Special Needs Trusts

When Is A Special Needs Trust Needed?


A way to become eligible for means-tested benefits if there are excess resources. When a child with serious and permanent disabilities reaches age 18 and is unable to be gainfully employed, it is frequently necessary to apply for government benefits such as Supplemental Security Income (SSI) and  Medicaid to provide some income support and health care. 

Access to programs of the Division of Developmental Disabilities(DDD), section 8 HUD housing and others depends in part on financial eligibility as well. Special Needs Trusts can play a crucial role in public benefits planning for disabled young adults on the autism spectrum or who have cerebral palsy or chronic psychiatric disturbances.

A way to protect settlements or inheritance. What if a Medicaid recipient receives a cash settlement for personal injury, or receives an inheritance? Special Needs Trust can be used to protect those funds if the Trust is funded before the individual turns 65.  The Trust provides a way to preserve  the funds for supplemental needs for the rest of the life of the injured person while also protecting eligibility for means-tested benefits. In some cases, a disabled former worker needs SSI as well as the Worker’s Compensation he may receive, and a Special Needs Trust may be a useful tool to achieve SSI eligibility.

Preserving Alimony and Equitable Distribution for a Person on Benefits. When a married person under 65 who has disabilities gets divorced, and will be dependent upon governmental benefits to pay for assisted living, Section 8 housing or other services, Special Needs Trusts can play a crucial role in preserving alimony or equitable distribution as a supplemental fund while preserving eligibility for means-tested benefits.

How To Establish A Special Needs Trust

Special Needs Trusts (SNTs) are Trusts that are established with the assets of a disabled individual, in which the assets are transferred to a Trust for sole benefit of the individual.

The Trust must be created by a parent, a grandparent, a guardian, a court, or by the disabled individual. A Guardian needs Court authorization.

An independent person is named as the Trustee. The Trustee is responsible to manage the funds, and has fiduciary responsibilities to the beneficiary.

Federal law and State regulations specify the requirements for such a Trust.

As long as the individual is under age 65, their assets can be transferred to the Trust without disqualifying them from means-tested benefits. 

The assets that are held by the Trust are not countable to the individual, and do not disqualify the individual from means-tested programs, provided that the Trustee follows the rules in handling the trust.

The Special Needs Trust Attorneys at Fink Rosner Ershow-Levenberg Marinaro, in New Jersey, will do everything that is required to write and establish a trust for the individual, including any necessary court proceedings. We provide advice and guidance to Trustees in the management of the Trusts, as well as related public benefits planning.

Special needs trust

Special Needs Trusts for Persons with Disabilities

What Is a Special Needs Trust?
An SNT is a specialized trust for sole benefit of a person who is disabled. It contains assets that belonged to the disabled individual.  It restricts the use of the money to supplemental needs, and not for support, so that the trust’s disabled beneficiary can be eligible for benefits such as SSI, Medicaid, or programs of the Division of Developmental Disabilities (DDD).

How is a Special Needs Trust made?
We write the Trust and it is established by the beneficiary’s parent or grandparent or Guardian, by the beneficiary, or by a court. The beneficiary’s assets can be transferred into the Trust, where the funds will be managed and controlled by a Trustee for the sole benefit of the disabled beneficiary.

Is a Special Needs Trust the same as a discretionary trust?
No. It must have many specialized provisions for it to be effective in protecting SSI, Medicaid and DDD eligibility.

Can it be written in the parent’s Will?
The method is different. When a parent wants to leave money for the benefit of his or her disabled child, a Supplemental Needs Trust can be written as part of the Last Will & Testament or as part of the parent’s Revocable Living Trust. Some parents establish the Trust during their lifetimes. The funds destined for the disabled child would be distributed to the Trust, so that the child doesn’t lose important government benefits. In these situations, the Trust is funded with the parent’s assets.