Special Needs Trusts: Protecting Your Loved Ones

Contrary to general assumptions, special needs trusts can be set up for anyone. Elliot Schlissel, a New York estate attorney who has been assisting clients for over 30 years in the New York metropolitan area and in Long Island’s Nassau and Suffolk counties, explained how special needs trusts work and how they can ultimately protect your loved ones.

NY Estate Lawyer Elliot Schlissel

Special needs trusts, or supplemental trusts, are generally set up for individuals receiving some type of benefits from public programs that have restrictions on the amount of assets they can have, according to Schlissel. He explains:

"Parents or brothers and sisters of special needs children typically set up these trusts. You generally don’t need the trust to operate during the lifetime of the parent. It’s when the parent becomes disabled or dies that they want some of their assets to go to their special needs child who is usually incompetent to handle these funds on their own. It is also possible for an individual who feels he or she is going to have special needs to do one for themselves. That is called a self administrated special needs trust. So, let’s say the person is very late in their life and they’re inheriting money from someone else. If that person is in a nursing home and or on Medicaid, then they can't use the inherited money or they lose government benefits."

Medicaid Qualifications

Medicaid, a program that was initially set up for poor people to obtain medical benefits, has qualifying income and asset requirements. Schlissel explained how it works:

"[Medicaid] is often used by seniors to fund the costs of nursing homes which can run anywhere from $8,000 to $15,000 a month. Most people can’t afford to pay for nursing home care. Therefore, they seek to qualify for Medicaid by submitting an application which is a complicated matter with very specific requirements. If a person has significant assets such as a home or money in the bank, they generally won't qualify for Medicaid."

Medicare vs. Medicaid

Medicare, unlike Medicaid, is a public access program that everyone can automatically qualify for provided they have had money removed from their wages by their employers while they were working. According to Schlissel, there are specific retirement ages as to when they can start collecting the money; however, there are no restrictions in Medicare with regard to how much income someone is making. He says that it should be noted that Medicare’s medical benefits do not pay for nursing home care, but will pay for rehabilitation for up to 100 days if someone is in a nursing facility solely for rehabilitation purposes.

If a person seeks to qualify for Medicaid and meets the very restrictive rules, they should contact an experienced elder law attorney to receive more information. Schlissel says that it is a complicated area of law with very specific rules and qualifying conditions – and he should know, he is a member of the National Academy of Elder Law Attorneys and has been handling Medicaid related matters and Medicaid planning for more than two decades.