Your estate planning attorney can help you draft a special needs trust for the benefit of your special needs child or other family member. After you select a trusted individual that will serve as your trustee, you need to make sure your special needs trust complies with New York State law.
Your attorney must make sure that the trustee will use your assets within your special needs trust only for a limited purpose. Because you may not want your special needs trust property to pay for necessary items that Supplemental Security Income (“SSI”) should cover, you can give your trustee specific powers to use the money for other incidental expenses. Your attorney will most likely designate your special needs or supplemental needs trust as an “irrevocable special needs trust for the benefit of X.” Pursuant to New York law, your attorney should also insert additional language in your trust document to make sure that your estate assets are used only for limited purposes without regard to other expenses or individuals. You must also go over which property to place in your special needs trust.
A special needs trust may help your estate avoid unnecessary property dissipation, legal fees and administration expenses. Because many New Yorkers are unaware of how to create a special needs trust, they may simply bequeath their property to others with the expectation that they will use your bequest to help your loved family members afford their special care to address their medical and financial needs. Often, this plan may not turn out to be the best long-term option. If you do not set up a special needs trust but bequeath your property to others with the hopes that they may take care of your children or other loved ones with special needs, you may be subject to unnecessary income taxes, subject to an equitable property distribution by divorce or subject to claims filed by creditors during bankruptcy. Additionally, they may not be required legally to assist your special needs child.
The Law Office of Michael Robinson, P.C. is a member of the American Academy of Estate Planning Attorneys.