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Actions Prior to Age 18: Have Family Members Communicate and Coordinate Gifts to Your Child

To make the most of special needs planning: communication is the key

An important task you can complete prior to the time your child turns eighteen is to have a candid conversation with the child’sCommunicate with family members when doing special needs planning grandparents, aunts and uncles.  If they are disposed to make a significant gift to your child (i.e., gifts other than the occasional gesture at birthdays and holidays), by Will or otherwise, you should ask them to coordinate their efforts and to make their large gifts to a Third Party Supplemental Needs Trust (a “3rd Party SNT”) established by one of them for the benefit of your child with a disability.  This will allow your child to benefit from the trust in ways which enhance and enrich his or her life, without jeopardizing the child’s eligibility for means tested government benefits, such as Medicaid.  I mention a 3rd Party SNT established by someone other than you, as a parent, because New York State Law prohibits you from establishing a 3rd Party SNT for your minor child.  The prohibition is tied up in a parent’s obligation to support his or her child until the child turns eighteen.  

Another feature and advantage of a 3rd Party SNT is that the person establishing the trust (called the “Grantor”) can select who will receive what remains in the 3rd Party SNT at the time of your child’s death.  The Grantor may select other grandchildren, children or cousins.  The Grantor is free to select an organization, such as the not-for-profit organization providing services to your child with a disability, to receive what remains in the 3rd Party SNT at the death of the child.  In other words, the trust principal need not be used to “pay-back” the State for the Medicaid it provided on your child’s behalf during his or her lifetime.  This is a distinct advantage which a 3rd Party SNT has over a First Party Supplemental Needs Trust (a “1st Party SNT”).  If a grandparent’s or an aunt’s gift went directly to your child, he or she would be relegated to establishing a 1st Party SNT and include the “pay-back” provision.  If instead they made a gift, by Will or otherwise, to a 3rd Party SNT, what remains in the trust could “remain in the family” or with those who are valued by the Grantor.

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