Mar 13, 2011

Special Needs Trusts

downs syndrom girl.jpgDear Liza: we had a special needs trust drawn up by a lawyer for our disabled daughter who has turned 21 and is entitled to an annuity.  Our lawyer is stating in
the trust that any benefits received by SSI or medicare throughout her life
must be reimbursed to the state (new york) upon her death or upon
termination of the trust.  We want her to be entitled to government benefits
so that she can stay active (day programs, job coaching, etc) but we were
surprised to read in the drafted trust document that any of these benefits
would have to be "paid back".  Is this true in New York State?
If the money that you are going to place in that Special Needs Trust is her money, and not a gift from a third party (and this is often the case if there's an accident settlement or the like), then, yes, your lawyer sounds as if he or she is setting it up correctly. A self-settled Special Needs Trust requires, by federal regulation, that the assets left at the end of the beneficiary's life must be paid back to the state Medicaid agencies that provided service. Here's a link to a helpful site, The Learning Disabilities Association of America, read the entry on Restrictions on Self-Settled Special Needs Trusts.