New York Special Needs Estate Planning
Serving Clients in New York City and the Surrounding Areas
Overview of Special Needs Estate Planning
Special Needs Estate Planning focuses on providing for the special needs of our loved ones with disabilities when we are no longer there to organize and advocate on their behalf. Parents of children with special needs must make careful estate planning choices to coordinate all of the legal, financial, and special care needs of their children – both now and in the future.
There are several types of trusts to assist with these special planning challenges. The most common types are Support Trusts and Special Needs Trusts.
- Support Trusts: Support Trusts require the Trustee to make distributions for the child’s support in areas like food, shelter, clothing, medical care, and educational services. Beneficiaries of Support Trusts are not eligible to receive financial assistance through Supplemental Security Income (SSI) or Medicaid. If your child will require SSI or Medicaid, you should avoid a Support Trust.
- Special Needs Trusts: For many parents, a Special Needs Trust is the most effective way to help their child with a disability. A Special Needs Trust manages resources while also maintaining the child’s eligibility for public assistance benefits.
There are two types of Special Needs Trusts:
- Third-Party Special Needs Trust: Created using the assets of the parent(s) as part of an estate plan; distributed by a Will or Living Trust.
- Self-Settled Special Needs Trust: Generally created by a parent, grandparent or legal guardian using the child’s assets to fund the Trust (e.g., when the child receives a settlement from a personal injury lawsuit and will require lifelong care). If assets remain in the Trust after the child’s death, a payback to the state is required, but only to the extent the child receives public assistance benefits.
Special Needs Trusts are a critical component of your estate planning if you have loved ones with disabilities for whom you wish to provide after your passing. Generally, Special Needs Trusts are either stand-alone trusts funded with separate assets (like life insurance) or they can be sub-trusts in existing living trusts.
Special Needs Estate Planning Online Resource Center
Planning for your loved one with special needs requires extensive research to become a well-educated advocate. You will want to keep up-to-date on the latest medical, educational, financial, and legal changes. Law Offices of Glenn Busch P.C. provides assistance to you and your family in addressing your unique concerns. Our law firm hopes this Special Needs Resource Center provides you with a quick reference to find the additional resources you may need.
- Social Security Resources:
Benefits for Children with Special Needs
Social Security Benefits Eligibility Screening Tool - Handbook for Trustees: A special needs trust can be a very powerful aid in managing care for a family member with a disability. It can provide supplemental items like therapy, respite care, dental work, companions, entertainment, education — all without interfering with the beneficiary’s SSI, Medicaid or other government programs. The special needs trust can be a flexible tool. It can also be very difficult and confusing to administer.
- The Arc: The Arc is a national organization of and for people with mental disabilities and related developmental disabilities and their families. The Arc works to promote and improve support and services for people with mental disabilities and their families and also fosters research into and education about the prevention of these disabilities in infants and young children.
- National Academy of Elder Law Attorneys: The National Academy of Elder Law Attorneys is a non-profit association that assists lawyers, bar organizations and others who work with older clients and their families. The Academy provides information, education, networking and assistance to those who deal with the many specialized issues involved with legal services to the elderly and people with special needs.
- National Alliance on Mental Illness: The National Alliance on Mental Illness (NAMI) is dedicated to improving the lives of persons living with serious mental illness and their families. There are NAMI organizations in every state and in over 1,100 local communities across the country.
- Center for Parent Information and Resources: The Center for Parent Information and Resources (CPIR) serves as a central resource of information and products to the community of Parent Training Information (PTI) Centers and the Community Parent Resource Centers (CPRCs), so that they can focus their efforts on serving families of children with disabilities. Use this list of states and territories to find the PTI or CPRC that serves your area.
- Annual Disability Statistics Compendium: This publication, the first Compendium, focuses on state-level statistics published by federal agencies.
Calculating Your Loved One’s Future Financial Needs
This free questionnaire can help you project the future expenses of a child with special needs.
For help with special needs estate planning, book a call with us today!
Special Needs Estate Planning FAQ
What is the difference between a Special Needs Trust and a Support Trust?
A Special Needs Trust protects your loved one’s eligibility for benefits like SSI and Medicaid, while a Support Trust does not.
Support Trusts are used to provide for basic needs like food and housing but can disqualify the beneficiary from means-tested government aid. Special Needs Trusts, on the other hand, supplement a person’s needs without interfering with public benefits. This makes Special Needs Trusts ideal for families needing long-term care planning while preserving access to critical assistance programs.
Can a Special Needs Trust be set up before I pass away?
Yes, a Special Needs Trust can be created and funded during your lifetime or upon your death.
Many parents opt to create a stand-alone Special Needs Trust while alive so it’s ready to manage assets like life insurance or gifts. These proactive trusts allow for smoother transitions in care and financial oversight when the parent is no longer able to provide direct support.
Will my child still qualify for Medicaid or SSI with a Special Needs Trust?
Yes, if structured properly, a Special Needs Trust allows your child to qualify for Medicaid and SSI benefits.
Because assets in a Special Needs Trust are not considered countable by Medicaid or the SSA, they don’t interfere with eligibility. The trust can pay for non-essential items like therapy, recreation, and education, services that public programs typically don’t cover.
What happens to the money in a Special Needs Trust when my child passes away?
It depends on the type of Special Needs Trust.
If it’s a Third-Party Special Needs Trust, any leftover funds can go to other family members or heirs. But with a Self-Settled Special Needs Trust, any remaining money must first be used to repay Medicaid or other public programs that provided assistance during the child’s lifetime.
Who should manage a Special Needs Trust?
A trustee, preferably someone with legal, financial, or caregiving experience, should manage a Special Needs Trust.
You can appoint a trusted family member, friend, or even a professional fiduciary or corporate trustee. Since trust management involves legal compliance and knowledge of government benefit programs, it’s critical to choose someone who understands the responsibility or is willing to work with an attorney or financial advisor.