Estate Planning With A Disabled Beneficiary Can Be Complex
When a person is planning their estate in Westchester County or Putnam County, it is something that should be taken very seriously. This is doubly true for those with disabled beneficiaries. A person may simply want to gift to a disabled person – out of a wish to support them, to pay for medical care, or to simply express thanks for their companionship. However, the point remains that New York and U.S. federal law can make it quite complex from a legal perspective to give gifts or bequests to a disabled person, particularly if that person receives government benefits. The good news is that there are ways to honor the testator’s wishes, but they usually require extra planning and a knowledgeable attorney.
Must Avoid Loss Of Benefits
In general, the problem with direct gifts or bequests to a disabled beneficiary is that, in the U.S., a disabled person who receives Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) can only have a maximum of $2,000 in countable assets (certain assets do not count against that cap). So, you can see how even a modest gift or bequest could easily push a disabled beneficiary over the limit. Once they are over the limit, that triggers a loss of government benefits. That said, it may not be necessary to rethink the gift; there are several different legal instruments that can ensure that a disabled beneficiary can both retain their benefits and receive your bequests and gifts.
By far the most commonly used tool is known as a special needs or supplemental needs trust (SNT). A SNT is a type of living trust designed to preserve a disabled person’s access to assets in the trust while offering the option of oversight in the form of a third-party advisor. There are different types of SNTs, suited for disabled people who already have assets, or who have none and receive government benefits, and each must be structured slightly differently.
Which Type Of Trust Is Best For You?
The two most common types of SNTs in New York are the “self-settled” (or first-party trust) and the third-party trust. A self-settled SNT is for those disabled people who already have a certain amount of assets – for example, if a person has received a jury award or has an annuity. Despite the name, either the disabled person or their parent, grandparent, or legal guardian can file a self-settled SNT, making the disabled person the trustee. The main potential issue with this style of estate planning is that any assets remaining in the trust after the passing of the disabled person must be used to reimburse Medicaid, which means that very little may remain to pass down.
A third-party trust, by comparison, is meant to fund more prosaic life expenses like education or any medical care not covered by Medicare or Medicaid. In this setup, the assets contained by the trust are never in the name of the beneficiary, so they will not affect the disabled person’s eligibility for government benefits. This is the most commonly used type of SNT, but not every case is well suited to this option.
Contact A Putnam County Estate Planning For Disabled Beneficiaries Attorney
Estate planning is difficult to navigate on one’s own, particularly if your estate will have considerations that not everyone must address. If you need help creating an estate plan that will preserve your beneficiary’s government benefits, a Westchester County or Putnam County estate planning attorney from Meyer & Spencer, PC can help to advise you on the best plan for your finances and your beneficiary’s well-being. Call or text our office today at (914) 741-2288 to schedule a consultation.
Source:
ssa.gov/news/press/factsheets/colafacts2024.pdf
