Long Island, New York Special Needs Planning Attorneys

Supplemental Needs Trusts, Special Needs Trusts, Equitable Estate Transfers, Guardianship and Advanced Directives, and Letters of Instructions

What is Special Needs?

Special needs is a term used to describe individuals who require assistance for disabilities that may be medical, behavioral, mental or learning based. Planning for special needs may encompass planning for minor children or adults with disabilities.


What should parents consider when planning for the care and support of children with special needs?

There are numerous strategies utilized by parents of disabled children to ensure their ongoing financial security and to enhance the quality of their lives, including:

  • Establishing a Supplemental Needs Trust (SNT)
  • Ensuring equitable transfer of your estate
  • Guardianship and advance directives (a health care proxy, living will, and power of attorney)
  • Preparing a Letter of Instructions

Article: What to consider when planning for children with special needs:

To parents, children are always children, no matter their age.  We take care of them when they are young and we want to ensure that they will be safe, comfortable and well provided for when we age, perhaps need care ourselves, or are no longer here.  For this reason, estate planning is an important tool to assist us in making sure that our wishes are fulfilled.

Planning is especially important for families with children who have special needs as a result of mental, emotional or physical disability.  Disabled children may need to be physically cared for, may not be capable of handling their financial affairs, may have modest means and, as such, may be entitled to, or the recipients of, governmental benefits such as Medicaid or Supplemental Security Income (SSI).  Trusts are often utilized to protect assets for the benefit of a disabled child but they usually contain certain restrictions on the access to the funds so that the child will continue to be eligible for governmental benefits.

Certainly, no two families are alike and estate plans should reflect this uniqueness.  Yet, there are certain common things that parents should consider when planning for the continued care and support of their disabled children:

  • Does the child qualify for, or is he receiving, public assistance?  Are all of their needs adequately met?  If so, you may still wish to leave funds for the benefit of your disabled child, to meet their “special needs.”  “Special needs” are typically items or services which the state or governmental agency will not provide.  For instance, funds may be used to take a child on vacation, a dream trip to Disney World, or to buy an I-Pod or computer, or to pay for a birthday celebration or a meal out.  Governmental benefits include only day-to-day medical and custodial expenses, no “luxuries.”
  • What percentage of your estate should be set aside for the disabled child?  Sometimes this depends on the extent of the child’s disability.  So, for instance, if a child is severely disabled and resides in a facility on governmental benefits they may not have significant “special needs.”  If a child is principally independent but has an illness that is or will become disabling, they may require a great deal of support later in life.  Certainly this should be taken into consideration when ascertaining how to divide the estate.
  • Can they take care of himself physically?  If not, who will care for them and/or supervise their care in the future?  You want your child to receive the same level of care you are providing.  Apart from a caregiver, your child will need an advocate, someone to protect his rights.  Other children may not be able to take on this responsibility for various reasons: they have their own families, they live in another state, etc.
  • What impact will being treated differently from your other children have on your child?  If your child is able to handle their own financial affairs consider how the restrictions of a “special needs” trust will impact them. No doubt, awareness of various social, cultural, emotional and financial factors may increase our ability to ensure the security of our disabled children and to enhance the quality of their lives.

What strategies are utilized by parents of minor and/or adult disabled children to ensure their ongoing financial security and enhance the quality of their lives?

  • Establishing a Supplemental Needs Trust (SNT)

A Supplemental Needs Trust (SNT) is designed to hold assets for the benefit of an individual who is receiving or may subsequently receive local, state or federal “needs based” governmental benefits such as Medicaid or supplemental security income (SSI).  It is intended to ensure that the assets will be utilized for the care, maintenance, support and education of the beneficiary, to supplement and not replace those benefits.  There are two types of Supplemental Needs Trusts “first party supplemental needs trusts” and “third party supplemental needs trusts.” The difference between these trusts is the source of the assets which fund the trust.

A third party Supplemental Needs Trust is funded with the property of someone other than the disabled beneficiary. Anyone may create such a trust except one who has a legal responsibility of support for the beneficiary.  Under New York State law, a spouse and the parent of a minor disabled child (under 18 years of age) are specifically precluded from funding a third party Supplemental Needs Trust for the benefit of such spouse or child.  The creator of this type of trust may specify who is to receive the balance of the assets upon the death of the disabled beneficiary.

A first party Supplemental Needs Trust (often called a “Special Needs Trust”) is funded with the assets which actually belong to the disabled individual, most often the proceeds from medical malpractice or personal injury awards, or inheritances.  It is a strategy that is only useful for individuals who are under 65 years of age.  While the transfer of the beneficiary’s assets to the trust will not jeopardize his or her entitlement for governmental benefits, and the principal and accumulated income will be considered “exempt” resources, the disabled individual cannot establish and implement the trust.  It must be created by the beneficiary’s parent, grandparent, guardian or upon court order.  Also,  there must be a post-death payback provision, pursuant to which, at the death of the disabled beneficiary, Medicaid is reimbursed, from the trust assets, for all funds it expended on the disabled beneficiary’s behalf.

These Supplemental Needs Trusts are an important part of your estate plan to discuss with your estate planning attorney.

  • Ensuring Equitable Transfer of Your Estate

Some parents of children with disabilities do not make provision, in their own estate plans, for their disabled child, believing that their other children will use a share of the inherited assets to provide care for a disabled brother or sister.  In essence, they are disinheriting their disabled child.  Often they do this in the mistaken belief that, if their disabled child inherits assets, he or she will lose public assistance and other governmental benefits.

With proper planning, parents of a disabled child may significantly increase the future financial security of this child.  The parents’ estate planning documents can expressly incorporate an SNT to benefit this child.  The child does not receive a share of the estate outright but, instead, it is paid to the Trustee of the SNT.  This is a form of third party SNT and can specify particular terms and conditions for the utilization by the Trustee of the assets for this child.

  • Guardianship and Advance Directives

Once a child reaches the age of 18, the parents’ rights, as the natural guardians, to make decisions on behalf of their child regarding health care and property management, terminate.  It is at this point that the parent of a disabled child must make a decision concerning guardianship.  Whether a guardianship proceeding is necessary or appropriate will depend on the mental, physical and emotional capabilities of the disabled child.  In some circumstances, properly executed Advance Directives may obviate the need for a guardian.

Advance Directives are: Power of Attorney, Health Care Proxy and Living Will.  Persons over the age of 18 years may execute these documents, provided they have the capacity to do so.  A Health Care Proxy is a document in which one designates a medical decision-maker when one is unable to communicate his or her wishes.  This decision-maker can be empowered to refuse or consent to medical treatment even with respect to maintaining or withdrawing life support.  A Living Will expresses personal wishes with regard to health care matters.  It can state a restriction on the use of life-sustaining medical procedures when there is no reasonable expectation of recovery or, alternatively, direct that aggressive measures be provided to prolong life.  A Power of Attorney is a documents which provides for ongoing financial and property management by an agent.  To the extent that a disabled individual is capable of understanding and expressing his or her wishes with respect to these matters, and can select agents to act, a guardianship proceeding may be avoided.

  • Preparing a Letter of Instructions

There will come a time when the parent will become disabled or die.  Crucial questions should be considered and addressed in anticipation of this event:  Who will care for my disabled child?  To whom should the other family members look for advice and assistance if my disabled child is unable to communicate his or her wishes?  Have my child’s special needs, preferences, likes and dislikes been recorded?  Who has access to this information and where shall it be memorialized?  How should my funds be utilized for the benefit of my disabled child?  It is advisable for parents to prepare a Letter of Instructions.  This very useful tool provides personal, financial and other pertinent information concerning the disabled child.  Having this data in one place and readily accessible may be especially crucial for successor caregivers who step in when the parent is ill, injured or dies unexpectedly.

Implementing these and other strategies may provide the greatest relief to parents of disabled children so that they can be assured that, in the future, there will be someone qualified and empowered to watch over their child.

Let us know how our special needs planning attorneys can help you.
Call Us Now Berwitz & DiTata LLP at 516-328-2300