As parents, the most precious part of our lives is our children. Parents who have a child with special needs, whether those children are minors or adults, share many deep concerns about the future of their children.

We all understand that no one loves or will care for our child more than we do. While parents of a child with special needs want to insure that their child's needs are met, they are often uncertain how best to meet those needs after the parents have died.

For example, parents are concerned about leaving money directly to a child with special needs for three basic reasons:

1. The child may be unable to manage their own financial affairs.

2. Any assets that the parents leave directly to their child will be considered a resource for many government entitlement programs such as Medicaid, SSI, etc. and will disqualify the child from receiving any of those government benefits until the assets the parents left their child are totally wiped out. In essence, this not only deprives the child with special needs of the benefit of those assets, but also prevents that child's brothers or sisters from getting the benefit of those assets. In other words, no one but the government will benefit from any of the assets you leave directly to a child with special needs who is on SSI or Medicaid or may be after your death.

   No parent wants to disinherit their child with special needs, but how do we provide assets for a child with special needs so that the child actually gets the benefit of those assets?

3. The child may be unable to manage their own personal affairs. How are the parents able to make sure that a responsible person will make regular visits to a child with special needs to make sure that the child has:
   1. Regular physical and dental examinations.

   2. An evaluation of education and training programs.

   3. An evaluation of work opportunity and earnings.

   4. An evaluation of recreation, leisure time and social needs.

   5. A determination of the appropriateness of their existing residential and program services.

   6. Evaluation of their legal rights to receive rehabilitation, programs and services to which they are entitled to by law.

The answer to the above three concerns is very clearly a Supplemental Needs Trust (SNT) for the child with special needs, whether that child is a minor or an adult. The SNT can be set up in your will or can be set up during your life for the benefit of your child

Under the New York State Estates Powers and Trusts Law, Section 7-1.12, a Supplemental Needs Trust can be established for people with severe and chronic or persistent disabilities and provides that neither the assets placed in the trust or the income from those assets will deemed an available resource under any government benefit or assistance program.

There are basically two types of Supplemental Needs Trusts for people with special needs:

1. A third party trust which is set up with the funds of someone other than the child with special needs. Please note that after your child is 21, you have no obligation under New York State Law to support your child. This is the trust we are focusing on for discussion purposes.

2. A trust which is set up with the funds of the child with special needs. These are known as "Pay Back" Supplemental Needs. I draw these Trusts and get them approved by the Court, but we will not be addressing this particular trust in our discussion. I am happy to discuss this type of Trust if your child has received an inheritance, settlement of a personal injury case or has excess income or assets over the allowable monthly income or allowable asset tests for SSI or Medicaid.

Without getting into a great amount of legal requirements, the bottom line is that the assets in an SNT are to be used for the benefit of the child and to supplement government benefits from the federal, state, county, city, or other governmental entity which the child may be eligible or which the child may already be receiving. The trustees are prohibited from using trust income or principal for the beneficiaries food, clothing, shelter or any other expenditure for the beneficiaries basic support or basic maintenance. These needs are provided for by government benefits.

The trustees have sole discretion to provide for all of the child's extra and supplemental needs that are not otherwise provided for by government financial assistance and benefits, including any medical, psychiatric, dental, hospital and nursing care to the extent not covered, payable or reimbursable by any government program or insurance.

The trustee can provide the child with resources and experiences that will contribute to and make the child's life as pleasant, comfortable and happy as possible. The trustee can pay for vacations, recreational trips away from place of residence, entertainment expenses, supplemental social service expenses, supplemental transportation costs, recreational equipment, games, crafts, books and magazines, television, radio and cable service, musical instruments, stereo, tape recorder, CD player, etc..

In essence, the trustees can make sure that the child gets the full benefit of every dollar the parent places in the SNT for the child without losing one dollar of government benefits the child may be entitled to. The parent's money is used to supplement and enhance the child's life style over and above what the government will pay for.

You will note that the above discussion is not a highly technical or scholarly approach to the subject of SNT's. My intent is to explain use of SNT's to the lay person in plain English. I may have left you with some questions, but I hope that I have made you aware of an excellent estate planning tool that addresses the concerns of a parent who has a child with special needs.

If we can be of any help to you we offer a free initial office conference and we would be happy to address your individual situation and needs.

Warmest personal regards

Last Updated: November 4th, 2009

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