Special Needs Trusts: Answers to Frequently Asked Questions
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Q: When is the best time to set up an SNT?
A: The sooner the better, since you could become incapacitated or die at any time. Why wait?
Q: What happens if you set up an SNT in New York and then move to a different state?
A: It may or may not work if you move. If the trust is drafted properly, it should work in both states. But if you know you’re going to move, it’s wise to have the trust reviewed by a lawyer in a different state, just to make sure you’ll get the full benefits of the trust under that state’s laws.
Q: By creating an SNT for a child, does that make you a legal guardian for the child?
A: No. Absolutely not.
Q: If a family has two or more children with special needs, can one SNT cover both of them?
A: It depends, and it’s really the choice of the parents. You can set up one for each, but then the money from trust A will only be utilized for son A, and trust B is only for son B. Which may be good. But if you put it in one pot, you can give it to one or both when they need it. So if you want to make sure each kid gets the same amount, create two separate trusts. If you want to make sure the money is used however it’s needed, set up one trust.
Q: Who can access the trust funds?
A: The trustee has complete, unfettered discretion. The child will not be able to demand the money. You’re relying on the trustee to know when the child needs it.
Q: If a family is wealthy and not too concerned about receiving governmental benefits, would you still recommend they set up an SNT for their child?
A: Yes, we do this all the time. You never know whether or not you’re going to need government benefits. Draft a trust with a great deal of flexibility, including a provision to give the trustee the authority to purchase something for the child even if it means it will disqualify them for Medicaid and other benefits, as long as the trustee determines that it will best benefit the child. That way, you can have your cake and eat it too.
Bernard A. Krooks, J.D., is a founding partner of the law firm Littman Krooks LLP, which has offices in White Plains, Manhattan, and Fishkill. He is also a past president of the Special Needs Alliance.