Nassau County Surrogate John Riordan has ruled in favor of reconstructing a testamentary trust in the Estate of Goldie Hyman, a case reported in the March 7th issue of the New York Law Journal at page 21. Even though this matter was uncontested, it presents a rather interesting fact pattern, especially in light of today’s increasingly complicated web of medicaid regulations.

The testator died in December, 1984. The will provides for a trust –now worth approximately 572 thousand dollars — to be maintained for the benefit of decedent’s son Burton Hyman who suffers from a variety of serious and chronic physical disabilities and who requires dialysis.

The provisions of the testamentary trust required, among other things, that regular quarterly payments of income be made to the trust beneficiary. While such provisions might have been innocuous when the will was drawn twenty five years ago, they clearly leave the trust corpus wide open to attack by the state and could well result in the disqualification of the beneficiary from medicaid benefits which he clearly requires.

The petitioners here have requested that the court reform the trust and convert it into a supplemental needs trust (SNT) which would effectively insulate the assets so as to provide for Burton  as the decedent had contemplated. Surrogate Riordan opined that, while " courts are generally loathe to reform testamentary instruments as a rule and, as a rule, will not, unless reformation effectuates the testator’s intent. When construing a will, the testator’s intent is to be gleaned from a sympathetic reading of the instrument in its entirety and not from a single word of phrase. It is of paramount importance that the testator’s actual purpose be determined and effectuated to the extent it comports with the law and public policy".

To this end," the Estates, Powers and Trusts Law 7-1.12 authorizes the creation of non-self settled supplemental needs trusts when (1) the beneficiary suffers from a ‘severe or chronic or persistent disability’ (2) the trust evidences the intent that the assets be used to supplement , not supplant , government benefits:(3) the trust prohibits the trustee from using assets in any way that may jeopardize the beneficiary’s entitlement to governmental benefits and (4) the beneficiary does not have the power to assign, encumber , direct, distribute or authorize distribution of trust assets. The policy of the State of New York is to encourage the creation of supplemental needs trusts for people who are mentally or physcially disabled."