Estate planning can seem like an exercise in slicing up a pie into different pieces that can be distributed in lump sums to your loved ones after you pass away. In reality, this is quite an oversimplification for many families. Learn more about New York special needs trust in this presentation.

1. What Is a Special Needs Trust www.myestateplan.com 1
“Estate planning can seem like an exercise in slicing up a pie
into different pieces that can be distributed in lump sums to
your loved ones after you pass away. In reality, this is quite
an oversimplification for many families.”
WHAT IS A NEW YORK
SPECIAL NEEDS TRUST?
MARK S. EGHRARI
NEW YORK ESTATE PLANNING ATTORNEY

2. What Is a Special Needs Trust www.myestateplan.com 2
There are different ways to facilitate asset transfers. Your personal circumstances
will dictate the ideal course of action, and the life situation of each person on your
inheritance list will also be part of the equation. The best way to provide for one
of your family members may not be appropriate for the next.
With the above in mind, we will look at the value of special needs trusts in this
paper.
PEOPLE WITH DISABILITIES & GOVERNMENT BENEFITS
If you have a loved one with a disability that you want to provide for, you have to
consider government benefit eligibility. A significant percentage of people with

3. What Is a Special Needs Trust www.myestateplan.com 3
special needs are enrolled in the Medicaid program. This is a health insurance
program that is jointly administered by the federal government along with each
respective state government.
Medicaid is a program that is intended for people with financial need. If you have
resources to speak of, you cannot qualify for Medicaid coverage. Since many
people with special needs are not in a position to earn much income, Medicaid is
often going to be the health care insurance solution.
Eligibility for Medicaid coverage
is not necessarily permanent. An
improvement in financial status
can cause a loss of eligibility. As
a result, if you were to leave a
direct inheritance to a loved one
who is relying on Medicaid, the
coverage could be interrupted.
The same thing could be true if you were to give a Medicaid recipient a significant
direct gift while you are living.
There is another government benefit program that provides income for disabled
people with very limited financial resources. This is the Supplemental Security
Income program. Once again, eligibility is not permanently etched in stone. An
improvement in financial status can result in a loss of eligibility for SSI.

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SPECIAL NEEDS TRUSTS
Now that we have shared the appropriate background information, we can look at
the value of special needs trusts. These trusts are alternately referred to as
supplemental needs trusts.
When you convey your own assets into a special needs trust for the benefit of
someone with a disability, it is considered to be a third party special needs trust.
A trustee is named in the trust declaration to administer the trust.
The beneficiary cannot directly control the actions of the trust, and the
beneficiary cannot receive direct monetary distributions. However, under
government program regulations, the trustee can use the assets in the trust to

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satisfy some of the beneficiary's unmet needs. As long as the expenditures are for
approved purposes, government benefit eligibility would not be impacted.
There would be no reimbursement efforts by the Medicaid program after the
death of the beneficiary if the funding from the trust came from a third party. In
some cases, a disabled
person who is enrolled in
need-based government
benefit programs will
receive a personal injury
settlement, or a life
insurance payout. Under
these circumstances, a first
party special needs trust
can be established and
funded with the
beneficiary's personal
resources.
The same scenario would exist with regard to the ability of the trustee to use
assets in the trust to satisfy the unmet needs of the beneficiary without causing a
loss of benefit eligibility. However, after the beneficiary's passing, Medicaid
would seek reimbursement from his or her estate. As a result, assets that remain
in the trust would probably wind up in the Medicaid coffers.

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SUMMARY
People with special needs rely on government benefits in many cases. Medicaid is
a source of health insurance, and Supplemental Security Income or SSI can
provide ongoing financial support.
These are need-based benefits, so there are asset limits. An improvement in
financial status can cause a loss of eligibility.
To respond to this type of scenario, a special needs trust could be created. Assets
in the trust could be used to improve the beneficiary's quality of life, but benefit
eligibility would not be jeopardized if the trust is properly constructed and
administered.
We have provided a basic overview in this paper. To learn more about special
needs planning, set up a consultation with a licensed estate planning attorney.
REFERENCES
American Bar Association
http://www.americanbar.org/newsletter/publications/law_trends_news_practic
e_area_e_newsletter_home/0501_estate_financialplanning.html
National Alliance on Mental Health
http://www.nami.org/Content/NavigationMenu/Find_Support/Legal_Support/
Special_Needs_Estate_Planning/Special_Needs_Trust_Primer.htm
Nolo
http://www.nolo.com/legal-encyclopedia/using-special-needs-trust-when-you-
have-too-many-assets-medicaid.html

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About the Author
Mark S. Eghrari
Mark S. Eghrari is an attorney in private practice in Smithtown, New
York. He has been in practice since 1988. Mark S. Eghrari provides
extensive estate and tax planning services to individuals and
businesses. Mr. Eghrari’s primary focus is helping clients avoid
probate, minimize or eliminate Federal and State Estate taxes and
protect their assets from the high cost of nursing care, if they become
ill. Mr. Eghrari’s expertise is in providing unique and innovative
estate planning solutions that create a secure future for his clients and their loved ones. Mr.
Eghrari is a member of the American Bar Association and New York State Bar Association as
well as the National Academy of Elder Law Attorneys and the American Academy of Estate
Planning Attorneys.
Mr. Eghrari completed his undergraduate work at Lafayette College in Easton, Pennsylvania
and received his MBA in banking and finance from Hofstra University on Long Island. He
earned his Juris Doctorate from the Hofstra University School of Law, where he was a member
of the Law Review. While in law school, Mr. Eghrari gained practical experience in the
corporate tax department of Citicorp in New York city.
Mark S. Eghrari and Associates PLLC
www.myestateplan.com
50 Karl Avenue, Suite 202
Smithtown, NY 11787
Phone: (631) 265-0599
Fax: (631) 265-0754