Supplemental Needs Trusts for individuals with disabilities – “First Party” Supplemental Needs Trust
This edition of the Koldin Report E-Newsletter is part of a series on questions we received from our “contact us” form on our website about Elder Law, Estate Planning and Medicaid.
All prior newsletters are saved on our website. You can read them by clicking here.
In this newsletter we answer the following question posed by a visitor to our website:
I am legally disabled and would like to apply for government benefits such as Medicaid. Can my life savings be transferred to a Trust so that I can qualify immediately for benefits?
Yes, as long as you are under age 65, you can establish a Supplemental Needs Trust.
A Supplemental Needs Trust provides that income and principal may be made available to the person with disabilities but only to supplement and not to replace government benefits.
Federal and State legislation expressly exempts Supplemental Needs Trusts (Special Needs Trusts) from being considered available in determining eligibility for Medicaid provided that the statutory requirements are met.
Assets owned by a person with disabilities can be transferred to a Supplemental Needs Trust so that eligibility for Medicaid and/or other government benefits programs can be established. This is often referred to as a “First Party” Supplemental Needs Trust.
The Federal and New York Social Services Law provides that there shall not be a transfer penalty for assets transferred to a trust established solely for the benefit of an individual who is under age 65 and is disabled.
On the death of the Medicaid recipient who has a Supplemental Needs Trust funded with his/her own savings, all amounts remaining in the trust up to the total value of all medical assistance paid on behalf of the individual must be paid to the State before any remainder beneficiaries can inherit.
If a Supplemental Needs Trust was established by someone else and funded with his or her own assets for the benefit of a person with disabilities, this “payback” to the State is not required. The “payback” rule only applies to Supplemental Needs Trusts funded with assets owned by the person with disabilities.
For more information regarding Supplemental Needs Trusts, please see our website by clicking here.
At the Koldin Law Center, P.C., located in East Syracuse, New York, we have over 50 years of experience helping individuals plan for immediate crisis and long term care. Our attorneys are available to discuss your estate planning options, including the advantages and disadvantages of Revocable Trusts and Irrevocable Trusts, along with other estate planning considerations including a Will, Power of Attorney, and Health Care Proxy. We do not charge a fee for the initial consultation. We welcome your children, family attorney, accountant, and/or financial planner to be present at the initial consultation.
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