If you'd like to provide for blind, deaf, mute and other disabled persons in New York without affecting their eligibility for government benefits, setting up a special needs trust is the best method to use. These trusts add to benefits like Medicaid and SSI, but don't replace them. A trustee manages the money in the trust and decides how to spend it on the disabled person's needs. The trust can pay for things that government benefits don't cover, like making changes to a home, buying helpful devices, or doing fun activities. In New York, it's important to work with lawyers like us who know a lot about special needs trusts because the state has its own rules for them.

Types of Special Needs Trusts

First-party special needs trusts, also called self-settled or d4A trusts, are funded using the beneficiary's own money, like inheritance, personal injury payments, or back Social Security. These trusts have to pay Medicaid back for what it spent on the person after they die. The person getting the trust must be under 65.

Third-party special needs trusts are made and paid for by someone else, like a parent, grandparent, or sibling. They can be part of someone's estate plan or a separate trust. They don't have to pay Medicaid back, so any leftover money can go to other people the trust names. There's no age limit for the person getting this kind of trust.

Pooled trusts are run by non-profits that combine money from many people. Each person has their own separate account. These trusts can use the person's money or someone else's, and the person can be any age. When the person dies, the leftover money in their account can stay with the non-profit or go back to Medicaid, depending on the trust's rules.

Establishing a Special Needs Trust in New York

When establishing a special needs trust in New York for blind, deaf, mute and other disabled persons, it is essential to follow the legal requirements and process. This includes consulting with an attorney like us experienced in special needs planning and trust creation, determining the appropriate type of special needs trust based on the beneficiary's specific circumstances and the source of funding, and drafting the trust document with provisions for distributions, trustee powers and duties, and remainder beneficiaries. Obtaining a Federal Employer Identification Number (EIN) for the trust, executing the trust document according to New York state law requirements, ensuring compliance with the Medicaid payback provision and age restriction for first-party trusts, and providing notice to government agencies such as Medicaid or SSI, if necessary, are also important steps.

Funding the trust involves identifying the assets to be transferred into the trust, such as cash, investments, real estate, or life insurance proceeds, and ensuring that the assets are properly titled in the name of the trust. When funding a first-party trust, it is important to be aware of the Medicaid transfer rules and potential penalties. The beneficiary's ongoing needs and anticipated future expenses should be considered when determining the initial funding amount. Keeping detailed records of all contributions and distributions from the trust for accounting and tax purposes is essential.

Benefits of Special Needs Trusts

Special needs trusts are designed to supplement, not replace, government benefits such as Medicaid and SSI. By holding assets in a properly structured trust, the blind, deaf, or mute beneficiary's eligibility for means-tested benefits is maintained. The trustee has discretion to make distributions for the beneficiary's needs without causing a reduction or loss of benefits, allowing the beneficiary to access additional resources while still receiving essential government support for healthcare, housing, and basic needs.

Should you need assistance in establishing a special needs trust, contact the Law Offices of Albert Goodwin to discuss your specific legal needs. You can call us at [212-233-1233](tel:+12122331233) or send us an email at [[email protected]](mailto:[email protected]). We are located in Midtown Manhattan in New York, NY.