SUPPLEMENTAL NEEDS TRUST
Supplemental Needs Trust: A supplemental needs trust (SNT), also known as a special needs trust,
is a type of trust used to “supplement” care and needs while on a government benefit program. It can be
created by the donor during life or be created as part of a will. Its purpose is to supplement, not supplant,
benefits that the beneficiary may receive. As long as the statutory requirements to establish an SNT are satisfied,
the assets transferred to an SNT will not be treated as an available resource for public benefit eligibility purposes.
Basically, the money in the SNT becomes invisible to government benefit programs. The SNT is commonly used in NY for
both Medicaid and SSI program recipients to provide funds to pay for the things that Medicaid and SSI do not cover.
There are three common types of SNT’s: self settled or first party[using the beneficiary's own money]; third party
[using other people’s money]; and pooled income [using the beneficiary’s monthly surplus income].
For a self-settled or first party SNT, the person must be under 65 years, the trust must be established by a parent, grandparent,
legal guardian, or court, the person must be disabled, and there must be a pay-back provision to Medicaid at the
death of the beneficiary from any funds remaining in the SNT at the termination of the trust for Medicaid benefits paid.
A third party SNT has no age limit for the beneficiary, no pay-back provision to Medicaid, and at death, the funds
remaining in the SNT can be directed to another person(s) or by power of appointment.
The SNT can spend the trust money on anything not covered by the Medicaid program.
Common uses include additional home care services not provided by Medicaid, entertainment,
travel, technology, utilities, furnishings, an automobile, a home, or other luxury items.
If the SNT beneficiary is on SSI, payment for shelter will reduce the SSI Benefit by up to one third.
There is no reduction for Medicaid benefits.
Pooled Income Trust: The Pooled Income Trust is a first party special needs trust available to disabled
persons over age 65. It is often the best way for elderly recipients receiving public benefits to avoid losing
their “surplus income”, the amount earned by the Medicaid recipient above the Medicaid limit ($825.00 in 2016
with a $20.00 disregard in New York City), to Medicaid.
There are numerous nonprofit organizations in New York State which have pooled income trusts.
By establishing a pooled income trust, you create a vehicle for sheltering your surplus income
for your use and benefit, often enabling you to remain in the community. The pooled income trust,
once established, allows you to deposit your surplus income into a separate trust account maintained
for you and not have those funds considered available to you by Medicaid. Your surplus income placed into a pooled income trust can be used for your needs rather than going to Medicaid as a spend down.
There are several aspects to the pooled trust you must consider before seeking to establish one. At death your death, any remaining funds in your account will go to the nonprofit charity running the trust and not to your beneficiaries. There are strict requirements and rules in the set up and approval of the trust as well as in the payment of the bills you present. All payments from the trust must be for your sole use and benefit; you can not gift with trust assets and income. You must submit bills to the pooled trust to be paid which must be approved; there can be no request for cash. There are monthly and or annual fees incurred. Use of the pooled trust may lengthen the Medicaid approval process as a separate review of the trust is done by Medicaid. Penalties for transfers to a pooled trust for persons over 65 years of age receiving SSI apply.
If you have questions regarding Supplemental Needs Trusts or Pooled Income Trusts contact Fern J. Finkel or Julie Stoil Fernandez at Finkel & Fernandez, LLP
16 Court Street, Suite 1007, Brooklyn, New York 11241, 347-296-8200 (telephone), 718-965-3185 (fax), ffinkel@ffelderlaw.com, jstoilfernandez@ffelderlaw.com.
