A New York couple is accused of stealing more than $1 million from their
disabled son's trust after his death. The boy was born disabled because
of negligent medical care during his delivery. His supplemental needs
trust was established when the hospital paid $2 million after a lawsuit.
Supplemental needs trusts are often created to ensure special needs children
still qualify for public assistance programs. These trusts are highly
beneficial because the child will be protected even after the parents'
death. Supplemental needs trusts are also advantageous because the parents
can designate a trustee to ensure the assets are used to help the child.
Sadly, the parents in this case outlived their child, and allegedly misused
The trust allowed the boy to qualify for Medicaid, but it was supposed
to reimburse New York's Human Resources Administration after his death
for the medical expenses. The parents were named as joint trustees and
received $150,000 immediately after the lawsuit. They would receive any
remaining funds after paying HRA back.
The grand larceny charges allege that the state made repeated efforts to
collect the $1.8 million spent on the boy's medical care. No withdrawals
were made during the boy's 15 years, which were spent in an institution.
Between the boy's death in 2008 and the parents' arrest, more
than $1 million was removed from the account.
Stories like this are an unfortunate occurance because supplemental needs
trusts help many good people. While there are the rare cases of misuse,
such as in this instance, the reporting of it in the media may skew the
perception that people abuse this kind of trust. In fact, it is most often
used as intended and highly beneficial.
Source: The Wall Street Journal, " NYC DA: Parents stole from disabled son's
trust," April 17, 2012