Your Guide to Special Needs Trust NJ

Explore the intricacies of Special Needs Trusts in NJ with the Law Offices of Wenarsky and Goldstein, LLC. Your guide to legal requirements, processes, and estate planning.

Navigating Special Needs Trusts in New Jersey

If a family member has special needs, ensuring their financial security in the future can be daunting. One effective solution is establishing a Special Needs Trust (SNT), which helps preserve financial resources for individuals with disabilities without interfering with their eligibility for government benefits from government programs.

However, setting up and maintaining an SNT in New Jersey can be complex, requiring professional legal guidance to comply with state-specific laws and regulations. The Law Offices of Wenarsky & Goldstein, LLC, a seasoned law firm, deeply understands special needs trusts and related areas of estate planning, wills, trusts, and appointment of a legal guardian. We can offer invaluable support. With our comprehensive knowledge and skilled legal representation, individuals and family members can be assured that their loved one’s financial future is secure and protected.

Special Needs Trusts: Definition and Purpose

A special needs trust, also known as a supplemental needs trust, is created to cater to the supplementary needs of a disabled person. Some expenses it covers include:

  • Medical expenses
  • Education
  • Recreation
  • Transportation
  • Personal care

An SNT is funded by assets belonging to the SNT beneficiary or a third party, such as a parent or other family members. As a beneficiary, you can receive funding from the trust without compromising your eligibility for public benefits (Medicaid eligibility and Supplemental Security Income (SSI)). The trust assets are not considered to be available resources for you. Your appointed trustee decides how and when to distribute them.

Types of Special Needs Trusts in New Jersey

Generally, you can create three types of SNTs in New Jersey:

  1. First-Party Trust. A first-party trust is funded with the beneficiary’s assets (e.g., inheritance or lawsuit settlement). To be eligible to set up this type of trust, the beneficiary must be under 65 years old and disabled as per the criteria laid down in 42 USC 1382(a)(3)(A). It includes a payback provision reimbursing the state for Medicaid benefits upon the beneficiary’s demise.
  2. Third-Party Trust: A third-party trust is established using assets belonging to someone other than the beneficiary, such as a parent or relative. Unlike first-party or pooled trusts, these trusts typically do not impose age restrictions on the beneficiary and lack a payback provision. This means that the remaining funds can be distributed to others after the primary beneficiary’s death. The reasoning for this is that because the funds held within the trust were never the property of the beneficiary, the government does not maintain the authority to pursue reimbursement for Medicaid payments made on behalf of the beneficiary upon their passing.

Pooled Trust: A pooled trust is funded by pooling funds from multiple beneficiaries who have disabilities, which are managed by a non-profit entity. Each beneficiary has a separate sub-account, and distributions are based on individual needs. It may or may not include a payback provision based on state law and the organization’s policy.

Legal Requirements for Establishing a Special Needs Trust in New Jersey

Setting up a Special Needs Trust in New Jersey involves meeting specific legal requirements and preparing essential paperwork. Here are the key steps:

  1. Choosing the suitable trust type.
  2. Drafting a comprehensive trust document specifying beneficiary details, trustee information, trust purpose, terms, and distribution instructions.
  3. Funding the trust appropriately.
  4. Registering the trust as required.
  5. Notifying relevant public agencies about the trust’s existence.

Given the intricacies, it may be a good idea to seek guidance from an experienced attorney to create a valid, compliant, and protective special needs trust in line with New Jersey laws. At the Law Offices of Wernarsky & Goldstein, LLC, we have extensive experience dealing with matters concerning trust creation, conservatorships, and guardianships. We can assist in crafting a legally sound and beneficial special needs trust that abides by New Jersey laws and safeguards your interests. 

Requirements of a Special Needs Trust

  • The SNT beneficiary has to be classified as disabled under 42 USC 1382(a)(3)(A).
  • The SNT is established as irrevocable.
  • The SNT is designated for the sole benefit of the SNT beneficiary.
  • Only specific individuals, including parents, grandparents, guardians, or courts, are authorized to establish the SNT.
  • Upon the death of the SNT beneficiary, the State of New Jersey becomes the primary remainder beneficiary, entitled to receive any remaining trust assets up to the total amount of Medicaid benefits paid/provided, minus any prior reimbursement or recovery of Medicaid payments that the State received.
  • Transfers to the special needs trust funds after the SNT beneficiary reaches the age of 65 are prohibited, and any additions to the trust after that age using the beneficiary’s assets are subject to regulations governing improper resource transfers.
  • Cash distributions from the trust to the SNT beneficiary are considered unearned income.
  • In the case of a tort recovery funding an SNT, reimbursement for Medicaid payments related to the tort must be made to the Medicaid agency before establishing the SNT.
  • But generally, New Jersey SNT regulations can be found at NJAC 10:71-4.11(g)1.

How the Law Offices of Wenarsky & Goldstein, LLC Can Assist

Creating a special needs trust is vital for securing the future of a loved one with special needs. But it involves legal complexities requiring professional assistance. At Wenarsky & Goldstein, LLC, our team understands special needs trusts and related areas of estate planning, with over 20 years of experience assisting families with individuals who have special needs.

We possess the knowledge and skills in various practice areas to help create a special needs trust aligned with your goals and in compliance with New Jersey law. We provide comprehensive legal services in estate planning and guardianship, including will drafting, guardian appointment, and power of attorney creation.

We understand each case is unique, so we provide a personalized approach to determining and implementing your goals, values, and concerns. We can be with you throughout the process and devise a plan fitting your situation and desires.  

When in doubt, consult us for assistance. We understand the importance of a special needs trust or SNT, and employ our skills, resources, and dedication to help you accomplish your estate planning goals.

Call the Law Office of Wenarsky & Goldstein

At the Law Offices of Wenarsky & Goldstein, LLC, our New York and New Jersey attorneys are experienced and knowledgeable in bankruptcy, estate planning and probate, guardianship, special needs planning, and real estate law. To learn more about how we can assist you with your legal needs, call us today at 973-453-2838.