Special needs trusts in Hauppage NY – also referred to as supplemental needs trusts – are designed to provide clarity in one’s expectations when he’s disabled. It is sometimes used as part of a will; however, it’s always deemed part of a total estate plan.
These important documents allow one with a physical or mental disability – or one who has a chronic or terminal illness – to ensure his wishes are being met in terms of assets held in that trust. They’re also typically safe from inclusion when it comes to determining government benefits based on assets.
A few of those benefits might include SSI, or supplemental security income, Medicaid, various rehabilitation programs, housing and medicines. Typically, when the numbers are crunched, a person is deemed impoverished if his assets total less than $2,000.
Using Special Needs Trusts in Hauppage NY
The law dictates that a supplemental needs trust or special needs trusts should be used for needs that the government does not provide. When drafted correctly by an estate planning lawyer, these trusts will shine when the government does not provide complete coverage for the disabled person’s needs. If the trust cannot provide anything for that person, then the trust kicks in and covers those needs in their entirety. This applies to those covered under Medicare or Medicaid, as well.
Which brings us to another important point: the rules of Medicaid say these trusts may not be used for day to day expenses such as housing or food; however, they may be used to ensure a home is adequately prepared to meet the needs of the disabled person. An example would be wheelchair ramps. Interestingly enough, the food restriction does not apply to vacations, dinner parties or other entertainment where food is served. This is surprising to many people because they assume the trust is designed to cover their needs for survival only, when in fact, it can and should be used to bring enjoyment and new, positive experiences to the beneficiary.
When Wealth is Not an Issue
Many people also assume their wealth means they have no need for a special needs trust for a loved one. While that’s true in other trusts’ purposes, a special needs trust is focused squarely on the disabled person and his current and future lifestyle. The wealth a family has today may not be enough to provide for a disabled family member tomorrow.
Remember, the assets in the trust will not be counted as assets and therefore, won’t prevent future benefits and program qualifications. Perhaps more importantly, a trust is off limits to creditors and may not be seized. Even if the beneficiary is sued, the assets in the special needs trust remain untouchable.
What is dangerous, however, is to bypass the benefits of a special needs trust in lieu of placing the assets with a sibling, with the belief that sibling will always look after his disabled brother. Unfortunately, there are no shortage of scenarios that prove this is anything but wise. Siblings disagree – even as adults – and if that disagreement is deep enough, it can result in the adult child seeking revenge against his disabled brother or sister.
Even if you’re sure that will never happen, the person holding the funds could be sued or file bankruptcy – and any assets in his name are wide open for seizure – and it matters none if he explains those assets are earmarked for a disabled family member.
This is just the tip of the iceberg. To understand all of the intricacies associated with special needs trusts, it’s crucial you meet with your estate planning lawyer so that he can cover those bases in their entirety. When the future of a loved one is at stake, it’s time well spent.
The Law Offices of Saul Kobrick, P.C. is a member of the American Academy of Estate Planning Attorneys.