What is a NY Special/Supplemental Needs Trust?

If you live in New York, you may have asked yourself, what is a NY special/supplemental needs trust? It is a trust that ensures a child or grandchild with special needs gets the financial support they need after they turn eighteen. Often, children with severe disabilities cannot take care of themselves. In the state of New York, a child is considered an adult at eighteen. This means that according to the government they are competent. However, this does not necessarily mean they can take care of themselves. This is where a NY Special/Supplemental Needs Trust comes into play.
If you or a family member residing in New York is living with a disability, get in touch with our attorneys at Morgan Legal Group, P.C. to set up a consultation. We can discuss any questions or concerns you have about special needs planning for you or your loved one’s future.
Russel Morgan - Estate Planning Attorney

Russell Morgan

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rmorgan@morganlegalny.com

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he Morgan Legal Group PC has represented individuals who have been harmed by the conduct of others as well as corporations.

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Questions And Answers

What is a NY special/supplemental needs trust but a trust that is for any child, regardless of age, who has a severe disability or chronic illness that will last well into adulthood is eligible for a NY special/supplemental needs trust.

If your child has a chronic disability, then it is important to have a special/supplemental needs trust because this ensures they will receive the financial support they need. Additionally, having a special/supplemental needs trust in place will protect any benefits, gifts, or other forms of aid you wish you provide for them.

A self-settled supplement needs trust is a trust wherein the money comes directly from the beneficiary (through court settlements or inheritances) and is used for the beneficiary’s own use.

A third-party supplemental needs trust is a trust wherein the money is supplied by a family member or friend of the beneficiary.

The difference between a self-settled supplemental trust and a third-party supplemental needs trust is that in a self-settled trust, when the beneficiary dies, the remaining money must be used to pay back Medicaid. There is no such requirement for a third-party supplemental needs trust.

In New York, a child is considered a competent adult who can make their own decisions when they turn eighteen. Before this age, parents can still make decisions for their child. However, when a child has a severe disability, they are usually unable to make these decisions for themselves, even once they have turned eighteen. A special/supplemental needs trust ensures that these decisions can still be made for the individual after they turn eighteen.

No, it does not affect Medicaid or Supplemental Security Income if the money being used is used only for the benefit of the child.

No. If the beneficiary is not yet 65 years old then it will not affect Medicaid or SSI.

The money contained in a special/supplement needs trust may be used for supplemental items not covered by public assistance programs. This includes anything that would benefit the child, either with their disability or with their comfort. For example, the funds may be used for physical therapy or entertainment purposes (like a television).

The money cannot, however, be used to pay for day-to-day necessities like groceries, rent, etc. Using the funds for these purposes is prohibited and may cause complications with programs such as Medicaid and SSI.

No, there is no limit. The amount can be as small or as large as necessary.

Yes. There are many instances of a special/supplemental needs trust being established in the will of a person. The trust becomes active upon the donor’s death.

Yes. The main purpose of this would be to ensure funds available to the disabled individual upon the death of the parent, or whoever established the trust.

No, there is no age limit. The only limit is to when it can begin, which is at the age of eighteen.

No. By law, the special/supplemental needs trust can only be used for the sole benefit of the beneficiary. It is prohibited to be used for anyone else.

Yes. There are some cases where the disability or chronic illness lessens to the point where the individual can begin to make decisions for themself. If this occurs, the trust may be terminated.

The trustee must sign a trust form. The trust form is provided by an attorney who will also take care of the legal proceedings to put the trust into action.

Yes, an attorney will help with the special/supplemental needs trust in New York. Having an attorney with extensive knowledge of the paperwork involved is key into getting what you need for the trust. Special/supplemental trusts are important planning tools for your loved ones, and you want to make sure that they are getting the help they need and deserve.

No, there is no difference. They are referred to by both names. Each one has the same requirements and legal work.

It should be avoided as it can affect the eligibility of the beneficiary for programs such as Medicaid. It is better to pay the services directly as the trustee then to give the money to the beneficiary to pay. In this way, you are not damaging any eligibility matters regarding public assistance programs.