Why Should You Establish a Special Needs Trust?

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Special Needs Trust Attorney

First, before we even begin to discuss what the benefits and downsides are of a special needs trust, I must emphasize that it is highly recommended you speak with an attorney understands Special Needs Trusts before creating such a trust.

There are benefits benefits to establishing a Special Needs Trust for parents of children under the age of 65 who have developmental disabilities.  Eligibility for Medicaid is based on a few different requirements – one being that an individual’s financial resources do not exceed $2,000.   For a married couple the amount of money is a bit higher.  It is actually $3,000.  Interestingly, N.J. Medicaid eligibility regulations allow adults to exclude the money from the Special Needs Trust from being considered during the eligibility assessment process.

Why is this so?  NJAC 10:71-4.11 says that a Special Needs Trust is intended to allow people to have assets to supplement, but ultimately not replace, any government benefits the person is eligible to receive or is receiving.

Basically, a Special Needs Trust takes title and control over all of the assets of a disabled individual before the disabled individual reaches the age of 65.  These trusts can be created by a parent or guardian or even a court.  Special Needs Trusts can also not be changed one they are created with certain protective layering.

There are a few criteria that must be met for the trust to qualify as a Special Needs Trust.  First, the trust cannot be changed and the trust must be solely for the benefit of a person with a disability.  Second, the trust’s purpose must be to supplement the government’s benefits – for things like food, shelter, and clothing.  Third, the individual must be considered to be sufficiently disabled that a Special Needs Trust is necessary. Finally, the trust must state that upon death of the beneficiary, the government will be repaid first from any remaining funds in the trust.

With all of that being said, it is clear that with many of these provisions and conditions, a special needs trust attorney would help clear up all of these ambiguities in the law.

To discuss your NJ Special Needs Trust matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing consultations if you are unable to come to our office.