Have you ever worried about what happens if an inheritance or surprise windfall puts your loved one's benefits at risk?
You're not alone.
According to a 2025 report by the Social Security Administration, individuals receiving SSI can only keep $2,000 in countable assets before losing their monthly payments. That's where a Special Needs Trust comes in. It's like a safety net that holds money for someone with disabilities without touching their SSI or Medicaid.
I'll walk you through exactly how these trusts work in Queens, Brooklyn, and NYC, from choosing a trustee to making sure funds go to the right places.
Let's go through it together.
Key Takeaways
- Special Needs Trusts protect SSI and Medicaid for people with disabilities by keeping gifts and inheritances separate from personal assets, so they don't count toward the strict $2,000 resource limit.
- First-Party Special Needs Trusts must include a Medicaid payback provision and can only be set up before age 65, while Third-Party Special Needs Trusts have no payback rule and work great for family gifts.
- Trustees follow strict New York rules and pay vendors directly—never hand cash to your loved one, or it counts as income and can wreck benefit eligibility.
- The Law Offices Of Roman Aminov offers free consultations, personalized estate planning, and has a "Superb" 10.0 AVVO rating, helping families across Queens, Brooklyn, and NYC set up compliant special needs trusts.
Understanding Special Needs Trusts
You might hear "Special Needs Trust" and think it's just more complicated paperwork.
But here's the thing: understanding the difference between a First Party Special Needs Trust and a Third Party Special Needs Trust can be the key to protecting SSI or Medicaid for someone you love in Queens, Brooklyn, or NYC.
What is a Special Needs Trust?
A Special Needs Trust is a legal tool that holds money for someone with a disability while keeping them eligible for government benefits.
Think of it as a protective shield.
According to research by Northern Trust, approximately 18.7% of the U.S. population lives with a disability. Many of them rely on SSI or Medicaid, which have strict asset limits. In 2025, an individual can only have $2,000 (and $3,000 if married) in countable assets to qualify for SSI—anything more, and they lose benefits.
A trustee manages the trust and uses the funds to pay for things that improve quality of life. The money stays outside your loved one's direct control, so it doesn't count against benefit limits. You can set up an SNT with the person's own money (like a lawsuit settlement) or with funds from family members.
If there's money left when your loved one passes away, it may go to pay back Medicaid—but only if it's a First Party SNT. Third Party SNTs don't have that payback rule.
Why Are Special Needs Trusts Important?
Benefits like SSI and Medicaid come with super strict rules.
If someone gets a direct gift or inheritance, those assets count against them. Cross that $2,000 threshold? Benefits stop. Health coverage vanishes. Monthly checks disappear. Nobody wants that nightmare.
Special Needs Trusts solve this problem. Assets sitting in a properly structured SNT don't count toward Medicaid or SSI limits. According to a 2020 study, 88% of parents with children who have special needs have not set up a trust to preserve benefit eligibility—but those who do see dramatic improvements in their loved ones' quality of life.
The trust pays for things government programs skip—specialized therapies, education, tech devices, even vacations. Under New York law (including regulations updated in 2025), trusts must follow specific rules like Medicaid payback provisions for First-Party SNTs. Getting this right takes a skilled Special Needs Trust Lawyer Queens or Brooklyn who knows the local system inside and out.
Key Benefits of a Special Needs Trust
A Special Needs Trust isn't just legal paperwork—it's a game-changer for families in Queens, Brooklyn, and NYC.
You might wonder how these trusts protect benefits while paying for extras.
Here's the breakdown.
How Does a Special Needs Trust Protect SSI and Medicaid Eligibility?
Assets inside a compliant special needs trust simply don't count as resources for SSI or Medicaid—if the trust follows state and federal rules.
Revocable trusts don't work for this; you need an irrevocable SNT.
The trustee pays vendors directly—rent to the landlord, tuition to the school, medical equipment to the supplier. Distributions made this way don't count as income. But here's a critical rule: never hand cash straight to the beneficiary. That cash counts as income and can negatively affect SSI eligibility.
Social services in New York requires a copy of your special needs trust for approval. Income deposited directly into a qualified SNT doesn't count against Medicaid either, keeping those vital benefits protected while your loved one enjoys extras.
What Expenses Can a Special Needs Trust Cover?
A trust can pay for:
- Specialized therapy not covered by Medicaid (speech, physical, occupational)
- Education costs—tuition, books, computers for school
- Technology like tablets, adaptive devices, or communication tools
- Entertainment—concert tickets, streaming services, hobby supplies
- Travel expenses for vacations or family visits
The golden rule? Payments go to third parties, not directly to your loved one as cash. Keep in mind that shelter payments are possible but might reduce SSI amounts. That's why it helps to work with an experienced Special Needs Trust Lawyer Brooklyn who understands these nuances.
How Does a Special Needs Trust Provide Long-Term Financial Security?
Special Needs Trusts create lasting financial security by holding funds for your loved one's entire lifetime.
Care costs rise over time. A trust managed by a responsible trustee ensures assets don't get drained too quickly or misused. Because SNTs don't count as personal assets, your loved one keeps SSI and Medicaid no matter how much sits in the trust.
Smart planning stops a surprise inheritance from causing benefit loss. Even decades later, the trust continues funding extras—new technology, better therapies, fun hobbies—without risking health insurance or monthly support.
If funds remain in the trust after your loved one passes, those go first to reimburse Medicaid (for First-Party SNTs only), then to family. Choosing the best trustee for a Special Needs Trust matters deeply. You want someone reliable who knows when to call a Special Needs Trust Lawyer NYC for guidance.
Types of Special Needs Trusts
Not all Special Needs Trusts work the same way.
Each type has different rules about who funds it, who can set it up, and what happens to leftover money. Understanding the difference between a First-Party Special Needs Trust and a Third-Party Special Needs Trust can save your family from costly mistakes down the road.
What Is a First-Party Special Needs Trust?
A First-Party Special Needs Trust holds money that belongs to the person with a disability.
Maybe they won a lawsuit settlement, received an inheritance, or got a financial windfall. Whatever the source, it's their assets funding this trust. The beneficiary must be under age 65 when you set it up—no exceptions, even if they "feel young at heart."
Here's the catch: First-Party SNTs require a Medicaid payback provision. When the beneficiary passes away, leftover funds go to Medicaid first to repay services received during their lifetime. After Medicaid gets its share, remaining money can go to family or other beneficiaries named in the trust.
What Is a Third-Party Special Needs Trust?
A Third-Party Special Needs Trust gets funded with money from someone other than the person with a disability.
Typically, parents, grandparents, or family friends create these as part of estate planning. You can add gifts and inheritances without risking SSI or Medicaid benefits—and here's the best part: no Medicaid payback required after your loved one passes.
How Special Needs Trusts Work
You've learned what Special Needs Trusts are and why they matter.
Now let's talk about how they actually function day-to-day in New York City. Understanding trustee responsibilities and spending rules helps families avoid mistakes that could cost thousands in lost benefits.
What Is the Role of a Trustee in a Special Needs Trust?
The trustee manages all trust assets and decides when to make distributions.
Every expense must follow strict Medicaid and SSI rules to protect the beneficiary's benefits. According to the NYC Department of Social Services, trustees handle day-to-day activities like purchasing items, investing trust funds prudently, and maintaining detailed records.
Trustees also file annual tax returns and submit accountings to social services when required. Some trusts use nonprofits as trustees—NYSARC Trust Services, for example, pools investments from many families while keeping separate accounts for each beneficiary.
Trustee compensation is allowed under New York law. A good trustee stays organized, keeps meticulous records, and always acts in the beneficiary's best interest—not anyone else's.
How Can Funds in a Special Needs Trust Be Used?
Trust funds pay for quality-of-life improvements that government programs don't cover.
Payments go directly to third parties—rent to landlords, tuition to schools, medical equipment from suppliers. These third-party payments don't count as income, so they won't affect SSI or Medicaid.
Here's what you can fund:
- Education and skill-building classes
- Entertainment like movie tickets or streaming subscriptions
- Personal care beyond what Medicaid covers
- Specialized equipment or adaptive technology
- Travel for family visits or vacations
Cash sent straight to the beneficiary counts as income and could wreck eligibility. Every expense requires careful documentation. Keep receipts, invoices, and proof of payment—social services may ask questions later.
Trust funds cannot buy anything that would disqualify someone from government help. Smart trustees track spending carefully and consult with a Special Needs Trust Lawyer NYC when questions arise.
Setting Up a Special Needs Trust in New York City
New York City has its own quirks when it comes to Special Needs Trusts.
Each borough—Queens, Brooklyn, even Staten Island—has local rules and preferences. Getting the legal details right from day one protects your loved one's future and keeps their benefits safe.
What Are the Legal Requirements for SNTs in Queens, Brooklyn & NYC?
SNTs in New York must be irrevocable to protect Medicaid and SSI benefits.
No "take backs" allowed. For a First-Party SNT, the beneficiary must be under 65 years old when you set it up. The trust document must include language stating that New York State gets reimbursed for Medicaid expenses after the beneficiary passes away.
Trust documents, along with all income statements, go to local social services for review. According to New York State Department of Health guidelines updated in 2025, assets placed into trusts after January 1, 2000 face current Medicaid scrutiny. An SNT can be established by family members, courts, or sometimes even the individual—but it's never as simple as handing over cash.
Getting help from a Special Needs Trust Lawyer Queens who knows local Department of Social Services offices is smart. Every detail matters under New York law, and small mistakes can cost big.
The Law Offices Of Roman Aminov: Your Special Needs Trust Attorney
Roman Aminov has spent years helping New York families navigate special needs planning.
He understands how personal this process feels. If you want advice that's actually helpful—and a lot less stuffy than typical "lawyer talk"—you're in the right place.
What Experience Does Roman Aminov Have in Estate Planning?
Roman Aminov holds a "Superb" 10.0 rating on AVVO, the highest score possible.
His practice focuses on estate planning for New York families. He helps set up wills, powers of attorney, and trusts of all types—including special needs trusts. According to his profile on Brooklyn Queens Law, he also earned the 2017 Super Lawyers Rising Star Award.
He handles complex Surrogates Court cases and deals with probate law and estate administration across Queens, Brooklyn, and NYC. Recent articles he's published cover topics like Medicaid Asset Protection Trusts and the differences between testamentary trusts and living trusts. If your family needs help with Medicaid applications or setting up a Medicaid trust, he brings real-world experience to the table.
How Are Solutions Personalized for Families?
With years of experience, the firm does more than fill in forms.
Each family brings different needs and dreams for their loved one. Some have a child needing long-term care. Others want to protect SSI or Medicaid while covering daily expenses like therapy, travel, or birthday gifts through the trust.
The Law Offices Of Roman Aminov listens carefully before crafting solutions that fit your unique story. Free consultations help families talk things through without pressure or upfront fees. According to client reviews on Avvo and Yelp, people appreciate how clearly everything gets explained—no legal jargon—and staff respond quickly to questions, even late at night.
The team handles local New York rules and even tricky out-of-state situations with calm expertise. That means you can focus on what matters most: your loved one's comfort and future happiness.
Additional Considerations for SNTs
Costs can surprise families when setting up Special Needs Trusts in Queens, Brooklyn, or NYC.
Legal fees and yearly management charges add up. Some folks also wonder about ABLE accounts as another option. It's all about finding what fits your situation best.
How Are Special Needs Trusts Taxed?
Special Needs Trusts face taxation based on their structure.
Revocable trusts? The person who creates the trust pays taxes on all income, just like other personal income. Irrevocable trusts—the type most common for Medicaid planning in NYC—work differently. If income stays inside the trust instead of going to the beneficiary, the trust itself pays taxes.
Here's where it gets expensive: trust tax rates climb fast. According to 2025 IRS figures analyzed by the Special Needs Alliance, trusts hit the 37% bracket at just $15,650 of taxable income. Compare that to individuals, who don't reach 37% until income exceeds $609,350.
First-Party SNTs use the disabled person's Social Security Number for tax filings. Income may be reported on their personal return. Third-Party SNTs typically get their own Tax ID numbers and file separately. When income gets distributed to your loved one, some tax duties may shift to them.
There's good news though. If your trust qualifies as a Qualified Disability Trust (QDT), it gets a $5,100 exemption in 2025. That means the first $5,100 of income goes untaxed at the trust level, providing significant savings.
What Is Trustee Compensation?
Trustee compensation is pay for managing a special needs trust.
The trust document should clearly state how much the trustee receives. New York law requires this amount to be reasonable—no wild numbers or surprise bonuses. Nonprofits handling pooled trusts often charge administrative fees instead of traditional compensation.
For example, if your sister serves as trustee for her nephew's trust in Brooklyn, she should receive fair payment for her work—but not extra just because "she's family." Trustees do a lot: handling money, paying bills, keeping meticulous records. They deserve fair compensation, but nothing over-the-top. The goal stays focused on protecting assets for your loved one with special needs.
Frequently Asked Questions about SNTs
Ever get stuck wondering about Special Needs Trusts in NYC?
Like, how do they really work, who can set one up, and what happens if your loved one gets an inheritance? You're definitely not alone with these questions. Here are the answers.
Can a Special Needs Trust Receive Gifts and Inheritances?
Yes, a Special Needs Trust can receive gifts and inheritances without risking SSI or Medicaid benefits.
Third-Party Special Needs Trusts work best for this. Family or friends can leave money or assets for a loved one with disabilities, and the trust keeps those funds safe from affecting benefit eligibility.
Say your aunt wants to leave $10,000 to her nephew. Instead of handing over cash directly, she puts it into his SNT. The trustee manages that money and uses it only as New York law allows, so SSI and Medicaid stay untouched. Gifts can come from parents, grandparents, even birthday checks from cousins.
Proper structuring matters here. A misstep could mess up benefits real fast, so work with a Special Needs Trust Lawyer Brooklyn to get it right.
Who Is Eligible to Establish a Special Needs Trust?
People with disabilities under age 65 can start their own First-Party SNTs if they receive money from a settlement or inheritance.
Family members like parents or grandparents can set up a third party special needs trusts for their loved one. Even courts can step in to help establish one.
Whether you're looking out for yourself or helping someone you care about, there's usually a way to build that layer of protection and keep important benefits steady.
Protecting Loved Ones with Disabilities
Taking care of loved ones with disabilities means planning ahead—way ahead.
There's more to explore if you want to make sure your family stays protected. Let's talk about gifting, inheritances, and how to keep support going strong.
How Can You Plan for Gifting and Inheritance?
Leaving a gift or inheritance for someone with special needs takes smart planning.
A Third-Party Special Needs Trust is one of the best ways to do it. New York families use these trusts so loved ones can keep SSI and Medicaid benefits. Even small gifts or an unexpected inheritance can cause trouble without proper planning.
Gifts and inheritances go straight to the SNT instead of your loved one's personal account. That way, they get extra support without risking benefits they depend on daily. It's kind of like getting your cake and eating it too—but way more practical.
How Do You Ensure Future Support and Care?
Planning ahead with a Special Needs Trust gives your loved one steady, lifelong support.
The trust holds money for extras like therapies or fun activities that Medicaid doesn't cover. A trustee manages the trust and makes sure bills get paid over time. This brings serious peace of mind.
New York Medicaid has strict rules. After the beneficiary passes away, leftover funds in a First-Party SNT may need to repay Medicaid—that's called the Medicaid reimbursement provision. Families set up these trusts to last as long as needed, sometimes for an entire lifetime.
Good planning keeps care on track and protects government benefits at every step. Working with a Special Needs Trust Lawyer NYC who understands local Department of Social Services requirements helps you avoid costly mistakes down the road.
Why Choose Law Offices of Roman Aminov, P.C.
Roman Aminov's team brings real New York City estate planning expertise—not just textbook knowledge.
Keep reading to see why so many families across Queens, Brooklyn, and NYC trust this firm with their most important special needs planning questions.
How Does the Firm Show Compassionate Representation?
Clients often describe feeling genuinely supported and cared for.
Reviews on platforms like Avvo consistently mention how the staff is patient, kind, and always available to answer questions. The attorney explains options step-by-step in plain language you can actually understand—no confusing legal jargon.
People notice the team's responsiveness. Mario Celi, in his Avvo review, points out the "clear communication and how fast everyone responds." Nobody leaves you waiting or feeling lost. The caring attitude shows up in small ways—a friendly phone call, an extra explanation just so you can sleep better at night.
Setting up a Special Needs Trust in New York City can feel overwhelming. Having someone who truly cares makes all the difference when you're protecting your family's future.
What Is Their Knowledge of New York Law?
That same care extends into deep knowledge of New York law.
Roman Aminov brings years of experience handling Medicaid planning, probate work, and estate administration across Queens, Brooklyn, and all five boroughs. State laws can make or break a Special Needs Trust plan. He tracks every update—like changes to New York Medicaid guidelines or new court rulings.
The firm doesn't rely on old law school textbooks. They publish current articles about elder law and Medicaid trusts in New York. Working with attorneys nationwide helps them solve unusual issues if someone owns property in multiple states or needs cross-border advice.
Local knowledge matters here. It's critical for staying compliant and protecting benefits like SSI or Medicaid for your loved one in NYC. According to Brooklyn Queens Law, Roman Aminov holds the highest AVVO rating in his vicinity and earned recognition as a 2025 Super Lawyers award winner for estate law.
Conclusion
Planning for a loved one with special needs can feel like a lot.
But you don't have to figure it out alone. A caring special needs trust attorney at the Law Offices of Roman Aminov in Queens, Brooklyn, and NYC will guide you through each step. Your family deserves peace of mind, and expert support really matters.
Call today for a free phone consultation. You might be surprised how much easier things get with the right help on your side.
FAQs
1. What does a special needs trust attorney do in Queens, Brooklyn, and NYC?
A special needs trust attorney sets up a legal trust so a person with disabilities can have funds for their care without being disqualified from government benefits like Medicaid and SSI. They ensure the trust document follows specific New York laws, like the Estates, Powers and Trusts Law § 7-1.12, to protect your loved one.
2. Why do I need a special needs trust attorney instead of doing it myself?
The rules are very strict, and a small error can jeopardize benefits since the asset limit for an individual on SSI is just $2,000. An attorney knows how to navigate complex local and federal rules, preventing costly mistakes that could disrupt essential government aid for your family member.
3. How much does a special needs trust attorney cost in NYC?
In Queens, Brooklyn, and NYC, the cost to set up a special needs trust generally ranges from $3,000 to $4,000, depending on its complexity. Think of it as a vital investment in securing your loved one's financial future and quality of life.
4. When should I contact a special needs trust attorney?
You should contact an attorney as soon as you anticipate a person with a disability receiving funds, whether from an inheritance, a lawsuit settlement, or as part of your own estate planning.
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