A special needs trust is a kind of irrevocable trust created for the benefit of someone with special needs. The assets kept in the trust are not counted as available resources for Medicaid eligibility, so the individual can qualify for Medicaid even while having another source of income.
The special needs trust is a highly beneficial estate planning instrument for parents having a child with special needs in Brooklyn. As the child grows into adulthood, they would typically still need as much financial support as they can get. Although Medicaid provides basic home care for disabled children, you may want your child to have a mechanical wheelchair, mechanical bed, special therapy, and other kinds of care to improve their quality of life more than what Medicaid offers.
But unfortunately, gifting assets to a disabled individual may disqualify them from Medicaid if the funds exceeds the income limit for Medicaid eligibility (which is $884 monthly in Brooklyn). And consequently, the money you transfer to the individual would be covering those health care costs that Medicaid is originally supposed to cover.
What can a special needs trust funds be used for?
Notably, you cannot use funds from a special needs trust for just anything, like buying a house or a car. While Medicaid takes care of the child’s basic needs, funds from the special needs trust will cater to those supplemental needs not covered by Medicaid, such as:
- Wheelchairs
- Mechanic beds
- Special therapies
- Accessible vans
- Walk to the park and other recreational experiences to enrich the individual’s life
- Occasional dine-in at the restaurant, etc.
- Supplemental needs that special needs trust funds cannot be used for include:
- Rent
- Mortgage payments and property tax
- Groceries
- Allowance cash given directly to the disabled individual
- Frequent restaurant meals
- Utilities
But with a special needs trust, you can enable your child enjoy both Medicaid benefits and a higher quality of life.
Types of special needs trusts in Brooklyn
There are the basically three types of special needs trust in Brooklyn. They are:
- Third-party trust – one created for a disabled individual by their parents or other loved one.
- Pooled trust – A trust managed by a non-profit organization for the benefit of several disabled individuals.
- The self-settled special needs trust – this type of trust is one funded by the disabled individual’s assets, probably those gotten from judgment in a personal injury lawsuit.
Advantages of using a special needs trust in Brooklyn
- When you fund assets in a special needs trust, you are certain the assets will be used specifically for those things for which the funds are intended (supplemental needs)
- Special needs trusts are irrevocable trusts, and as such, the assets cannot be touched by creditors, tax, Medicaid, or any winner from a civil lawsuit.
- It gives the third-party a chance to continue supporting their disabled loved one even after death.
- If done right, the special needs trust does not interfere with Medicaid eligibility.
When executing a special needs trust, it is paramount that you use the right terms to ensure the trust does exactly what you want it to do. It must also comply strictly to the laws of New York State for validity. Note that every special needs trust must be created before the beneficiary attains the age of 65.
Who manages the funds in a special needs trust Brooklyn?
The disabled individual cannot use the assets in a special needs trust by themselves. There must be a trustee managing the trust funds on behalf of the individual, just as it is with other kinds of trust.
Knowing what to use special needs trust funds for can be quite complicated
There are times when you may not know exactly what the special needs trust may be used for. And notably, wrongful use of the assets can disqualify the individual from Medicaid benefits. It is therefore important that you have proper guidance.
Our trust and estate attorneys are always willing to help Brooklyn residents navigate the issue of estate matters. We can educate you on your rights and limits when it comes to Medicaid and special needs trust. If you also need help creating and funding the trust, you can call on us.
We put priority into ensuring no mistakes are made that may cost you and your loved ones.
Call us today for professional assistance with your special needs trust Brooklyn.