How Can I Fund a Special Needs Trust?
Anyone in Summit or elsewhere in New Jersey who has a disabled child or grandchild, it is important to think about establishing a special needs trust (SNT) for that individual. Special needs trusts allow parents, grandparents, or guardians of disabled adults to provide for their disabled loved one financially without impacting the disabled person’s eligibility for public benefits. To be clear, disabled adults in New Jersey often rely on public benefits such as Medicaid or Supplemental Security Income (SSI) payments, for which eligibility is based on having limited assets and resources.
Accordingly, if a disabled person who relies on these benefits receives even a small inheritance or monetary gift, their eligibility can be impacted. In such a situation, that disabled adult will often need to use up the inheritance or monetary gift to pay for medical care and necessities until they have spent it down and again are eligible for SSI or Medicaid. You can prevent this — and ensure that you can provide for a disabled family member — without impacting their eligibility for public benefits by establishing a SNT. How can you fund it? Consider the following information from our New Jersey estate planning lawyers.
Using Your Own Inheritance
If your parents or other relatives left you an inheritance when they died, you may be holding onto that money with plans of leaving it to your own children. If you have a disabled child who will need your financial support in the future, you can consider using your inheritance to fund your child’s SNT.
Life Insurance
For Summit residents who have a disabled child or grandchild but relatively limited resources themselves, funding a SNT with a life insurance policy can be a good option. You can ensure that the money from your life insurance policy goes to fund the SNT when you die. You can designate the trust as the beneficiary in your life insurance policy.
Savings and Other Assets
In your will, or in payable-on-death beneficiary designations on bank accounts, you can identify the SNT as the entity that will inherit assets left through your will or that will receive the money contained in an account with a payable-on-death beneficiary designation.
Donations to a Disabled Child or Grandchild
Sometimes SNTs in New Jersey can be funded with gifts or donations from the community, especially if you are in a close community and you do not otherwise have the means to fund a SNT on your own. Members of your community may want to come together to ensure that your disabled child or grandchild has the care they need after you are gone. Special needs trusts do not need to contain especially high amounts of money. Even a modest amount can fund a SNT for a disabled adult.
Contact a Summit, New Jersey Estate Planning Attorney
If you have any questions about establishing a special needs trust or understanding your options for funding it, one of the experienced Summit estate planning attorneys at Dempsey, Dempsey & Sheehan can help. We can assist you in setting up a SNT for a disabled child or grandchild, and we can also help with other aspects of estate planning in New Jersey. Contact us today for more information.
Source:
nj.gov/humanservices/dmahs/clients/snt.html
