2021 Update: Legal Documents Can No Longer be Executed Remotely by Teleconference Lamson & Cutner…
The 21st Century Cures Act was signed into Federal law on December 13, 2016. One of the most important features of the Act is that it now allows disabled persons under the age of 65 to establish their own First Party Special Needs Trusts (more commonly known as First Party Supplemental Needs Trusts).
Under prior law, disabled persons were not able to establish this type of trust, even if their disability was physical and their mental capacity was intact The law required that the trust be established (with the individual’s assets) by a parent, grandparent, guardian or a court. In many cases, a parent or grandparent was not available to create the trust, leaving no recourse other than to seek the intervention of a court. Unfortunately, the process of establishing a court-ordered trust is often filled with delay, frustration, and expense.
Since the right to a First Party Special Needs Trust was established in 1993, it has been an extremely important part of Elder Law and disability planning because of the protections it provides to the disabled population. Disabled individuals who need access to government programs such as Medicaid are not required to “spend down” all of their assets to qualify or maintain eligibility for those programs. If they receive a gift or inheritance, or obtain a court judgment or settlement, they have a way to protect those funds so they can be used to supplement the care and support received from programs such as Medicaid or SSI. Assets transferred to or held by a First Party Special Needs Trust do not affect eligibility for these important programs.
One major and unchanged feature of the First Party Supplemental Needs Trust is that once the disabled person passes away, any remaining assets in the trust are used to reimburse Medicaid (or other government program) for the costs it incurred in providing care or assistance to the disabled person. For this reason, this type of trust is known as a “pay back” trust. If all of the assets in the trust are spent during the disabled person’s lifetime, then Medicaid does not get paid back. On the other hand, if assets remain after Medicaid is paid back, then contingent beneficiaries may receive a distribution.
As of the date of this writing, New York State has not yet aligned its regulations with the changes imposed by the 21st Century Cures Act, but that is expected to occur soon.
At Lamson & Cutner, P.C., we work with clients to protect their assets and income, and to help them gain access to benefits from programs such as Medicaid. We create First Party Supplemental Needs Trusts, as well as a variety of other trusts and other legal documents designed to meet clients’ goals. Please feel free to contact the Elder Care Attorneys at Lamson & Cutner, P. C., for further details.