Raymond Zeitoune, Esq. & Isaac Yedid Esq.

Parents of individuals who are disabled are always looking to build financial security for their�disabled children. They want to ensure that their loved ones with �special needs� will enjoy a�rewarding lifestyle that includes the �extras� in life.

However, special care must be taken in providing for the well-being of children with �special�needs.� Eligibility for various government benefits (often providing essential coverage of their�medical and living expenses, as well as access to community programs) can be jeopardized by�gifts made or inheritances left directly to children with �special needs.� An effective estate�planning tool that protects funds intended to enrich the life of a loved one with special needs�while preserving eligibility for public benefits is commonly known as a �special needs trust� or a��supplemental needs trust� (SNT).

An SNT allows a parent to make a gift or leave an inheritance to a child with �special needs� in�trust instead of outright, protecting those funds from disqualifying the child from government�programs. The assets in an SNT can be used to cover essentials not provided through government�programs (such as a private nurse), or for purchases that would otherwise enrich the�beneficiary�s life (such as furniture). One or more trustees become responsible for the�management and distribution of the resources held in trust.

An SNT, which is authorized in New York under EPTL 7-1.12, would allow the beneficiaries to�qualify for government benefits while receiving distributions from the trust if the following�conditions are met: (1) the beneficiary suffers from a severe and chronic or persistent disability;�(2) the trust document clearly states that the bequest should be used to supplement, not replace,�government benefits; (3) the trust prohibits the trustee from using the assets in a way that may�impair or diminish the beneficiary�s entitlement to government benefits or assistance; (4) the�beneficiary does not have the power to assign, encumber, direct, distribute or authorize�distribution of trust assets; and (5) the distributions are at the sole discretion of the trustee(s) and�are not mandatory.

Parents often ask whether an SNT should be created or, alternatively, whether an inheritance�should be left to other trusted members of the family directly with the intention that those trusted�family members would take care of the child with �special needs.� Leaving an inheritance�directly to a third party (and not in an SNT) is usually not the best option, as there may be a�disagreement as to the true owner of the money, which may create problems. For example, if a�parent were to leave money directly to their daughter in order to take care of their disabled son,�the daughter�s ex-husband may try to take ownership the money in a divorce settlement, or if the�daughter were deep in debt, her creditors may try to collect from that money.

On the other hand, using an SNT would create a concrete plan of financial care for the child with��special needs.� The SNT would specify how the funds are to be utilized and who is to receive�the funds upon the beneficiary�s death. On the other hand, if a sibling, for instance, holds funds�for another sibling, there can be a discrepancy as to the true owner of the money, family�problems can be created, and it is unclear whether the holder of the funds can use the money for�him/herself, even if only temporarily.

However you choose to organize your affairs, what’s most important is that you create a clear,�easily accessible system that will light the way for your family and friends. May we all merit�living long, healthy and happy lives – amen.

The attorneys in the Trusts & Estates Practice Group at Yedid & Zeitoune have a combined 20 years of legal�experience and are ready to assist you with all your estate planning needs.

Isaac Yedid, Esq. & Raymond Zeitoune, Esq.

Yedid & Zeitoune, PLLC

1172 Coney Island Avenue Brooklyn, New York 11230

Phone: (347) 461-9800 Fax: (718) 421-1695 Email:�[email protected]

152 Madison Avenue, Suite 1105 New York, New York 10016

NYC Office – By Appointment Only:

152 Madison Avenue, Suite 1105 New York, New York 10016