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Special Needs Trusts for Loved Ones with A Disability

A laughing down syndrome child with his mother indoors baking.

Covering living expenses for those with a disability can be extremely challenging. Not only is someone with a disability unable to work, but government benefits such as Supplemental Security Income (SSI) and Medicaid are only available to those who meet extremely restrictive income and asset guidelines. Meeting what can be high medical and rehabilitative care expenses on this limited income can be impossible without additional help. A special needs trust may be the ideal way for you to provide support for a loved one that doesn’t jeopardize their other support payments.

Due to the way eligibility for disability payments is calculated, a large cash gift could jeopardize the recipient’s ongoing ability to receive SSI or Medicaid. A special needs trust allows you to support someone you care about, and allows the disabled person to get help he or she needs to remain independent. Additionally, the trustee overseeing the trust can ensure that the funds are used for the types of expenses that are in the best interests of the beneficiary. These trusts need not last for the lifetime of the beneficiary, but can be used for those with short-term disabilities, and can include a proviso that the trust be ended when in the beneficiary’s best interests. One potential downside of special needs trusts is that, when the trust is ended either after it is no longer necessary or upon the death of the beneficiary, the trust may have an obligation to pay back money that the beneficiary received from Medicare while also receiving trust funds.

Funds from special needs trusts can be used on a broad range of what are known as “non-countable resources.” These can include in-home care expenses, a home that serves as the beneficiary’s primary residence, a car, furniture or appliances, and, under some circumstances, funds being used for educational or vocational training expenses. Special needs trusts cannot convey so-called “countable resources,” such as cash, stocks, investment accounts, real estate that doesn’t serve as the recipient’s primary residence, or retirement assets. Your estate planning attorney can walk you through what expenses are payable through the trust when you create it.

If you are seeking assistance with your New York estate plan and would like help in determining the best possible allocation of your assets to benefit your loved ones, contact seasoned Hudson Valley trust and estate planning law firm Rusk, Wadlin, Heppner & Martuscello for a consultation on your claims, in Marlboro at 845-236-4411, or Kingston at 845-331-4100.

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