Does New Jersey Have More Than One Type of Special Needs Trust?
Do you have a child with a severe disability and for whom you want to be able to provide financial assistance without impacting their eligibility for public benefits? Or do you have a disability and want to find out about asset protection without affecting your own ability to be eligible for certain kinds of benefits? In either type of situation, you will likely want to discuss the possibility of establishing a special needs trust (SNT) in New Jersey with a Summit estate planning lawyer. Special needs trusts are particularly designed for adults with disabilities, and there are a few different types of SNTs in New Jersey that you should know about.
First-Party and Third-Party Special Needs Trusts in New Jersey
With either a first-party or third-party special needs trust in New Jersey (and we will discuss the differences below), the trust must be established as an irrevocable trust and must be for the sole benefit of the disabled individual. In addition, upon the death of the beneficiary, remaining assets in the trust must go to the State of New Jersey — the state must be named as the beneficiary — to cover the amount up to what the state has paid in Medicaid benefits. Transfers to both first-party and third-party SNTs can only be made while the beneficiary is under the age of 65.
A first-party SNT is a special needs trust established by a disabled person for themselves, in order to remain eligible for benefits like Supplemental Security Income (SSI) and Medicaid without having to spend down all of their resources. This type of trust is especially common when a disabled person receives a payout, such as a civil lawsuit payout for their injury. A third-party SNT is created by a family member (must be a parent, grandparent, or guardian) for a disabled adult for the same purpose.
Pooled SNT
Pooled SNTs are a particular kind of special needs trust where multiple beneficiaries have their resources held in a trust and managed by a trustee. Everyone’s accounts are kept separate, but all of their funds are managed by the trustee so that the costs of administration are lower.
Qualified Income Trust
Not exactly a type of SNT, but a qualified income trust (QIT) is another type of trust that an older adult might use to qualify for Medicaid for the purpose of long-term care due to a serious health issue or disability without having to spend down monthly income.
Contact a Summit, New Jersey Estate Planning Attorney
Special needs trusts can be complex to create and maintain, but a lawyer can assist you from the beginning. One of the experienced Summit estate planning attorneys at Dempsey, Dempsey & Sheehan can provide you with more information about the types of special needs trusts available in New Jersey, and we can assess your particular circumstances to help you understand your eligibility for establishing one of these types of trusts. Once you are ready, we can help you with the creation of the trust and any other related aspects of estate planning in New Jersey. Contact us today for more information.
Source:
nj.gov/humanservices/dmahs/clients/SNT_regulations.pdf
