Special Needs Trusts in New York: Providing for Loved Ones With Disabilities

When estate laws are a plot point in movies or TV shows, it is usually to highlight the greed of someone who owns property or stands to inherit it, or else as a deus ex machina in which a sudden influx of inherited money enables the characters to solve their problems. In most cases, the amounts of money that change hands when a deceased person’s estate settles are not large enough to be interesting to the television audience. Likewise, not everyone who establishes a trust or receives money as a beneficiary of one is wealthy. In fact, one of the most common scenarios in which people transfer property to their trusts is the polar opposite of escapist fiction. More numerous than the people who are so wealthy that, if not for a living trust to keep their assets out of probate, would owe estate taxes are the ones whose heirs would be destitute without income from the trust. Many trust beneficiaries are financially vulnerable because they are unable to earn enough employment income to be financially independent, either because of medical special needs or because of a history of personal adversity. For advice about establishing a trust for the benefit of a vulnerable family member, contact a Bronx estate planning lawyer.

How Does a Special Needs Trust Work?

A trust is a legal entity that is separate from the person who established it; it has its own taxpayer ID number, much as businesses and nonprofit organizations do. Whereas business interests count legally as the property of the business owner, a trust does not legally belong to its grantor. To set up a trust, you, the grantor, write a document called a trust instrument that designates one or more people as trustees; they have the legal authority to make transactions with the property belonging to the trust. The trust instrument also lists how the trustees must use the trust assets, including but not limited to the beneficiaries listed in the trust instrument.

In the case of a special needs trust, also known as a supplemental needs trust, the beneficiary is a person with disabilities, or an otherwise vulnerable person, who depends on the grantor financially. The trust instrument may instruct the trustees to pay money from the trust directly to the beneficiary. It might also instruct them to pay the expenses associated with the house where the beneficiary lives, a house which legally belongs to the trust.

Why Do People Establish Special Needs Trusts?

It makes sense to establish a trust for a family member with disabilities if the beneficiary cannot manage his or her own finances. Even if the beneficiary can do this, the main reason to establish a special needs trust is if the beneficiary receives government benefits and would lose benefit eligibility if he or she legally owned the trust assets instead of the trust owning them.

Schedule a Confidential Consultation With a Bronx Estate Planning Attorney

An estate planning lawyer can help you revise your estate plan to include a special needs trust for the benefit of a family member. Contact Cavallo & Cavallo in the Bronx, New York to set up a consultation.

Source:

nysarctrustservices.org/resources/what-special-needs-trust/