In a recent New York case, In re Paradiso, the court did not reform a father’s will which left money in a trust to a disabled daughter. In the Will, the father attempted to create a testamentary special needs trust, which would not have jeopardized the daughter’s government benefits (Medicaid and SSI). However, the language that was used to create a trust was not the statutory language!
There is a statute, EPTL 7-1.12, which requires that the supplemental needs trust language must clearly show that the intent of the deceased was “to supplement, not supplant, impair or diminish, government benefits”. If there is no such precise language, the intent of the testator is not clear, and the Trust will not be considered a Special Needs Trust.
As a result, the father’s money went in a regular Trust to a disabled daughter. Since the government will consider this money available to her, she is likely to lose her government benefits. These benefits can range from housing assistance and vocational training to home care and a stipend for basic food needs.
This result could have been avoided by talking to a special needs attorney, who would have drafted a proper testamentary Special Needs Trust.
Disclaimer: This article only offers general information. Each situation is unique. It is always helpful to talk to a specialized attorney, to figure out your various options and ramifications of actions. As every case has subtle differences, please do not use this article for legal advice. Only a signed engagement letter will create an attorney-client relationship.