When a person has a physical or mental disability and lacks the capacity to manage his or her own financial matters, it may be necessary to create a special needs trust. A special needs trust is managed by a trustee. The person for whom the trust is managed is called the beneficiary.
It’s important that the trustee is an appropriate and trustworthy person because he or she may have significant financial responsibilities. Trustees can use trust assets to pay for necessities such as medical and dental expenses, personal care items, education and other items for the beneficiary.
Family members can act as trustees, but if there is no suitable family member available a trustee can be appointed by the court.
Often, special needs trusts are created to ensure that beneficiaries remain eligible for government benefits. These benefits may include Supplemental Security Income (SSI), Medicaid, subsidized housing and others. In New York, if the special needs trust conforms with the law, the assets of the trust are not counted when the beneficiary’s eligibility for benefits is determined.
Even if the beneficiary doesn’t require benefits currently, a special needs trust can address the specific needs of the disabled person and those benefits may be helpful in the future.
A special needs trust may also be used to protect inherited assets because the funds will go into the trust, which will also preserve the beneficiary’s eligibility for government programs.
In New York, there are provisions that must to be included in the special needs trust in order for it to be valid. An experienced attorney can provide advice specific to the individual’s circumstances.