Back to the Basics: Estate Planning for Adults & Children with Special Needs

According to 2010 U.S. Census data, 56.7 million Americans, or almost 20 percent of U.S. residents, have a disability. Within this demographic, over 5 million adults need assistance with self-care and independent living activities, including difficulty getting around inside the home, getting into/out of bed, bathing, dressing, eating, toileting, managing money, preparing meals, doing housework, taking prescription medications, and using the phone.

More than half of those with severe disabilities who are age 15 to 64 receive some form of public assistance. Approximately 33 percent receive Social Security benefits and approximately 20 percent receive Supplemental Security Income (SSI) benefits. Some also receive other forms of cash assistance such as Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP) (formerly called food stamps), and public or subsidized housing.

Given the above statistics, many people who are making estate plans will be leaving money or property to someone with a disability who has a special needs situation. However, if the inheritance is not structured properly, the receipt of money or property can negatively impact a person with disabilities’ eligibility for some public assistance programs.

A trust is a legal document that directs the management and distribution of assets. The person or entity creating or funding the trust is called the grantor. The person who receives the benefit of the trust is called the beneficiary. The grantor appoints a trustee to manage the trust and distribute the trust’s assets or funds for the benefit of the beneficiary. (The trustee can be a person or an entity such as a bank.)

Trusts are particularly useful in the situation where a beneficiary has special needs because a trust can provide financial resources without compromising eligibility for public benefits. On particular type of trust is called a supplemental needs trust (or sometimes a special needs trust). The special needs trust protects and perseveres financial assets that the individual with special needs inherits. It also separates the assets so that they are not counted for purposes of determining eligibility for public benefits such as SSI, Medicaid, and subsidized housing.

In addition to protecting public benefits, a supplemental needs trust can allow for vastly superior care options and opportunities for the person with special needs. These supplemental items can greatly enhance the person’s dignity, productivity, and comfort. For example, trust funds can be used to purchase the following–

-clothing -transportation -personal care items -education -rehabilitation and therapy -case management -health insurance premium -dental care -phone and phone service -television -entertainment
Establishing A Supplemental Needs Trust
Supplemental needs trusts must comply with complex federal and state laws in order to be effective. They also require information regarding the specific situation and needs of the person with special needs.

However, in New York, the following general requirements apply to the formation of a supplemental needs trust:

1. The supplemental needs trust must be for the benefit of an individual under the age of 65 who qualifies as begin “disabled.”
2. The trust is established by a parent, grandparent, legal guardian, or the court 3. The beneficiary with special needs with have no direct control over or access to trust funds 4. The trust must provide that, upon the death of the beneficiary of the supplemental needs trust, the state will receive the remainder of any trust funds up to the amount spent by the state for medical assistance to the beneficiary.

Proper estate can help you plan for the future security of a loved one with special needs. It is important to contact an experienced NY estate planing attorney.

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