{"id":17113,"date":"2021-04-27T12:43:58","date_gmt":"2021-04-27T16:43:58","guid":{"rendered":"https:\/\/berwitz-ditata.com\/?p=17113"},"modified":"2021-04-27T12:44:25","modified_gmt":"2021-04-27T16:44:25","slug":"berwitz-ditata-llp-wins-first-case-new-nys-decanting-law","status":"publish","type":"post","link":"https:\/\/berwitz-ditata.com\/berwitz-ditata-llp-wins-first-case-new-nys-decanting-law\/","title":{"rendered":"Berwitz &#038; DiTata LLP Wins First Case Under New NYS Decanting Law"},"content":{"rendered":"<style type=\"text\/css\"><\/style><p>What is \u201cdecanting\u201d and why does this matter? Decanting is the legal term for transferring assets from one irrevocable trust to another irrevocable trust. Typically, when we think of irrevocable trusts, we think they cannot be changed &#8211; and that\u2019s true. But, if an irrevocable trust is seriously flawed, decanting is the process that provides a solution in the <em>right<\/em> case.<\/p>\n<p>&nbsp;<\/p>\n<p>In this case, the question brought on appeal concerned whether assets, decanted from the first irrevocable trust to a new irrevocable trust, could be payable to relatives after the trust beneficiary dies rather than to the State. The trust beneficiary was receiving governmental benefits.<\/p>\n<p>&nbsp;<\/p>\n<p>Ordinarily, we would recommend implementing a supplemental needs trust (\u201cSNT\u201d) for such a beneficiary. An SNT allows trust funds to be used to supplement government benefits\u00a0without disqualifying the beneficiary from receiving needs-based benefits. Some SNTs require that, after the death of the beneficiary, Medicaid be reimbursed from the remaining trust assets. In our case, the original irrevocable trust did not contain an SNT. The new irrevocable trust contained SNT provisions but did not include a provision that Medicaid be paid back. The issue was first successfully litigated by Berwitz &amp; DiTata LLP in the Surrogate\u2019s Court. The Surrogate agreed with our position that the new irrevocable trust did not have to contain a \u201cpayback provision\u201d to Medicaid after the trust beneficiary dies. The State appealed the Surrogate\u2019s determination and we then litigated this question in the Appellate Division. We are happy to report that the Appellate Division affirmed the Surrogate\u2019s determination, in other words, they, too, agreed with us.<\/p>\n<p>&nbsp;<\/p>\n<p><strong>The facts:<\/strong> In 1992, Moses R. created an irrevocable trust for his then infant grandson, 19-month old Daniel S. The original trust would have allowed Daniel to withdraw all\u00a0of the trust assets when he reached 21 years of age. What grandfather Moses could not have known was that Daniel would later be diagnosed with epilepsy and bipolar disorder, in addition to obsessive compulsive disorder (OCD), attention-deficit disorder (ADD) and attention-deficit\/hyperactivity disorder (ADHD). When Daniel turned 18, he qualified for Medicaid and Supplemental Security Income, both needs-based governmental benefits. Absent additional planning, he would have become ineligible to receive those benefits if he had received the trust assets at 21.<\/p>\n<p>&nbsp;<\/p>\n<p>T<strong>he law:<\/strong> Before 2011, NYS had a statute that permitted a Trustee to decant (transfer) the trust assets to another trust that was so restrictive that it would not have permitted the Trustee of Daniel\u2019s trust to protect the assets. In 2011, New York liberalized the decanting statute. The amended statute allows a Trustee to decant an irrevocable trust that offers no protection for the beneficiary to a new irrevocable trust that contains an SNT that will protect the assets for\u00a0the beneficiary who is receiving governmental benefits. But the statute did not address the terms of that new SNT.<\/p>\n<p>&nbsp;<\/p>\n<p><strong>The argument:<\/strong> The State unsuccessfully argued that the new trust should require that, after Daniel\u2019s death, the trust assets be first used to reimburse Medicaid for the benefits that Daniel had received during his lifetime on the theory that the trust was funded with Daniel\u2019s assets. In contrast, the Appellate Division agreed with our position that the 1992 trust, having been funded at the outset with assets belonging to Moses, the grandfather, could be decanted to a new irrevocable trust which deprived Medicaid of the right to be reimbursed after Daniel\u2019s death. Thus, any remaining trust assets will be distributed to Daniel\u2019s siblings.<\/p>\n<p>&nbsp;<\/p>\n<p>The impact of the new statute is now clearer. There is now a mechanism for modifying an existing irrevocable trust where the trust provisions require adjustment because circumstances have changed. Timing can be critical. We, of course, are available to review and evaluate these trusts and to discuss the available options with the Trustee.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>What is \u201cdecanting\u201d and why does this matter? Decanting is the legal term for transferring assets from one irrevocable trust to another irrevocable trust. Typically, when we think of irrevocable trusts, we think they cannot be changed &#8211; and that\u2019s true. But, if an irrevocable trust is seriously flawed, decanting is the process that provides&#8230;<\/p>\n","protected":false},"author":3,"featured_media":17114,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-17113","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles"],"featured_image_src":"https:\/\/berwitz-ditata.com\/wp-content\/uploads\/2021\/04\/bill-oxford-OXGhu60NwxU-unsplash.jpg","featured_image_src_square":"https:\/\/berwitz-ditata.com\/wp-content\/uploads\/2021\/04\/bill-oxford-OXGhu60NwxU-unsplash.jpg","author_info":{"display_name":"berwitzandditata","author_link":"https:\/\/berwitz-ditata.com\/author\/berwitzandditata\/"},"_links":{"self":[{"href":"https:\/\/berwitz-ditata.com\/wp-json\/wp\/v2\/posts\/17113","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/berwitz-ditata.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/berwitz-ditata.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/berwitz-ditata.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/berwitz-ditata.com\/wp-json\/wp\/v2\/comments?post=17113"}],"version-history":[{"count":0,"href":"https:\/\/berwitz-ditata.com\/wp-json\/wp\/v2\/posts\/17113\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/berwitz-ditata.com\/wp-json\/wp\/v2\/media\/17114"}],"wp:attachment":[{"href":"https:\/\/berwitz-ditata.com\/wp-json\/wp\/v2\/media?parent=17113"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/berwitz-ditata.com\/wp-json\/wp\/v2\/categories?post=17113"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/berwitz-ditata.com\/wp-json\/wp\/v2\/tags?post=17113"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}