On September 29, 2008, Surrogate’s Court, Nassau County decided the Matter of Irwin Rappaport case, which involved a proceeding to reform (i.e., change) the last will and testament of Rose Rappaport. Ms. Rappaport was survived by four children. In her will she directed that her trustees hold funds in trust for her disabled daughter, Susan. The trust provided that the income was to be distributed to Susan for her lifetime, and further provided that the principal of the trust was to be used for Susan as the trustees deemed advisable for her health, support and maintenance.
While Rose’s three other children (not the disabled child) were appointed as the executors of the will, no trustees were nominated for the trust. Irwin Rappaport petitioned the court to reform the will to name the three children as trustees and convert the trust to a “third party supplemental needs trust” for the benefit of Susan. In a separate proceeding, Irwin was appointed Guardian of Susan.
A supplemental needs trust is a trust established for the benefit of a disabled individual. A trust established for the benefit of another person is a “third party trust.” A trust established by the disabled individual for his/her own benefit and with his/her own assets is known as a “self-settled trust.”
The Department of Health (DOH) appeared in the proceeding and expressed its objections to the reformation of the will. DOH asserted that the Estates Powers and Trusts Law Section (EPTL)7-1.12, which authorizes the creation of supplemental needs trusts in a will for the benefit of another individual, was enacted before the execution of the will, thereby leaving open the question of why the trust was not a supplemental needs trust.
Courts typically do not reform documents that were created by decedents during their lifetimes. If a court does so, it is in order to carry out a testator’s intent. The decision stated that “courts have shown a willingness to reform wills to obtain the benefits of a supplemental needs trust where the testator’s intent to supplement, rather than supplant, government benefits is evident from the language of the testamentary instrument and such reformation would not change the testator’s dispositive plan.”
The court held that it did not matter that EPTL 7-1.12 was enacted before execution of the will. The court focused on the fact that Susan suffers from chronic disabilities and that the will evidenced Rose’s intention for the trust assets to supplement not supplant government benefits for Susan. As a result, the court did not follow the more restrictive analysis of previous case law.
It is important that an individual’s will and/or trust be drafted correctly the first time. And, of course, these documents can be modified during the individual’s lifetime, provided he/she has the requisite capacity to do so. However, readers must know that if the final document does not reflect the individual’s intent, and if the document cannot be changed due to death or incapacity of the individual, an action to reform the document can be commenced.
A qualified elder law attorney can advise when a supplemental needs trust should be part of long-term care planning.
Allan Wernick is a lawyer and director of the City University of New York Citizenship and Immigration Project. He is the author of “U.S. Immigration and Citizenship - Your Complete Guide, Revised 4th Edition.” Send questions and comments to Allan Wernick, Daily News, 450 West 33rd Street, New York, N.Y. 10001. Professor Wernick’s web site is www.allanwernick.com.
Allan Wernick’s Immigration column is reprinted from the Thursday, October 16 edition of the New York Daily News.
