Creating a Special Needs Trust

Do you provide for a disabled adult child or another disabled loved one? If so, part of your estate planning process should include discussing the creation of a Special Needs Trust (SNT) with your Summit estate planning lawyer. Special Needs Trusts are designed specifically to provide for disabled adults without affecting their ability to continue to receive public benefits. There are specific requirements to establish a SNT, and our firm can assist you. Consider the following information about creating a Special Needs Trust in New Jersey.

How is a Special Needs Trust Different from Other Types of Trusts in New Jersey?

A SNT is a specific type of trust that is designed to hold assets of a disabled person who is under the age of 65. The aim of this type of trust is to allow a disabled person to have access to certain benefits contained in the trust without losing their eligibility for Medicaid and Supplemental Security Income (SSI) benefits, both of which are public benefits for which eligibility is based on having limited assets. The assets held in a SNT are not technically owned by the disabled beneficiary, so they do not count toward the disabled beneficiary’s income and assets for Medicaid or SSI eligibility purposes. According to the New Jersey Department of Human Services, SNTs are “established for the sole benefit of the disabled individual by a parent, grandparent, or legal guardian of the disabled individual.” The assets in a SNT can only benefit the disabled beneficiary — they must be for that person’s sole benefit.

Like certain other types of trusts, SNTs must be irrevocable trusts. However, their terms are then quite different from other kinds of trusts in New Jersey. In order for a SNT to be created, very specific requirements must be met concerning the beneficiary’s disability status.

Eligibility for a Special Needs Trust 

In order to create a SNT in New Jersey, you should work with an estate planning attorney to ensure that you are eligible to create the trust and that your disabled loved one is an eligible beneficiary. The eligibility requirements for a SNT include the following:

• You are one of the individuals who is legally permitted to establish a SNT, meaning that you are the parent, grandparent, or guardian of the disabled beneficiary;
• Disabled beneficiary meets the definition of being disabled and eligible for federal benefits under the US Code;
• Trust is irrevocable;
• Trust is for the sole benefit of the named disabled beneficiary; and
• New Jersey Medicaid Program will be reimbursed from the trust for the total amount of Medicaid benefits paid to the disabled beneficiary upon the disabled beneficiary’s death.

Contact a Summit Estate Planning Attorney 

Whether you are just beginning to think about estate planning or you need to create a Special Needs Trust in addition to your existing estate plan, our firm can help you. One of the experienced New Jersey estate planning attorneys at Dempsey, Dempsey & Sheehan can speak with you today to provide you with more information about Special Needs Trusts and their requirements, and we can begin working with you to establish a SNT for your disabled loved one. Contact us to learn more.

Sources:

nj.gov/humanservices/dmahs/clients/snt.html

nj.gov/humanservices/dmahs/clients/SNT_FAQs.pdf

law.cornell.edu/uscode/text/42/1382