A First-Party Supplemental Needs Trust (SNT) can secure a stable financial future for your child with special needs without disqualifying them from benefits like Medicaid. The execution of this trust, however, depends greatly on your choice of trustee. When selecting them for your child’s SNT, choose someone who is:
Dependable and fiscally responsible
In New York, trustees have the power to manage trust assets under the Estates Powers and Trusts Law. The trustee is responsible for gathering the money and property that belongs to the trust. This might come from areas like your child’s inheritance, regular income, or a settlement from a medical practice. They must also keep accurate financial records, including details about money received, expenses, and sales of assets.
A prudent investor
SNT trustees are required to manage trust property according to the Prudent Investor Act. Investments must be considered in relation to the beneficiary’s portfolio size and diversification, as well as factors like economic conditions, tax consequences, and inflation. They should also know when to seek guidance from professionals such as accountants and financial planners.
Steadfast and dedicated
The process of keeping your child eligible for Medicaid and other government benefits under this trust can be tedious. The trustee must comply with certain requirements, such as:
- Notifying the local Social Services district when creating or funding a First Party SNT using the beneficiary’s own assets or when the beneficiary passes away.
- Providing proof of bonding if the trust holds over $1,000,000
- Notifying in advance for transactions that involve transfers below fair market value or any action that significantly reduces the trust’s principal.
- Obtaining a special Tax Identification Number (TIN) and filing an annual income tax return for the trust account.
A lot of work goes into being the trustee. Make sure to select a person who is meticulous about following rules and procedures, even when it becomes challenging.
Plan your child’s future today
Every child has different needs. Their SNTs should reflect that. When drafting a trust, it’s crucial that you do your due diligence and make use of all the legal resources available to you.