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Question: MY MOTHER IS ESTABLISHING an Restatment of her will (Distributions). in essence, to act as a supplement needs trust. what is the correct language (example: 42 U.S.C. & 1396p (c)(2)(B)(iii) in new york state that such inheritance be protected an available resource under any government or assistance program? i would greatly appreciate your assistance. thank you v.gr
Response: The language that you are looking for is contained in New York Estates, Powers and Trusts Section 7-1.12 (e):
(1) The following language may be used as part of a trust instrument, but is not required, to qualify a trust as a supplemental needs trust:
1. The property shall be held, IN TRUST, for the benefit of (hereinafter the "beneficiary") and shall be held, managed, invested and reinvested by the trustee, who shall collect the income therefrom and, after deducting all charges and expenses properly attributable thereto, shall, at any time and from time to time, apply for the benefit of the beneficiary, so much (even to the extent of the whole) of the net income and/or principal of this trust as the trustee shall deem advisable, in his or her sole and absolute discretion, subject to the limitations set forth below. The trustee shall add to the principal of such trust the balance of net income not so paid or applied.
2. It is the grantor's intent to create a supplemental needs trust which conforms to the provisions of section 7-1.12 of the New York estates, powers and trusts law. The grantor intends that the trust assets be used to supplement, not supplant, impair or diminish, any benefits or assistance of any federal, state, county, city, or other governmental entity for which the beneficiary may otherwise be eligible or which the beneficiary may be receiving. Consistent with that intent, it is the grantor's desire that, before expending any amounts from the net income and/or principal of this trust, the trustee consider the availability of all benefits from government or private assistance programs for which the beneficiary may be eligible and that, where appropriate and to the extent possible, the trustee endeavor to maximize the collection of such benefits and to facilitate the distribution of such benefits for the benefit of the beneficiary.
3. None of the income or principal of this trust shall be applied in such a manner as to supplant, impair or diminish benefits or assistance of any federal, state, county, city, or other governmental entity for which the beneficiary may otherwise be eligible or which the beneficiary may be receiving.
4. The beneficiary does not have the power to assign, encumber, direct, distribute or authorize distributions from this trust.
(2) (i) If the creator elects, the following additional language may be used: 5. Notwithstanding the provisions of paragraphs two and three above, the trustee may make distributions to meet the beneficiary's need for food, clothing, shelter or health care even if such distributions may result in an impairment or diminution of the beneficiary's receipt or eligibility for government benefits or assistance but only if the trustee determines that (i) the beneficiary's needs will be better met if such distribution is made, and (ii) it is in the beneficiary's best interests to suffer the consequent effect, if any, on the beneficiary's eligibility for or receipt of government benefits or assistance. (ii) If the trustee is provided with the authority to make the distributions as described in subparagraph (2) (i), the creator may elect to add the following clause: ; provided, however, that if the mere existence of the trustee's authority to make distributions pursuant to this paragraph shall result in the beneficiary's loss of government benefits or assistance, regardless of whether such authority is actually exercised, this paragraph shall be null and void and the trustee's authority to make such distributions shall cease and shall be limited as provided in paragraphs two and three above, without exception. "