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By Nancy Burner, Esq.

Nancy Burner, Esq.

Congratulations! You’re going to be graduating from high school very soon and are (fingers crossed) heading off to college in the fall. In preparation, you are shopping for school supplies, bedding, a new wardrobe, and researching the best classes to take. What you’re likely not thinking about is ensuring you have the proper estate planning documents in place before taking that next step in your life.

Drawing up a will or advanced directives for a college student may seem like an unnecessary task and expense, but once you turn 18, you are considered an adult under New York State law. Since you are no longer under your parents’ care, they do not have an automatic right to make decisions on your behalf. While this may seem like your long-awaited initiation into the freedom of adulthood, the reality is that situations may arise where a parent or other family member’s input is crucial.

Students are especially prone to getting sick or injured and, combined with living on their own, make it necessary to put certain legal directives in place. The three documents every college student needs are a health care proxy, HIPAA release form, and durable power of attorney.

A health care proxy allows you to appoint an agent to make medical decisions for you if you cannot do so for yourself. You can only name one agent but can nominate alternate agents in case your primary agent is unable or unwilling to act. The HIPAA release form further authorizes your agent to obtain your medical information. Without these documents, your parent (or whomever you designate to make such medical decisions) is going to face resistance when it comes to inquiring about the status of your health or providing care instructions to your doctor.

The power of attorney names an agent to make financial decisions on your behalf. The power of attorney does not strip you of your financial powers but rather duplicates them so that your agent can act in your stead if you are incapacitated or otherwise unable to act. A power of attorney can be beneficial if you need someone to pay a bill, apply for financial aid, or hire a professional on your behalf, such as an accountant or lawyer.

Beyond the aforementioned documents, you may also consider a last will and testament and a living will. Although they sound similar, they are very different documents. Depending on the extent of your assets, either saved or inherited, you may want to designate beneficiaries in a last will and testaments or trust. A “living will” documents end of life decisions, such as whether you want to be kept alive by artificial means if you have an incurable disease or are in a persistent vegetative state.

Although these are questions that you will hopefully not face for decades, planning for your future is an important way of taking control of your life. Any new graduate — or eighteen-year-old for that matter — should make time to seek the advice of an Estate Planning attorney to discuss what documents should be in place as you enter the world of adulthood.

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office. Visit www.burnerlaw.com.

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By Nancy Burner, Esq.

Nancy Burner, Esq.

When a person does their estate planning, he or she will typically prepare a Last Will and Testament. A will contains a provision that nominates an Executor. Since there is a nominated executor, typically, in probate proceedings the appointment of the fiduciary is not complicated as it is controlled by the selection made by the testator.

It is significantly different when a person dies intestate (without a will). In these situations, the Surrogate’s Court is required to appoint an Administrator. The rules on the priority of who is eligible for appointment are contained in Surrogate’s Court Procedure Act. The statute contains a detailed order of priority in the court’s granting of letters of administration. Absent a showing that the person with statutory priority is ineligible to receive letters of administration due to several grounds including: that person is an infant; incapacitated; a non-domiciliary of the United States; a felon or does not possess the qualifications required of a fiduciary by reason of substance abuse or dishonesty, letters must issue to that person.

The decedent’s surviving spouse has priority to receive letters. Unless he or she is ineligible as stated above, the spouse will be appointed. This becomes an issue in many second marriage situations where the children of the first marriage do not get along with spouse from the second marriage. Unless there are grounds to disqualify the spouse, it is likely not worth pursuing objections to his or her appointment. Filing objections will delay the matter and cost a lot of money in legal fees with little likelihood of success.

Complications in the appointment of an Administrator also arise when there are several people in one category with equal priority to serve. This happens when the decedent has no spouse and several children. This situation can also arise in families where the decedent has no spouse, children, or surviving parents but several surviving siblings. Regardless of whose consent is required in each case, letters of administration can only issue to an eligible person(s) or person nominated by all interested parties.

It is not always advisable to resolve family disputes for letters of administration by agreeing to have the two or more administrators serve together. If the level of hostility is great, it is unlikely that they will be able to work together for the smooth administration of the estate. The parties might be able to agree on a third party to serve, known as a designee.

 If not, the court may appoint one of the parties or might appoint the Public Administrator. While the Public Administrator will ensure fairness in the process, its fees are typically higher than if a family member served. The Public Administrator will take statutory commissions if appointed, and the Public Administrator will also be entitled to have its attorneys’ fees and the expenses of its office paid from the estate.

The appointment of an Administrator can be as simple or as difficult as the family dynamics allow. Regardless, if you are seeking to become the administrator of an estate, you should seek the advice of an attorney experienced in estate administration to guide you through the process. Getting appointed by the court is only the first step in the process of administering an estate.

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office. Visit www.burnerlaw.com.

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By Nancy Burner, Esq.

Nancy Burner, Esq.

Many people use irrevocable trusts as part of their estate plan for tax savings, asset protection and Medicaid planning. In all these types of trusts, the grantor (creator) of the trust is going to be limited to their access of the principal of the trust in order to ensure that their planning needs are met. This means that their ability to use trust assets as collateral for a loan is going to be limited. 

A concern that should be discussed before transferring real estate to an irrevocable trust, is whether or not you 1.) have an existing mortgage and plan to refinance in the near future and 2.) whether you think you may need to get a new mortgage or line of credit in the near future?

It is common, particularly in Medicaid planning, to transfer real estate to your irrevocable trust because Medicaid trusts typically provide that the grantor can reside in the property and shall maintain all tax exemptions formerly afforded to them. This makes the home an easy asset to protect since the transfer does not affect everyday use of the property. The biggest exception is the Grantor’s ability to refinance or secure new mortgage products once the property is in a trust since many banks will not lend to properties owned by an irrevocable trust.

While most irrevocable trusts do not expressly prohibit the Trustee from securing a mortgage with a trust asset, the loan industry’s underwriting guidelines typically do not allow it. 

Luckily, some banks are catching up with the times and have special products which can be secured against properties in irrevocable trusts. However, you should expect to pay higher interest rates.

If your preferred lending institution will not work with your property in the trust, then it may be possible to revoke the trust with the consent of the grantor and beneficiaries. However, once a trust is revoked, it will no longer afford you the planning goals it once did.
In other words, if your house was in a Medicaid Trust for 7 years and you revoke it to avail yourself to the low interest rates now available for mortgages, it will no longer be protected. The home would have to be placed in another Medicaid trust for an additional 5 years before it would be protected again should you require nursing home care and ask that the Medicaid program pay for said care. 

Always speak to your attorney before taking any asset out of an irrevocable trust. While everyone wants to pay the lowest interest rate possible, the protection you are getting by keeping the assets in the trust may outweigh the cost savings. If beneficiaries will not consent, or cannot consent due to death, disability or minority, the Trustee may be able to “decant” the irrevocable trust assets to a new trust with different terms which the bank may find more favorable. Decanting requires a Trustee who is not an interested party, so if the current Trustee is also a beneficiary, a new Trustee will need to be appointed. 

Decanting has become popular in recent years not only for amending trusts to please the lenders, but to fix a myriad of issues that older trusts may present. This is a specialized area of the law and you should seek counsel that is familiar with sophisticated trust and estate principles before transferring any asset from one trust to another.

In sum, transferring your property to an irrevocable trust will likely limit your choices for refinancing or mortgaging the property in the future. If this is something you are considering, speak to your attorney about obtaining financing before you transfer your house to the trust to avoid the hassle later.

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office. Visit www.burnerlaw.com.

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By Nancy Burner, Esq.

Nancy Burner, Esq.

While the beginning of the year is typically tax season, it is important to remember that property tax exemptions can be applied for at this time. There are different programs that homeowners should be aware of in order to potentially save with respect to property taxes. 

Most individuals are familiar with the STAR program, which is the New York State School Tax Relief Program. Another program that people may not be as familiar with is the exemption for persons with disabilities. New York State offers local governments and school districts the ability to opt into a grant reduction on the amount of property taxes paid by qualifying persons with disabilities.

The eligibility requirements for this exemption is based on the individual’s disability, income, residency and ownership. For the disability component, the individual must demonstrate a physical or mental impairment that substantially limits the person’s ability to engage in one or more major life activity (e.g., walking, hearing, breathing, working). The applicant must submit proof of disability via an award letter from the Social Security Administration, an award letter from the Railroad Retirement Board, a certificate from the State Commission for the Blind and Visually Handicapped, an award letter from the U.S. Postal Service or an award letter from the U.S. Department of Veterans Affairs. 

If the disability is not permanent, the applicant will be required to certify the disability each year. For the residency requirement, the property must be the “legal residence” of the disabled person and currently occupied by the disabled person. There is an exception for absence due to medical treatment. For the ownership requirement, all property owners must be disabled. The only two exceptions are for spouse- or sibling-owned property. In those cases, only one owner needs to be disabled.

With respect to the income eligibility, the basic exemption is a 50 percent reduction in the assessed value of the legal residence. New York State allows each county, city, town, village or school district to set the maximum annual income limit at any figure between $3,000.00 and $29,000.00. If the disabled person makes between $29,000.00 and $37,399.99, the localities can give a less than 50 percent exemption based on a sliding scale. Proof of income of the most recent tax year is required to be submitted with the application. 

All income sources are countable except Social Security Income (SSI), Foster Grandparent Program Grant monies, welfare payments, inheritances, return of capital and reparation payments received by Holocaust survivors. Certain medical expenses can be used to offset gross income. For example, medical and prescription drug expenses that are not reimbursed or paid by insurance may be deducted from total income. 

Additionally, if the owner is an inpatient in a residential health care facility, the monies paid by the owner, spouse or co-owner will not be considered income in determining the exemption eligibility. Each municipality may be more generous with the exception than others.

Finally, even if all requirements are met, if there are children living in the home and attending public school, the disabled owner is typically not eligible for the exemption. This can be waived by the school district under specific circumstances.

New York State sets out broad eligibility requirements that each municipality can narrow down. It is important to find out the exact requirements for your specific municipality to determine if you qualify for the exemption. The exemption for persons with disability can offer a substantial relief for those who qualify.

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office. Visit www.burnerlaw.com.

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By Nancer Burner, Esq.

Nancy Burner, Esq.

The new Setting Every Community Up for Retirement Enhancement (SECURE) Act, effective Jan. 1, 2020, is the broadest piece of retirement legislation passed in 13 years. The law focuses on retirement planning in three areas: modifying required minimum distribution (RMD) rules for retirement plans, expanding retirement plan access and increasing lifetime income options in retirement plans. This article will focus on the modifications to the RMD rules and their effects on inherited individual retirement accounts. 

Before the SECURE Act, if you had money in a traditional IRA and were retired, you were required to start making withdrawals at age 70½. But for people who have not reached age 70½ by the end of 2019, the SECURE Act pushes RMD start date to age 72. By delaying the RMD start date, the SECURE Act gives your IRAs and 401(k)s additional time to grow without required distributions and the resulting income taxes.

Since RMDs will not start until age 72, the new law will give you an additional two years to do what are known as Roth IRA conversions without having to worry about the impact of required distributions. With a Roth IRA, unlike a traditional IRA, withdrawals are income tax-free if you meet certain requirements and there are no RMDs during your lifetime. The general goal of a Roth conversion is to convert taxable money in an IRA into a Roth IRA at lower tax rates today than you expect to pay in the future.

The SECURE Act also removed the so-called “stretch” provisions for beneficiaries of IRAs. In the past, if an IRA was left to a beneficiary, that person could stretch out the RMDs over his or her life expectancy, essentially “stretching” out the tax benefits of the retirement account. But with the SECURE Act, most IRA beneficiaries will now have to distribute their entire IRA account within 10 years of the year of death of the owner. 

There are, however, exceptions to the 10-year rule for the following beneficiaries: surviving spouse, children under the age of majority, disabled, chronically ill and an individual not more than 10 years younger than employee. 

The SECURE Act means it is now very important to review the beneficiary designations of your retirement accounts. You want to make sure they align with the new beneficiary rules. Prior to the SECURE Act, a spousal rollover was generally the best practice to preserve the IRA. For many with large retirement accounts, it may now be better to begin distributing the IRA earlier in order to minimize exposure to higher tax brackets. It may also be beneficial to name multiple beneficiaries on an IRA to spread the distributions to more taxpayers, so the 10-year rule has less of an impact on the beneficiary’s income tax bracket. 

Prior to the SECURE Act, many people used trusts as beneficiaries of retirement accounts with a “see-through” feature that let the beneficiary stretch out the tax benefits of the inherited IRA account. The benefit of the trust was to help manage the inherited IRA and to provide protection from creditors. 

However, many of these trusts provided the beneficiary with access to only the RMD. With the new rule that all money must be taken out within 10 years, these trusts no longer have the same effect and could be troublesome, requiring that significantly more money be distributed to the beneficiary annually than initially intended. In addition, the trust funds would likely be exhausted after 10 years rather than providing funds to the beneficiary over his or her remaining life expectancy. 

Anyone with a trust as the beneficiary of an IRA should immediately review the trust language with an experienced estate planning attorney to see if it still aligns with his or her intended goals. 

If you are not sure what the new SECURE Act means for your retirement account, you should also contact an experienced estate planning attorney to review your beneficiary designations. 

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office. Visit www.burnerlaw.com.

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By Nancy Burner, Esq.

Nancy Burner, Esq.

The Tax Cuts and Jobs Act (the Act) increased the federal estate tax exclusion amount for decedents dying in years 2018 to 2025. The Act is set to sunset on Dec. 31, 2025. 

The exclusion amount for 2020 is $11.58 million. This means that an individual can leave $11.58 million and a married couple can leave $23.16 million dollars to their heirs or beneficiaries without paying any federal estate tax. This also means that an individual or married couple can gift this same amount during their lifetime and not incur a federal gift tax. The rate for the federal estate and gift tax remains at 40 percent.

There was concern that the sunset of the higher exclusion amount and reversion to the lower amount could, retroactively deny taxpayers who die after 2025 the full benefit of the higher exclusion amount applied to 2018-25 gifts. This scenario has sometimes been called a “claw back” of the applicable exclusion amount. In November, the IRS issued new regulations that make clear that gifts made within the time period of the increased exemption amount used before death will not be “clawed back” into the decedent’s estate and subject to estate tax.

There are no 2020 changes to the rules regarding step-up basis at death. That means that when you die, your heirs’ cost basis in the assets you leave them are reset to the value at your date of death. 

The portability election, which allows a surviving spouse to use his or her deceased spouse’s unused federal estate and gift tax exemption, is unchanged for 2020. This means a married couple can use the full $23.16 million exemption before any federal estate tax would be owed. To make a portability election, a federal estate tax return must be timely filed by the executor of the deceased spouse’s estate. 

For 2020 the annual gift tax exclusion remains at $15,000. This means that an individual can give away $15,000 to any person in a calendar year ($30,000 for a married couple) without having to file a federal gift tax return. 

Despite the large federal estate tax exclusion amount, New York State’s estate tax exemption for 2020 is $5.85 million. This is a slight increase for inflation from the 2019 exemption of $5.74 million. New York State still does not recognize portability.  New York still has the “cliff,” meaning that if the estate is valued at more than 105 percent of the exemption amount ($6,142,500 in 2020) then the estate loses the benefit of the exemption and pays tax on the entire estate. 

New York reinstated its short-lived elimination of the three-year lookback on gifts effective Jan. 15, 2019. However, a gift is not includable if it was made by a resident or nonresident and the gift consists of real or tangible property located outside of New York; while the decedent was a nonresident; before April 1, 2014; between Jan.1, 2019 and Jan. 15, 2019; or by a decedent whose date of death was on or after Jan. 1, 2026.

Most taxpayers will never pay a federal or New York State estate tax. However, there are many reasons to engage in estate planning. Those reasons include long-term care planning, tax basis planning and planning to protect your beneficiaries once they inherit the wealth. In addition, since New York State has a separate estate tax regime with a significantly lower exclusion than that of the federal regime, it is still critical to do estate tax planning if you and/or your spouse have an estate that is potentially taxable under New York State law. 

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office. Visit www.burnerlaw.com.

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By Nancy Burner, Esq.

Nancy Burner, Esq.

Married couples often share everything. They can have joint assets including real estate, checking and savings accounts and brokerage accounts. However, there are assets that cannot be held in joint names. 

While a retirement account or life insurance policy can name the spouse as beneficiary, the owner is usually just one person. Therefore, if the nonowner spouse needs to contact the institution that holds the policy or account on behalf of their spouse, they will run into a roadblock if they do not have any legal authorization to do so. The mere fact that you are a spouse does not give you access to this information. 

It is for these types of assets that one spouse will need a power of attorney for another. This document states exactly what powers one person, the “principal,” is allowing another, the “agent,” to have over their affairs. If the power is not specifically included in the document, the agent cannot act on it. If the spouse is named as agent, it is often advisable to name a second and/or third person to act as successor agent if your spouse is unable to act. 

Beyond accessing certain assets, the power of attorney document can allow the agent to step into the shoes of the principal and act on his behalf in other instances. If the powers are properly granted, the agent can create and fund a trust for the principal, sign contracts, access safe deposit boxes, give charitable gifts, engage in Medicaid planning and so on.  

While signing a power of attorney in the presence of a lawyer is not a requirement, it is a good idea. The power of attorney document gives the option of attaching a contemporaneously signed statutory gifts rider. The document itself says that the preparation of the rider should be supervised by an attorney. In the rider, the principal is giving the agent authority to transfer assets out of the principal’s name. Any such transfers must be in the best interest of the principal.

The power of attorney is a complicated document that can have an extreme impact on your life as it is giving another person the ability to access your accounts and confidential information. This is an important document to have in the toolbox as one ages but only if you understand and feel comfortable with the powers being granted. For this reason, it is advisable to seek the counsel of an experienced elder law or estate planning attorney to explore the different scenarios in which your spouse may need to have power of attorney over your affairs.  

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office. Visit www.burnerlaw.com.

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By Nancy Burner, Esq.

Nancy Burner, Esq.

If you are the beneficiary of an estate or trust and you think that the fiduciary or person in charge is not meeting their obligations, there are procedures in which they can be removed. Surrogate’s Court Procedure Act SCPA §719 lists several grounds upon which a fiduciary can be removed. The grounds are straightforward and include when the fiduciary refused to obey a court order, the fiduciary is a convicted felon, the fiduciary declared an incapacitated person or the fiduciary deposits assets in an account other than as fiduciary of the estate or trust. 

However, many situations are not as straightforward as the grounds listed in SCPA §719. While you may be working with a fiduciary that does not act in the manner that you wish, oftentimes, the conduct does not rise to the standard that would warrant their removal. 

 Courts have held that the removal of a fiduciary pursuant to SCPA §719 is equivalent to a judicial nullification of the testator’s choice and can only be done when the grounds set forth in the statutes have been clearly established. The court may remove a fiduciary without a hearing only when the misconduct is established by undisputed facts or concessions, when the fiduciary’s in-court conduct causes such facts to be within the court’s knowledge or when facts warranting amendment of letters are presented to the court during a related evidentiary proceeding. 

Pursuant to SCPA §711 a person interested may petition the court to remove the fiduciary. Some of the grounds listed in the statute include: the fiduciary wasted or improvidently managed property; the fiduciary willfully refused or without good cause neglected to obey any lawful direction of the court; or the fiduciary does not possess the necessary qualifications by reason of substance abuse, dishonesty, improvidence, want of understanding or who is otherwise unfit for the execution of the office. Again, while there are many cases where fiduciaries have behaved badly, courts are generally hesitant to remove fiduciaries unless the assets of the estate/trust are put at risk. 

Even though you may be unhappy with the conduct of a fiduciary, not every breach of duty will result in the removal of the fiduciary. Many breaches can be addressed in an accounting proceeding either through surcharge or denial of commissions. While a fiduciary can be removed if conduct that violates SCPA §711 or §719 can be proven, it is often a lengthy and expensive process that involves the exercise of discretion by a court that is hesitant to remove a fiduciary chosen by the testator. 

A proceeding to remove a fiduciary should only be undertaken if it can be proven that the assets of the estate/trust are in danger under the fiduciary’s control. Mere speculation or distrust will not be enough to remove a fiduciary. If you believe that the fiduciary of an estate or trust is not managing the estate or trust properly, you should consult with an attorney experienced in estate administration matters that can review the facts and determine the best course of action. 

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office. 

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Nancy Burner, Esq.

By Nancy Burner, Esq.

Losing a spouse is an extremely difficult time in life and handling the administration of their estate can be a stressful experience. When you are ready, it is important to seek the advice of an estate planning and elder law attorney to discuss what needs to be done on behalf of your spouse’s estate and also what planning you need to do for your own estate.

Your attorney will want to review all assets held by your spouse, whether individually or jointly with you, and all assets in your name. It is also important to review any previous estate planning documents you may have in place, such as last will and testaments, trusts, powers of attorney and health care directives. A thorough review of the assets and estate planning documents will help your attorney advise you on what additional planning, if any, needs to be done.

If your spouse was the owner of an IRA or other tax deferred retirement account, you are likely named as the primary beneficiary on the account. You will want to ensure that you roll over this account into an IRA account in your name. It will also be necessary for you to put your sole name on any accounts that are held jointly with you and your spouse or that name you as transfer on death beneficiary.

Furthermore, it is important you update the beneficiaries under these accounts where appropriate, especially if your spouse was previously listed as your primary beneficiary. 

You will need to go through a court process to gain control of assets held in your spouse’s sole name without a beneficiary.  The court proceeding is called “probate” if your spouse had a last will and testament or “administration” if your spouse died without a last will and testament. New York State law provides a scheme for the distribution of assets in the case of a person that did not execute a last will and testament.

If your spouse had children, you and the children will share in the assets of the administration estate. There are also certain rights that a surviving spouse has to assets of the estate about which your attorney can advise you.

Lastly, a review of your current estate planning documents will help determine if updates to your plan are required. For example, you will likely need to change your agents listed under your power of attorney and health care proxy if each document listed your spouse as agent.

Additional changes to your will and/or trust may be required if there are changes to the tax law, your family structure or personal health status, such as a need for long-term care.

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office.

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By Nancy Burner, Esq.

Nancy Burner, Esq.

When planning for the differently abled, the use of supplemental needs trusts as part of your estate planning will ensure that you have provided protections for those with special needs and disabilities.

When considering your estate planning, it is important to consider any beneficiaries who may have special needs or disabilities. Receiving an outright inheritance could negatively affect these individuals, as oftentimes they are entitled to, and receive, need-based government benefits such as SSI, Medicaid and Group Housing, to name a few, which either supplement or fully cover the living and medical expenses of the individual.

Safeguarding these benefits by using supplemental needs trusts rather than an outright distribution can ensure that you can leave funds to a loved one who has special needs without the risk of interfering with their government benefits.

Supplemental needs trusts can be established as “first-party” or “third-party trusts.” This article highlights third-party supplemental needs trusts which are, simply stated, trusts funded with the assets of a third-party, anyone other than the differently abled individual.

To understand the difference, first-party trusts are funded with the assets or income of the differently abled person and are often used to safeguard benefits after the individual receives an inheritance or some other windfall. First-party supplemental needs trusts are also often used to protect money that was in the name of the individual at the onset of a disability. 

First-party supplemental needs trusts are available to persons under the age of 65, and thanks to recent legislation, can be created by the individual him or herself, a parent, guardian or through the court. Although a terrific planning tool, when possible it is preferable to address these planning needs ahead of time to ensure no interruption of benefits and a maximum preservation of assets. 

The first-party trust requires a payback provision which dictates that any monies that remain in the trust at the time of the individual’s death must be paid to the state in an amount equal to the medical assistance paid on behalf of the individual. 

Third-party supplemental needs trusts can either stand alone or be incorporated into your estate planning. These trusts can be created by anyone for the benefit of the disabled individual. They can be funded upon creation or can be prepared with the idea of funding at the time of the death of the creator.

The assets in the trust can be used to provide the individual with comforts they would otherwise not be able to afford. Because these trusts are set up with the fund of a third party, unlike the first-party supplemental needs trusts, they do not have a payback provision.

Upon the death of the original beneficiary of the trust, whatever assets remain in the trust can be distributed in accordance with the grantor’s wishes. By leaving assets in a supplemental needs trust, you would be able to provide for your loved one and ensure the continuation of imperative benefit on which he or she relies.

It is important to note that funds between a first-party trust and a third-party trust should never be co-mingled. Specifically, if monies which originated with the disabled individual go into a third-party trust, the protections afforded to third-party trusts (i.e., no payback provision) may extinguish and a payback could be required. 

Overall, supplemental needs trusts are invaluable for planning for those differently abled. The trusts can enhance the quality of life for the person and supplement the benefits he or she is already receiving.

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office.

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