In New York, three kinds of special needs trusts (SNTs) can protect the assets of a disabled person so they meet the income and asset thresholds required to maintain their eligibility for government benefits. One of these types is a first-party special needs trust, also called a self-settled SNT.
Understanding the legal requirements for setting up first-party special needs trusts in Westchester County can be complex, but Amoruso & Amoruso LLP can help. Founding attorney Michael J. Amoruso was a leader in advocating for the passage of the federal Special Needs Trust Fairness Act in 2015, which led to sweeping changes in who can establish a first-party SNT. To learn more, contact our law firm to schedule a consultation with one of our experienced disability trust attorneys.
What Is a First-Party Special Needs Trust?
A first-party special needs trust (SNT) is funded by a disabled individual’s own assets, such as an inheritance, a legal judgment, or a settlement. A distinguishing factor between first-party special needs trusts and other SNTs is that the disabled person can establish a first-party trust themselves, as long as they are under 65 and legally competent. Parents, grandparents, a legal guardian, or the court can also set up a first-party trust using the disabled individual’s funds.
When properly structured, a first-party special needs trust can prevent the government from using the assets in the trust as a countable resource when determining eligibility for Medicaid, Supplemental Security Income (SSI), and other public benefits.
A first-party SNT allows the beneficiary to use the trust funds for expenses that improve their quality of life and are not covered by Medicaid, such as rent and utilities, transportation, and recreational activities. After the person dies, any remaining funds in the trust must repay Medicaid for the services it provided during the person’s lifetime.
When Is a First-Party Special Needs Trust Appropriate?
Establishing a first-party special needs trust in Westchester County might be appropriate if a disabled person holds significant assets that could disqualify them from claiming government benefits. A first-party SNT allows the person to keep their assets in the trust to remain eligible for public benefits while using their SNT funds to cover supplemental needs.
Can I Qualify for Medicaid If I Create a First-Party SNT?
Yes, you can qualify for Medicaid while having a first-party SNT. If you receive an inheritance, settlement, or other financial windfall in an amount that would typically render you ineligible for Medicaid, you can shelter those assets in a first-party special needs trust so you still qualify for benefits. The trust can use the assets to pay for your needs and expenses not covered by Medicaid while Medicaid covers your medical expenses or long-term care.
What Are the Medicaid Payback Requirements?
When a person with a first-party special needs trust dies, any remaining funds in the SNT must go to Medicaid as reimbursement for the benefits it provided during their lifetime. This repayment covers all costs paid by Medicaid, such as hospital visits, prescriptions, and long-term care. The repayment amount must equal the total value of Medicaid’s payments but is only due after the person’s death. If the trust does not have enough funds to cover the total amount, Medicaid will accept whatever is left in the trust.
Why Choose Amoruso & Amoruso LLP?
With nearly 60 years of combined experience in special needs planning, the attorneys at Amoruso & Amoruso LLP are recognized for developing effective strategies to protect disabled New Yorkers. Contact us today to discuss establishing a first-party special needs trust in Westchester County.
