These costs may include renting a house or apartment or purchasing a house, condominium, or other living space. The cost of renovating existing housing to improve accessibility may also be covered by a special needs trust. 
• Services and items not covered by Medicaid. Medicaid limits the items and services it covers. A special needs trust can pay for necessities not covered by Medicaid. Common costs SNTs cover include special therapies, wheelchairs, accessible vehicles, and mechanical beds.
• Recreational and cultural experiences. All human beings benefit from a life rich in recreational, cultural, and social experiences. A special needs trust can ensure that the beneficiary doesn’t face financial barriers to participation in these activities. Activities and experiences an SNT can pay for include counseling, school or camp fees, theater or museum tickets, and similar items.
• Other services or items that improve the beneficiary’s quality of life. The SNT allows the beneficiary to meet financial needs for things that improve their quality of life. This category may include items like furniture, clothing, and phone and Internet access. 

Requirements for Special Needs Trusts

In New York, special needs trusts must follow several legal requirements. These include:

• The trustee must have absolute control over the distribution of the trust assets. A beneficiary may request a distribution, but the trust must give the trustee the authority to grant or deny requests. 
• The beneficiary cannot have power to revoke or amend the trust. If the beneficiary can control the trust’s existence, the courts and Medicaid will assume the beneficiary still owns the trust’s assets – and count them as “excess resources.” 
• The trust should not pay cash directly to the beneficiary. Otherwise, this cash may be counted against the beneficiary’s Supplemental Security Income (SSI) or other public benefits. 

Trustees are also required to follow several rules when fulfilling their responsibilities to an SNT. These include managing the trust, keeping clear financial records, reporting to the Department of Social Services (DSS) as required, and providing a final accounting when the SNT is eventually closed. An experienced attorney can walk you through this process. 

Types of Special Needs Trusts

SNTs generally come in three different types. These include the first-party trust, the third-party trust, and a “pooled” trust. Each type has its own definition, rules, and format. 

Understanding the different types of trust can help you think through challenges and questions related to trust formation for you or your loved one. The team at Littman Krooks can help. 

First-Party Special Needs Trusts

A first-party special needs trust is funded with assets the beneficiary owns. For example, if the beneficiary has significant bank account holdings, investments, or owns real estate, these assets can be placed in a first-party special needs trust. First-party SNTs are also known as “self-settleed” or “(d)(4)(A)” trusts.

A first-party SNT is commonly used when a person with special needs receives a settlement from a personal injury case. They may also be created when a well-meaning family member leaves an inheritance to the person with special needs, not realizing that their generosity could jeopardize the person’s access to public benefits. Proceedings from a divorce, such as spousal support, divided property, or child support payments, may go into a first-part SNT as well. 

A first-party SNT must be created for the benefit of the person with special needs. It must be established by a parent, grandparent, legal guardian of the person’s property, or a court. Other legal requirements also apply. 

Third-Party Special Needs Trusts

A third-party SNT is funded with assets from people other than the beneficiary. Often, these include resources from parents, grandparents, other family members, or friends. The key distinction is that these resources are not owned by the beneficiary, unlike the resources in a first-party SNT.

Third-party SNTs are a common estate planning vehicle. They relieve many parents’ largest worry: that their child with disabilities won’t have the support they require once their parents are gone. A third-party SNT allows those assets to support the child’s needs during the parents’ lifetimes and to continue providing support after the parents pass. 

Third-party SNTs can provide more flexibility than other types of SNTs. For instance, parents can create a third-party SNT that operates immediately or one that only begins to cover the beneficiary’s needs after the parents’ death. Parents can create a third-party SNT that allows for changes in trustee, so that they can manage the funds while they live and leave the role in the hands of a trusted person once they pass. 

Because third-party SNTs also function as estate vehicles, the SNT can have certain tax consequences. Speak to an experienced Westchester County special needs trust attorney to determine the best arrangement for your loved one’s third-party SNT.

Pooled Trusts

A pooled trust is similar to a first-part SNT, in that both are funded with the beneficiary’s assets. However, not all situations call for a first-party SNT. If a person’s resources are low or there is no parent, grandparent, or guardian to manage the trust, a first-party SNT may not be an option. In this case, a pooled trust is used instead. 

A “pooled trust” is so named because it is typically managed by a non-profit organization that specializes in managing small SNTs for multiple people with special needs. Funds are “pooled” by the non-profit, which then distributes funds to each person and tracks what each person has. The beneficiary can create their own sub-account within the pooled trust, making these trusts accessible to those with no living family to manage a first-party SNT.

Special Challenges in Creating Special Needs Trusts

Special needs trust can be challenging to create. The trust must operate as intended, without creating burdensome financial consequences for anyone involved. For example, the trust must shelter assets so that the beneficiary does not lose access to public benefits. It must also operate in a way that doesn’t impose unnecessary tax burdens on family members. 

Some questions to consider when evaluating whether a special needs trust is right for you:

• Does the disabled person or family qualify for local, state, or federal benefits? If so, what might happen if these programs are cut or their requirements change?
• Does your current health plan cover the disabled person’s medical needs? What needs will need to be met in the future?
• Does the disabled person need a guardian? If so, what does the guardian need to manage?
• Where will the disabled person live as they get older? Is this space equipped with things they may need, like ramps, handrails, and other accessible items? 
• Does your estate plan meet the disabled person’s needs? If they have significant assets of their own, does their estate plan address their needs? 

These questions often lead to more questions. Don’t hesitate to talk to an experienced special needs trust lawyer in Westchester County.

Speak to an Experienced Westchester County Special Needs Trust Attorney Today

Navigating life with special needs can be challenge, even if resources are available. A special needs trust helps streamline that process. It protects a person’s access to necessary public benefits while still providing access to personal resources. 

Creating these trusts can be challenging, as state and federal law are complex. An experienced Westchester County special needs trust attorney can help. Talk to the team at Littman Krooks today to learn more.