Supplemental Needs Trust

January 20, 2016

A New York Supplemental Needs Trust Must Be Clearly Stated In Estate Planning Documents

A Supplemental Needs Trust (SNT) is an important mechanism to provide financial security for persons with disabilities. The New York Probate Lawyer Blog has posted a number of articles regarding the requirements and benefits of a SNT.

Essentially, a SNT allows for funds to be held for the benefit of a person who is receiving government benefits such as Medicaid or Social Security Disability. Since the trust beneficiary can only receive benefits from the trust at the full discretion of the Trustee, the creation and existence of the trust will not diminish or effect the benefits the beneficiary receives from governmental sources. Also, there are guidelines that the Trustee must follow in making distributions from the SNT. Continue reading

September 16, 2015

A New York Supplemental Needs Trust May Be Approved by the Court To Hold Guardianship Assets

by Jules M. Haas

A Supplemental Needs Trust (“SNT”) is a trust that is typically created to provide a protected fund for persons who receive benefits from governmental sources. Ordinarily, if an individual is the recipient of benefits from Medicaid or social security disability or other governmental programs, the receipt of private funds by such individual would disqualify them from obtaining future benefits. The private monies would either need to be paid to the government as repayment for past benefits or spent down before government subsidies could resume. The SNT allows a person to have the best of both worlds. Funds can be held in a SNT while the government benefits continue to be paid.

A SNT can be created and utilized in many different situations. For example, in estate planning, where a parent has a child or potential beneficiary that is a recipient of benefits such as Medicaid, a SNT can be established as a provision in a Last Will or Living Trust to provide a source of extra financial benefit for such person without risking any loss of benefits. New York Estates, Powers and Trusts Law Section 7-1.12 entitled “Supplemental needs trusts established for persons with severe and chronic or persistent disabilities” provides the requirements for the creation of such trusts. Continue reading

May 20, 2015

A New York Supplemental Needs Trust Can Protect Assets for An Incapacitated Person

by Jules M. Haas

When dealing with matters concerning an incapacitated person, one of the primary concerns is finding the resources to pay for the living expenses and care of the individual. New York Guardianship Lawyers must always determine the type of assets, income and benefits that are available. Incapacity can take many forms and the nature of a disability will be reflected in the expenses incurred. For example, an individual may have been the victim of an accident or stroke and need 24 hour nursing home care. On the other hand, a person may have dementia or Alzheimer’s disease and may be able to live at home with their family.

In situations where care expenses are extensive, personal resources may be unavailable or may have been exhausted. Also, it is possible that as a result of Elder Law Planning and Estate Planning, a person may have transferred assets to others many years before the onset of a disability. Where assets are limited, it is common that government benefits such as Medicaid and Social Security would be available to pay for the cost of care. Continue reading

December 25, 2013

New York Guardianship Proceedings Can Involve a Supplemental Needs Trust

by Jules M. Haas

The New York Probate Lawyer Blog contains previous posts concerning the benefits of a Supplemental Needs Trust. Briefly, a Supplemental Needs Trust (“SNT”) is a trust that allows assets to be held for the benefit of a person who is receiving governmental benefits such as Medicaid or social security disability. The maintenance of the trust fund will not interfere with or cause these benefits to be discontinued. The SNT trustee can use the trust to provide additional services or care for the SNT beneficiary over and above those provided by Medicaid or Social Security payments. New York Estates, Powers and Trust Law (“EPTL”) Section 7-1.12 provides the statutory provisions required for a trust to be qualified as a SNT.

As discussed previously, there are many situations in which a SNT can be established. For example, a person can establish a SNT in a Last Will to be funded upon death with the trust assets to be utilized for a person who is incapacitated or otherwise receiving governmental benefits. Another situation where a SNT is common is in connection with an Article 81 Guardianship. Instead of holding a person’s funds under the guardianship where the funds may cause Medicaid or other benefits to be discontinued or where the funds may be required to repay Medicaid claims, the assets can be placed in a Court approved SNT. Recently, in a decision by Nassau County Surrogate Edward McCarty III in Property of Alan Frederick Silverman decided on October 29, 2013 and reported in the New York Law Journal on December 16, 2013, the Court allowed the establishment of a SNT. In this case an incapacitated person for whom a guardian was appointed was the recipient of funds from the estate of his father. The guardian was allowed by the Court to create a SNT and to place the estate assets into the trust thus preserving them for the benefit for the incapacitated person.

I have represented numerous clients where a SNT was established in conjuction with the client’s appointment as the guardian of a person’s property and personal needs. Generally, the Courts are very receptive to creating these trusts since they afford incapacitated and disabled individuals the ability to afford services and care above those provided by governmental benefits.

August 7, 2013

A New York Supplemental Needs Trust Can Preserve Estate Assets for an Incapacitated Person

by Jules M. Haas

A New York Supplemental Needs Trust (“SNT”) is a trust that allows trust funds to be available for a person who is receiving government benefits such as Medicaid or Social Security Disability (“SSD”). The governmental payments continue and are not reduced or terminated despite the existence of the trust fund. While the government sometimes may be entitled to claim a re-payment upon the death of the beneficiary, the beneficiary can utilize both the government and trust resources during life in furtherance of their quality of life.

A SNT is typically needed where a person is disabled or incapacitated and is the recipient of governmental assistance. New York Estates, Powers and Trusts Law (“EPTL”) Section 7-1.12 provides the statutory details as to the trust requirements. New York Estate and Guardianship Lawyers generally become aware that there are many different situations where a SNT can preserve assets to be used for incapacitated individuals. For example, there are situations where a person may be injured due to an accident or medical procedure and ultimately receive a large monetary award for the injuries they suffer. Sometimes the injuries also result in an incapacity that would allow the person to qualify for benefits such as Medicaid or SSD if they did not have any personal assets. In order to prevent the monetary settlement from disqualifying the person from receiving the benefits, the settlement proceeds can be placed into a SNT. The SNT trustee can then use the SNT funds in his discretion to provide additional care and benefits which are not provided through the government payments.

Many situations where a SNT is needed may involve Court proceedings such as Article 81 Guardianships in the Supreme Court or Estate Administration in the Surrogate’s Court. In these matters, the Court is asked to authorize and allow the creation of the SNT and the transfer of the funds to the SNT trustee. Court authorization allows the funds to pass directly to the trust and avoid having the incapacitated person receive these monies which would otherwise result in the disqualification or termination of the governmental benefits.

A recent case in the Nassau Surrogate’s Court is a typical example of the use and benefit of a SNT. Matter of Krushnauckas, decided by Surrogate Edward McCarty III on June 28, 2013, and reported in the New York Law Journal on August 8, 2013, concerned the estate of an individual, Adrienne, who died intestate leaving a daughter named, Michele. Michele was 56 years of age and was mentally retarded and was receiving governmental benefits in the form of Medicaid and Supplemental Security Income. Michele’s Property Management Guardian was the Public Administrator who requested that the Court approve a SNT for the approximately $400,000 estate distribution that Michele was entitled to receive. By placing the inheritance into the SNT, Michele’s Medicaid and SSI would not be affected. After reviewing the general benefits and reasons for establishing a SNT along with some issues regarding payback of benefits, the Court authorized the establishment of the trust.

The effective planning and use of a SNT in Article 81 Guardianship proceedings and Estate Settlement matters can create tremendous benefits and promote the quality of life for persons suffering from disabilities and incapacity.

November 14, 2012

New York Article 81 Guardianship Proceedings Can Arise in Housing Proceedings

by Jules M. Haas

New York Guardianship proceedings can be found to be an appropriate remedy in varied situations. Typically, the Article 81 Guardianship is associated with an elderly person suffering from an illness such as dementia or Alzheimer’s disease or a person who has suffered a severe physical event such as a stroke or heart attack. These situations are a garden variety basis for the appointment of a Guardian for property management and personal needs.

New York Guardianship attorneys, however, are familiar with the many other situations in which a Guardian may be needed. For example, in many instances, younger individuals may be incapacitated due to mental or physical disabilities that are birth related. In these situations, a Guardian may be necessitated not only for personal needs but also to handle monetary awards or funds the person may be entitled to due to a settlement from a lawsuit. The Guardianship Court is often asked to allow the establishment of a Supplemental Needs Trust to hold these funds so that the incapacitated person does not lose the benefit of governmental programs such as Social Security Disability or Medicaid.

Many guardianship cases also involve issues relating to the housing of the person who is incapacitated. Such person may live in a rental apartment or even own a cooperative apartment. Due to the person’s incapacity, the rent or maintenance due on the apartment may go unpaid and subject the person to possible eviction or termination of their leasehold interest.

Other events that may result in eviction proceedings or lease terminations are where the tenant creates a nuisance by engaging in loud or abusive conduct or exhibits Collyers Syndrome which is the excessive hoarding and accumulation of items in the apartment. These activities create a climate where both the incapacitated individual and other tenants in the building are at risk.

When a person is exhibiting the above described behavior, the building management may commence eviction proceedings or, sometimes, contact Adult Protective Services of the New York City Human Resources Administration to intervene. APS will attempt to provide the tenant with assistance, if possible.

A Manhattan Guardianship lawyer, Queens Guardianship lawyer or Brooklyn Guardianship lawyer who represents a family member attempting to obtain appointment as a Guardian,
can ask the Guardianship Judge to issue a stay or injunction to stop the eviction proceedings of the incapacitated person until a Guardian has been appointed. Such relief is usually granted by the Court.

The New York Probate Lawyer Blog has discussed in previous posts that a Guardian will be appointed by the Court if the Court determines by “clear and convincing evidence” that a person is incapacitated. New York Mental Hygiene Law (“MHL”) section 81.02. When a Court is considering the case, it will review the ability of the person to manage activities of daily living such as “money management”, “grooming”, and “housing”. MHL section 81.03 (h). Therefore, when a person fails to pay rent or creates a nuisance or dangerous condition in an apartment, such activity is evidence of incapacity.

I have represented many clients who have petitioned to be Guardians in situations where their friends or relatives are on the verge of eviction or lease termination due to failure to pay rent or creating a nuisance condition. In these cases, quick action and Court filings are often needed to obtain a stay of the eviction and prevent the loss of the incapacitated person’s apartment. Once appointed, a Guardian is usually able to pay the back rent or correct the nuisance condition so that the apartment which is the incapacitated person’s home can be retained.

July 26, 2012

New York Guardianship Proceedings Also Involve Payments from a Supplemental Needs Trust

by Jules M. Haas

The New York Probate Lawyer Blog has had many posts regarding issues and requirements of an Article 81 Guardianship Proceeding. These proceedings involve a determination as to whether an individual is incapacitated and, if so, the appointment of an appropriate Guardian.

The determinations that are made by the Court involve many different persons which may include the alleged incapacitated person; a petitioner (usually a family member); and a Court Evaluator. In some cases third parties are involved such as a Nursing Home, Adult Protective Services, New York State Mental Hygiene Legal Service and Medicaid.

A Supplemental Needs Trust (“SNT”) is often a critical component of the Guardianship process. In a typical situation a person who is incapacitated may be entitled to a large monetary award due to a personal injury action. Since the incapacitated person would also qualify for government benefits such as Medicaid and SSI, the SNT provides a means by which the monetary funds can be set aside for extra benefits without the loss of the governmental entitlements. In the Guardianship proceeding, the Court authorizes the Guardian to establish the SNT and to transfer the funds into the Trust thus avoiding any loss of benefits. The SNT trustees, who are also designated by the Court, then administer the trust for the benefit of the disabled person. The trustees selected are commonly the family members who are the Guardians.

Once the SNT is established, the trustees can make expenditures for such things as computers, vacations, extra care and other items which the governmental benefits do not pay for without losing the governmental coverage for other items such as medical care. A good explanation of this process is provided in a recent case decided by Justice Howard H. Sherman on April 19, 2012 and reported in the New York Law Journal on May 14, 2012 entitled Matter of Geraldine R. In this case the Department of Social Services (Medicaid) claimed that the Supplemental Needs Trust trustees did not need to obtain prior Court approval to pay for items such as a vacation, purchase of a computer, printer and television, and educational programs. The Court found that it had authority to approve these items prior to the expenditure.

In fact, it is the usual and appropriate manner for trustees of a SNT to obtain prior Court approval of their expenditures. The trustees can then avoid a later denial by the Court and the requirement that they reimburse the trust for improper expenses.

I have represented many clients in connection with Guardianship proceedings and the establishment of a Supplemental Needs Trust. These cases require a Court hearing and I work closely with my clients and their families to help them through what can be a complex court process.