Planning with Heart: The Importance of Special Needs Trusts (and How to Avoid Common Mistakes)

Just a few blocks from my office, there’s a special place that never fails to lift my spirits: Café Joyeux on 52nd Street off Lexington Avenue.  With its cozy French-inspired fare and incredible staff—all of whom live with intellectual or developmental disabilities - it’s far more than just a coffee shop.  It's a daily reminder that with the right support and opportunity, every person can shine.

Places like Café Joyeux - and the amazing people behind them - inspire me every day in my work as an estate planning attorney.  They remind me how important it is to plan thoughtfully for loved ones with special needs, so they too can live lives full of purpose, joy, and security.

But unfortunately, I've seen even the most well-meaning families make avoidable mistakes that jeopardize their loved ones' futures.  Today, I want to share some of the most common pitfalls - and more importantly, how to avoid them.

1. Leaving Money Directly to a Loved One with Special Needs

It’s natural to want to provide for your child or family member directly.  However, in doing so, you may unintentionally jeopardize their access to vital public benefits like Medicaid, housing assistance, and job training programs, which are means-tested.  Even a modest inheritance could disqualify them from receiving the help they need.

2. Relying on a Sibling or Relative "To Take Care of Them"

Some families try to work around this by giving money to a trusted sibling or relative, hoping they will use it for the individual’s care.  While intentions are good, life happens - divorces, lawsuits, financial setbacks - and the money legally belongs to that relative.  Sadly, I have  seen situations where the funds disappear, leaving the vulnerable person unprotected.

The Better Way: A Special Needs Trust

The good news is, there’s a proven, compassionate solution: a Special Needs Trust (SNT).

Also referred to as a Supplemental Needs Trust, an SNT lets you set aside money for your loved one without affecting their eligibility for government programs.  Managed by a trustee you choose, the trust can fund therapies, education, travel, recreation, and more - enhancing their quality of life without endangering their benefits.

There are two main types:

• First-party SNTs: Funded with the beneficiary’s own assets (such as a settlement from a personal injury or medical malpractice case).

• Third-party SNTs: Funded with resources from others, such as family or friends.

A huge advantage of third-party SNTs? When your loved one passes away, leftover funds can stay in the family or go to a charitable cause you care about—not to the government.

Now back to the pitfalls…

3. Forgetting to Name a Backup Trustee

Choosing a trustworthy initial trustee is critical, but so is planning for the “what-ifs.” Illness, accidents, or life changes can make it impossible for your first choice to continue serving.

I always recommend naming one or more successor trustees and even building in a flexible mechanism to appoint future ones.  That way, your loved one is always protected -without the court stepping in to make decisions for your family.

4. Trying to Handle It Alone

Serving as a trustee isn’t just about good intentions—it’s a legal and financial responsibility.  Mismanaging the trust, even accidentally, can put both the trustee and the beneficiary at risk.

That’s why I encourage clients to assemble a support team: a knowledgeable estate planning attorney, a financial advisor, and an accountant. Together, we can make sure the trust is properly managed, invested wisely, and legally compliant - for the long term.

5. Letting the Plan Grow Outdated

Your loved one’s needs may change over time - and so can your family circumstances. Regularly reviewing your plan, ideally every few years or after major life events, ensures that your intentions are always honored.

A Final Thought

Creating a Special Needs Trust isn’t just a legal decision - it’s a profoundly loving one.  It’s about protecting your loved one’s dignity, independence, and future, even when you can’t be there yourself.

If you’re ready to explore how a Special Needs Trust could fit into your family's plan, I’d be honored to walk you through it.  Together, we can create a plan that gives you, and your loved one, peace of mind.

And if you find yourself near 52nd and Lexington in midtown Manhattan, treat yourself to a croissant (or coffee!) at Café Joyeux. You will leave not just satisfied, but inspired.

Out in the Community

Last month, I spoke on “Managing Money: A Caregiver’s Guide to Finances” on behalf of the Alzheimer’s Association at Services Now for Adult Persons, Inc (SNAP) in Queens.

I also attended the Super Lawyers event Honoring the Outstanding Legal Professionals of 2025. I am pictured outside the venue (Bryant Park Grill).

This week, I am a panelist at a major medical center here in Manhattan with other professionals who are resources for patients upon hospital discharge. Offered for social worker CE credit, the session will educate the hospital’s case managers on elder law, daily money management, home care, and more.