A special needs trust is a unique financial planning option that ensures the future well-being of a child, grandchild, sibling, or dependent with special needs. This type of trust, when created in accordance with all applicable laws, will secure your loved one’s financial future. It will also ensure your dependent’s eligibility for government benefits is not jeopardized.
Bratton Estate and Elder Care Attorneys can help your family create a special needs trust as part of a comprehensive New Jersey estate plan. We can set your mind at ease by helping you create a specialized trust that protects your dependent. Call us today at 856-857-6007 to get started.
Planning for the future can be daunting. The task is even more difficult for those families with individuals who have special needs. If you have a loved one with special needs, you likely worry about who will care for him/her when you are gone. Below are some basic questions and answers regarding special needs trusts. Such trusts are commonly used to protect the financial interests of individuals with special needs. As you navigate the rather complicated waters of special needs planning, remember that each situation is unique. You will need the assistance of a qualified attorney to properly establish a trust and we at Bratton Law Group are here to help you. It is never too early to start!
What is a Special Needs Trust?
A special needs trust is established for a person with special needs to supplement any benefits that person may receive from government programs. A properly drafted special needs trust allows the beneficiary to continue receiving government benefits while receiving money from the trust.
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What is a Trust?
A trust is a legal arrangement, created by the grantor, through which a trustee holds property for the beneficiary. A trust can have different types of beneficiaries, income and corpus. Unlike a will, which only goes into effect after you die, a trust takes effect as soon as you create it and may be used to begin distributing property before death, at death, or afterwards.
A special needs trust is a trust tailored to a person with special needs that is designed to manage assets for that person’s benefit while not compromising access to important government benefits.
What Are the Different Types of Special Needs Trusts?
There are three main types of special needs trusts: the first-party trust, the third-party trust and the pooled trust. All three name the person with special needs as the beneficiary.
A first party special needs trust holds assets that belong to the person with special needs, such as an inheritance not previously directed to a third party trust or an accident settlement.
A third-party special needs trust holds funds belonging to other people who want to help the person with special needs. This type can be inter-vivos or testamentary.
A pooled trust holds funds from the disabled individual for the benefit of that person but it is pooled with other funds from different beneficiaries
What is the Benefit of a First-Party Special Needs Trust?
If the individual with special needs has more than $2,000 in his or her own name, he or she may not qualify for Social Security Income (SSI) or Medicaid. But, the government will allow the individual to qualify for SSI and Medicaid so long as s/he places the assets in excess of $2,000 in a first-party special needs trust.
The trust must be created by the beneficiary, beneficiary’s parent, grandparent, guardian or the court. While the beneficiary is living, the funds in the trust are used for his or her benefit. When s/he dies, any assets remaining in the trust are used to reimburse the government for the cost of his/her medical care.
These trusts are useful for beneficiaries who are receiving SSI or Medicaid and receive a personal injury settlement or inheritance not previously directed to a third party trust because the trust allows the beneficiary to retain his/her benefits while still being able to use his/her trust funds when necessary.
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What is the Benefit of a Third-Party Special Needs Trust?
The third party special needs trust is most often used by parents and other family members to assist a person with special needs. These trusts can hold any kind of asset imaginable belonging to the family member or other individual, including a house, stocks and bonds, and other types of investments.
The third-party trust functions like the first-party trust in that the assets held in the trust do not affect an SSI or Medicaid beneficiary’s access to benefits and the funds can be used to pay for the beneficiary’s supplemental needs beyond those covered by government benefits. But a third-party trust does not create the payback provision found in the first party trusts.
That means when the beneficiary dies, any funds remaining the trust can pass to other family members, or to charity, without having to be used to reimburse the government.
Can Others Contribute to my Child’s Special Needs Trust?
Yes. If you create a trust now, your extended family and friends can make gifts to the trust or include the trust in their estate planning.
Who Needs a Special Needs Trust?
A special needs trust is the best way to ensure your loved one with special needs continues to get the care and support needed after your death. It is an important consideration for parents, grandparents, siblings, and the legal guardians of special needs dependents.
Those who benefit from special needs trusts vary widely in their level of impairment. Many can live on their own but cannot manage money. Others require around-the-clock supervision and care. They may live in a group home, nursing home, or long-term care facility. No matter the level of care your loved one requires, a special needs trust can give you peace of mind you desire.
Understanding Special Needs Trusts in New Jersey
A special needs trust is an irrevocable trust. A key benefit of this type of trust is the special provisions that ensure the special needs dependent can continue to qualify for Medicaid, Supplemental Security Income, and other asset and income-based benefits.
Some special needs trusts can be used to accept, hold, and manage the disability benefits received by the special needs dependent. Different rules apply to these trusts, and we can help you understand them when we discuss your estate plan.
Understanding the Role of a Trustee
In addition to creating a trust with special provisions, you will need to name a trustee for the trust. This trustee can be an individual or a corporation. Often, people opt to name a family member, trusted attorney, or a bank. If you opt for a family member, you will want someone who is trustworthy, dependable, and financially astute.
In addition, you will want to name one or more back up trustees. This allows you to determine who will manage the distributions, should the primary trustee become incapacitated in any way.
The trustee’s job is to make financial decisions on the trust’s behalf and to provide distributions to the beneficiary when scheduled or necessary. We will help you write the rules about when these distributions should take place.
Let Our Team Help You Establish Your New Jersey Trust
We will work with you and your family to ensure you understand everything you need to know about your special needs trust. Our estate planning attorneys can answer your questions and address your concerns. We typically create these trusts as part of a comprehensive estate plan. So, we can simultaneously address any other estate planning concerns you have.
Call us today at 856-857-6007 and let us go to work for you.
Contact an Estate and Elder Care Lawyer Today About Your Estate Planning Needs
At Bratton Estate and Elder Care Attorneys, our legal team understands how hard it can be to think about what could happen to your dependent with special needs after your death. You worry about health issues and financial challenges. A special needs trust, as part of a comprehensive plan, can help alleviate these worries.
Our New Jersey special needs trust lawyers will review your loved one’s needs and eligibility for government financial assistance programs. We will review current statuses of all involved and advise you about ways to limit tax liability. Finally, we will expertly draft special needs trust documentation to ensure your loved one is well-protected. Helping clients in cities like Princeton, Mount Laurel, Moorestown, Voorhees, and Medford.
Call us for help with your New Jersey special needs trust today at 856-857-6007.
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