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Elder Planning Isn't Just For The Elderly

The do’s and don’ts of administering a special needs trust

Parents of New York children with special needs often establish special needs trusts as a way of leaving assets behind for the child without disqualifying him or her from public assistance. Special needs trusts are complex and sometimes difficult to administer. However, when done right, they allow your child to continue to receive public benefits without risking him or her not qualifying anymore during means-testing.

According to the Special Needs Alliance, when you establish a special needs trust, you must also appoint a trustee. The trustee is the individual who administers trust provisions and oversees the distributions of the assets inside. There are a number of important steps this individual must take as well as some pitfalls he or she may want to avoid.

Special needs trust do’s

The trustee for a special needs trust has an obligation to make sure the funds in the trust undergo correct usage. For example, the beneficiary should not use them for entertainment or everyday expenses. Instead, the funds should go toward supporting the individual with a disability’s direct special needs. It is also the job of the trustee to make sure that nothing else occurs that could jeopardize the beneficiary’s continued eligibility for public benefits.

Special needs trusts don’ts

The trustee should not turn funds from the special needs trust over to the beneficiary to use directly. Instead, the trustee might use the funds from the trust to make direct payments to those supplying the things that supplement the individual with a disability’s needs.

This is a brief sampling of some of the dos and don’ts associated with administering a special needs trust. However, this is not an exhaustive summary of all such information a trustee should know.


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