Special Needs Trusts: What Are They and Who Needs Them?

estate planning lawyer in New YorkSpecial needs trust are designed to assist physically or mentally disabled individuals. These trusts are also sometimes referred to as supplemental needs trusts. They allow monetary assets and other types of assets to be maintained for the disabled individuals. These trusts protect the assets and give the special individuals the use and enjoyment of the assets, but see to it that the assets do not prevent or interfere with any of the governmental benefits these special individuals are receiving. These trusts usually have a trustee who is a family member, close friend or other trusted individual to see to it that the terms of the trust are carried out.

First Party Special Needs Trust

These types of special needs trusts are created by parents or other family member for a special individual who is under 65 years of age. The trust is specifically designed to avoid interfering with the individual receiving benefits from social security, medicaid or other programs. Upon the death of the beneficiary of this trust, Medicaid can seek to recover their prior expenditures on behalf of the beneficiary from the balance of the corpus of the trust.

Third Party Special Needs Trust

These trusts can be created for a special person at any age. These trusts also do not have an impact on the receipt by the special individual of governmental benefits. Upon the death of the beneficiary of the trust, the trust assets are distributed pursuant to the terms of the trust. Medicaid or other state programs are unable to recover any of the funds from these trusts.

estate planning attorneyElliot Schlissel is a member of the National Academy of Elder Law Attorneys. He has more than 35 years of experience dealing with all aspects of wills, trusts, and estate planning.