Glossary of New Jersey Trust Terms
Learn the terms and basic vocabulary found throughout this website. Definitions are a lawyer’s starting point in all discussions and this site is no different. Take your time reading each word or phrase. It can be challenging.
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Special Needs Trust
A general term that denotes any one of several types of trusts, all of which preserve eligibility for government assistance benefits and create a fund that can be used to supplement the beneficiary’s care and quality of life.
Third Party Trust
A trust that is established by someone other than the trust beneficiary and with funds in which the beneficiary has no ownership interest. Examples of third parties could include the parents of adult children, grandparents, aunts, uncles, brothers, sisters, cousins, friends, or any other independent party with no duty of support. One principal advantage of these trusts is that they do not need to contain payback provisions, which means that assets can be passed on to other family members at the trust beneficiary’s death free of any State liens.
A trust established for the sole benefit of the trust beneficiary by the beneficiary’s parent, grandparent, legal guardian, or a court. The beneficiary must be under 65, the assets used to fund the trust must belong to the beneficiary, and any remaining assets at the beneficiary’s death must be used to reimburse the State.
A trust established and administered by a non-profit association with trust sub-accounts established for the sole benefit of the individual beneficiaries by the beneficiary’s parent, grandparent, legal guardian, a court, or the individual beneficiary. The beneficiary does not need to meet any age requirement, the assets used to fund the trust must belong to the beneficiary, and any remaining assets at the beneficiary’s death must either be retained in the trust by the non-profit or used to reimburse the State for all medical benefits provided to the beneficiary.
Refers to all of the various needs based State programs that are operated in conjunction with the Federal government. New Jersey has numerous different adult Medicaid programs intended to provide different benefits and meet different needs. Like Supplemental Security Income (SSI), Medicaid programs have income and asset limits that must be satisfied and maintained as a condition to receiving program benefits. While Medicaid asset limits are fairly consistent, income limits can vary considerably from program to program.
Provides health insurance for the aged and for individuals determined to be disabled. Unlike Medicaid, Medicare is a social insurance program, not a means tested program. It consists of two components, Part A and Part B. Part A provides inpatient hospital coverage, skilled nursing home care, and home health care. Part B provides inpatient hospital services, out-patient hospital care, physical therapy, medical equipment, and prosthetic devices. Part B is voluntary, and a small monthly premium must be paid to maintain enrollment.
Trusts created pursuant to legislation passed under the Omnibus Budget Reconciliation Act of 1993 (OBRA 93) and codified at 42 U.S.C. §1396p(d). OBRA Trusts include (d)(4)(A) Trusts, also called Disability or special needs trusts; (d)(4)(B) Trusts, also called Income or Miller Trusts; and (d)(4)(C) Trusts, also called Pooled Trusts.
A term that is applicable when someone is receiving Medicaid benefits under the Institutional Care Program, which is the Medicaid program in New Jersey that helps pay for long term nursing home care. Everyone who receives long term care benefits is responsible for paying a portion of the overall cost. The portion that each person must pay, or their “patient responsibility”, is determined by adding all gross income together and then subtracting a personal needs allowance of $35.00. The individual receiving long term care benefits must pay his or her patient responsibility each month, and Medicaid pays the remaining balance.
Social Disability Income (SSDI)
An entitlement program that operates very much like Social Security old age and retirement benefits because eligibility is partially based on paying into the system for an appropriate number of quarters. Assuming that a sufficient number of quarters have been paid, receipt of SSDI benefits is then conditioned on a determination of disability by the Social Security Administration rather than upon reaching retirement age.
Special Needs / Supplemental Needs
Refers to services and/or goods that are not provided by the trust beneficiary’s public assistance program. Because this definition of special needs is directly related to the technical eligibility requirements of each public assistance program, trust distributions that are perfectly appropriate for one trust beneficiary may be entirely inappropriate for a different trust beneficiary who receives different public assistance benefits.
Supplemental Security Income (SSI)
A needs-based Federal program that is administered by the Social Security Administration. The determination of disability that the Social Security Administration must make is the same determination that is made for SSDI. Unlike SSDI, however, SSI has income and asset limits that must be satisfied and maintained as a condition to receiving program benefits. In many States, including New Jersey, eligibility for SSI automatically qualifies the individual for Medicaid benefits.
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Written by Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a New Jersey Special Needs Trust Attorney