Planning for the future is never easy, but when a loved one has a disability or special needs, the process becomes even more important. A Special Needs Trust (SNT) is one of the most effective legal tools available to help families provide for a child, sibling, or other relative with disabilities, without jeopardizing their eligibility for essential government benefits. But what exactly does a Special Needs Trust do, and why might it be the right choice for your family? Continue reading and reach out to the knowledgeable Morris County estate planning lawyers at Wiley Malehorn Sirota & Raynes to learn more. Here are some of the questions you may have:
How Does a Special Needs Trust Protect Government Benefits?
One of the primary purposes of a Special Needs Trust is to preserve access to public assistance programs like Supplemental Security Income (SSI) and Medicaid. These programs are means-tested, which means they have strict asset and income limits. If a person with special needs were to receive an inheritance or financial gift directly, that sudden increase in assets could disqualify them from receiving vital support.
This is where the SNT comes into play. Instead of giving money or property directly to the individual with special needs, those assets are placed in a trust that is managed by a trustee. The trustee uses the funds to supplement, rather than replace, the benefits the beneficiary is already receiving. For example, the trust might pay for transportation, home modifications, education, recreation, or out-of-pocket medical expenses.
Because the assets belong to the trust and not directly to the beneficiary, they are not counted when determining eligibility for government aid. This allows families to provide a higher quality of life for their loved one without putting that critical support at risk.
Who Can Set Up a Special Needs Trust?
Almost anyone with a desire to help a loved one with a disability can create a Special Needs Trust. Parents often establish one as part of their estate plan, but grandparents, siblings, or even family friends can also be involved in funding or setting up the trust.
Importantly, there are different types of SNTs available. The most common are first-party and third-party trusts. A first-party SNT is funded with the beneficiary’s own assets, such as a legal settlement or inheritance, while a third-party SNT is funded with assets belonging to someone else, typically a parent or grandparent. The type of trust you choose will depend on who is providing the funding and what your long-term goals are.
When Should You Speak With an Estate Planning Attorney?
Because the laws surrounding government benefits and trusts are complicated, and because every family’s situation is different, you should strongly consider speaking with a qualified estate planning attorney as early as possible. An attorney can help you draft a trust document that complies with both federal and New Jersey law. They can also advise you on naming a trustee, managing assets within the trust, and coordinating the SNT with the rest of your estate plan.
Your loved one deserves security, dignity, and care, now and in the future. A Special Needs Trust can help make that possible.
If you have additional questions or would like to speak with a lawyer about your case, simply contact Wiley Malehorn Sirota & Raynes today.
