Special Needs Trusts for a Minor Child and Adult Incapacitated Person

Contact an Experienced NJ Special Needs Trust (SNT) Attorney Today.

Special Needs Trusts in New JerseyLife is hard without having a disability. The life of a person with a disability can be even harder, more isolated and full of anxiety, fear, frustration and expense. The future is less certain especially if the caretaker is getting older or is declining in health. I truly understand these emotions and concerns. I’m here for you.

Millions of Americans have family members with disabilities. Disabilities can be physical, intellectual, and psychological.

Even if you don’t have a family member with a disability, you know many individuals who do. Intellectual and physical disabilities are not limited to a racial or socio-economic group.

If you have a friend or family member with a disability, you simply must know about Special Needs Trusts. These trusts are designed to protect income and property for the benefit of an individual who may be eligible for government benefit programs (or likely to receive benefits in the future).

If the person is eligible for Supplemental Security Income (SSI), Medicaid, DDD, PPP, Social Security Disability (SSD) or some other benefit program (i.e. Section 8 housing, food stamps, prescription assistance), they will remain eligible for these benefits with a properly drafted Special Needs Trust.

Learn the Benefits of Setting Up a Special Needs Trust in NJ

At Hanlon Niemann & Wright, We Understand New Jersey Special Needs Trusts

“Special needs” is a term used in clinical, diagnostic and functional development to describe individuals who require assistance for disabilities that may be cognitive or psychological.  Individuals with Autism, Downs syndrome, blindness, developmental disability or cystic fibrosis for example, may be considered to have special needs. But eligibility for a SNT is not just limited to special needs persons. A disabled person also qualifies. A “disability” is defined as a physical, cognitive or behavioral health impairment that substantially limits one or more activities of daily living. It can be cognitive, developmental, intellectual, sensory or a combination of these. 

A person with a disability is defined not necessarily by a person’s defined medical condition, but by an environment that erects barriers to his or her participation in the social and economic life of their communities.
– quoted by NAELA

Please Listen to Me! You Need a Special Needs Trust for a Minor Child, Adult Child or Friend, Sibling or Family Member with a Disability in New Jersey.

We Can Help.

Understanding the Difference Between a Special
Needs Trust and a Supplemental Needs Trust

TESTIMONIAL

From start to finish, the entire experience of the “dreaded” estate planning and especially preparing our special needs child trust agreement went so smoothly.  That is thanks to the professionalism and dedication of Mr. Niemann and his wonderful staff.

Mr. Niemann, with the help of Lucille and Michele managed to guide us with sound advice, answer each and every question that arose (and there were many!) with the utmost patience, sensitivity and always with a smile on their faces.  Thank you from the bottom of our hearts!

We will be counting on all of you for helping us to obtain guardianship of Hannah next year!

—Sharon Arafa, Cliffwood, NJ

TESTIMONIAL

Mr. Niemann has been a God send to me and my family. He has met with me many, many times with patience, sensitivity and understanding that few people expect from an attorney. My family issues are complex and Mr. Niemann understands what I want to happen to my estate upon my death, especially for my adult incapacitated child and other adult children. He created a special trust for my son. He has followed up with me to help me make decisions without forcing his opinions on me. In the end, he told me, “Jerri, my job is to explain your choices and help you understand the legal effect of those choices.”

He guided me and put me at ease. He wanted me to make decisions that are the right ones for me. I am thankful for Mr. Niemann being my attorney and I recommend him to elderly persons who seek a qualified professional who will treat them with dignity, respect and sensitivity.

—Jeraldine Vincitore, Freehold, NJ

TESTIMONIAL

Please accept my sincere thanks to your law firm and your staff for all your patience and assistance in helping my sister and I through the tangled legal jungle in preparation for my sister’s Special Needs Trust account.  We would have been lost without you.

— Ginny Ditzel, Snow Camp, NC

Why Use a Special Needs Trust for a Special Needs Disabled Individual?

There are many reasons for creating a Special Needs Trust.  It will be my pleasure to explain them to you face to face.  Here are some of the benefits I explain to clients when recommending a Special Needs Trust.  I have bullet pointed them for you here and then I go onto explaining each point in much greater detail on the pages that follow;

  • The person with the disability will keep his/her income (SSI or SSD) and health care benefits, including Medicaid and Medicare.
  • Money placed into the trust can be used to pay for personal items and services not covered by public benefits
  • Money in the trust can be used to pay for doctors, dentists, therapists and other professionals who do not accept Medicaid, or for the services, co-pays and deductibles not covered by Medicare A & B & Medicaid
  • Parents and grandparents can control how, when and where trust assets go after the person with the disability passes. The only alternatives to the Special Needs Trust are (1) leaving nothing to the child; or (2) leaving the money to a pooled trust; or (3) leaving money in trust that is not a SNT causing the loss of public benefits.

Estate Planning With a Special Needs Trust

If you leave money to a person with a disability outright, he or she will lose public benefits. After the assets are spent down to under $2,000, the child can go back on public benefits. All the money you have given will be lost. It is so easy to solve this mistake with a Special Needs Trust.

Consult With a New Jersey Special Needs Trust Attorney Today

As a father himself, Mr. Niemann is a sensitive and caring attorney willing to help you achieve the best possible future for your child or family member.

Types of Special Needs Trusts  in New Jersey

First Party and Third Party Special Needs Trusts in New Jersey

There are two types of special needs trusts.  A special needs trust will be either a “Third Party Trust” or a First Party Trust.  I know that’s a mouth full.  Let me make it easier to understand.

You may initially determine whether a special needs trust is a Third Party Trust or First Party Trust by looking at the source of the money used to fund the trust.  If the assets used to fund the trust do not belong to the beneficiary, and if they do not belong to the beneficiary, then the trust is a Third Party Trust.  In other words, a Third Party Trust will always be established by someone other than the person with the disability with third party funds.  The beneficiary has never had an ownership interest.  For example, funds coming from a parent, grandparent or sibling are owned by the parent, etc.  They are not the funds owned by the child/disabled adult.  Note:  Once someone inherits funds, they belong to the person with the disability.

There are two general requirements for a Third Party special needs trust.  First, these trusts must be established by someone other than the trust beneficiary.  Third Party Trusts are usually established by parents, grandparents, aunts, uncles, siblings, friends, or any other independent party with no legal duty to support the trust beneficiary.  A spouse cannot establish a third party special needs trust.  The second key requirement is that these trusts must be established with funds in which the beneficiary has no ownership interest.  Third Party Trusts can be more easily adapted to the needs and wants of the person creating the trust and can therefore be part of a more traditional estate plan.  They can be revocable or irrevocable, and most significantly, do not require any “payback provisions” to New Jersey, or the Federal government (Medicaid) upon the death of the beneficiary.  Payback provisions are critical and should always be avoided when possible. I’ll explain why in the last part of the section which follows immediately below.

A First Person Special Needs Trust in New Jersey

These trusts are also referred to as (d)(4)(A) trusts.  They are described in the Federal statutes that authorize them.  This type of trust is generally called a “First Party Special Needs Trust”.  To establish a valid First Party Disability Trust in New Jersey, the trust must satisfy the legal requirements set forth below:

  • The Trust must be created solely for the benefit of an individual who is disabled as defined by law and who is under 65 years of age.
  • The trust may only be established by an incapacitated adult disabled person, the individual’s parent(s), grandparent(s), legal guardian, Power of Attorney (POA), or by a Court.
  • The Trust must be established with the funds and assets belonging to the individual.
  • Any funds that remain in the Trust at the disabled individual’s death must be used to reimburse the State for government benefits provided over the individual’s lifetime.  This requirement to reimburse the State is commonly referred to as a “payback provision”.  This payback requirement is what distinguishes a Special Needs Trust (First Party SNT) from a Supplemental Needs Trust (Third Party SNT).

What About Pooled Trusts in New Jersey?

Some people have heard about Pooled Trusts, but most people have not.  What are they?  Well, these trusts are referred to as (d)(4)(C) trusts. They are trusts managed and invested by non-profit organizations under IRS Code 501(c). These organizations serve the disabled community. With a pooled trust the funds of the disabled person are invested with hundreds/thousands of other disabled persons in a common trust fund.  Each beneficiary has their own “account” and funds are used for the economic benefit and welfare of each disabled person. Each participant has their own separate sub-trust, a large master trust and each participant has their own tax ID number.  To establish a valid Pooled Trust, it must satisfy specific legal requirements.

  • The Trust must be established and managed by a non-profit association.
  • The Trust must maintain separate accounts for each Beneficiary, but the funds are pooled for purposes of investment and management.
  • Each separate Trust account must be established solely for the benefit of an individual who is disabled as defined by law.  There are no age restrictions or requirements.
  • The individual’s account must be established with assets belonging to that individual.
  • Any funds that remain in the individual’s account at death may be kept by the non-profit trustee for their charitable purpose(s).  Any funds not retained by the Trust must be used to reimburse the State.  This may be referred to as a modified payback requirement.
  • New Jersey allows Pooled Trusts for individuals age 65 and younger.  It does not allow Pooled Trusts to be created by individuals past the age of 65.

CALL OUR OFFICE TODAY AND ASK FOR MR. NIEMANN TO PERSONALLY DISCUSS WHETHER A SPECIAL NEEDS TRUST IS RIGHT FOR YOU.  CALL HIM TOLL-FREE AT (855) 376-5291 OR YOU CAN EMAIL HIM AT fniemann@hnlawfirm.com.

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Special Needs Trust attorney serving these New Jersey Counties:

Monmouth County, Ocean County, Essex County, Cape May County, Camden County, Mercer County, Middlesex County,
Bergen County, Morris County, Burlington County, Union County, Somerset County, Hudson County, Passaic County