A person under 65 years old may create a first-party supplemental needs trust for income in excess of the monthly amount allowed by Medicaid. A person is entitled to fund this trust until the age of 65 years old and will be entitled to the resources in the trust until he or she dies. Furthermore, a first-party supplemental needs trust allows a person to designate a trustee to make payments on his or her behalf. It is worth noting that a trustee may be limited to the powers enumerated in the trust’s terms and conditions. Therefore, a person may choose to expand a trustee’s power or limit his or her power by setting forth specific guidelines.
The assets within a first-party supplemental needs trust are used to supplement any government benefits in order to cover the cost of items beyond basic necessities, such as transportation or items of luxury that provide other comforts. In addition, a person who is receiving community Medicaid, which provides for long-term care at home, may use these funds to cover the cost of paying for additional homecare health aide hours. Items such as food, clothing, personal hygiene items, among other basic necessities, that are paid for by a supplemental needs trust may be considered income. If this exceeds the amount set by Medicaid, it may affect a person’s eligibility for supplemental security income (SSI) or Medicaid.
As a result of the amended 21st Century Cures Act and New York State Social Services Law, an individual may now create and fund his or her own first-party supplemental needs trust. In addition, assets placed in a first-party supplemental needs trust by a disabled person will no longer be deemed as available resources for the purpose of determining Medicaid eligibility. Prior to this, a disabled person had to have a parent or other qualifying family member create the trust on their behalf, as well as petition a court to protect those assets from Medicaid.
Furthermore, it is worth mentioning that a valid first-party supplemental needs trust must be in a signed, written document and must state that Medicaid is entitled to receive a reimbursement from the trust at the time of the person’s death. This reimbursement is limited to the funds that are remaining in the trust.
If you are in the process of planning for your future needs or the needs of a loved one and wish to execute a first-party supplemental needs trust, an experienced New York estate planning attorney can give you the legal guidance necessary to help plan for their future. From the simple to the complex, the attorneys at Blodnick, Fazio & Clark are skilled in all aspects of estate planning and dedicated to representing their clients with diligence and compassion. For more information or to schedule a consultation, contact our New York estate planning lawyers at (516) 280-7105, or (631) 669-6300.