Four Common Misconceptions About Special Needs Trusts in New Jersey

If you have a child, grandchild, or other loved one with special needs, it is imperative that you develop an estate plan that ensures that they are properly protected. A special needs trust is a powerful estate planning tool that can help to protect the best interests of vulnerable people. Here, our New Jersey wills, trusts, and estate planning attorney dispel four of the most common myths about special needs trusts.

Misconception #1: Special Needs Trust are Not Actually Necessary for Disabled People

False. Disabled people are often far better off if money or property is left to them through a special needs trust instead of directly. As explained by the New Jersey Department of Human Services, a special needs trust is “a type of trust that preserves the SNT beneficiary’s eligibility for needs-based government benefits such as Medicaid and Supplemental Security Income (SSI).”

Why is that important? Giving assets directly to a person with a disability can undermine their eligibility for critical government benefits like Medicaid or Supplemental Security Income (SSI). A special needs trust is a unique tool that you can use to leave assets to a special needs person without it counting against them for Medicaid and/or SSI.

Misconception #2: Any Trust Can Serve as a Special Needs Trust

False. This is wrong. Not all trusts meet the strict legal criteria required to protect government benefit eligibility for people with disabilities. In New Jersey, a valid special needs trust must be carefully drafted to restrict the use of funds to supplemental needs. It must also comply with federal and state regulations. Using the wrong type of trust can undo your entire planning effort.

Misconception #3: Only Parents Can Set Up a Special Needs Trust

False. While parents can and often do set up a special needs trust for a vulnerable child, it can be created by any person or any entity. In New Jersey, a special needs trust can be created by a grandparent, legal guardian, or even the court. Further, in some cases, people with disabilities may fund their own trust with assets they receive through a settlement or inheritance.

Misconception #4: Special Needs Trusts Give Up Control Over the Money

False. Some families worry that creating a special needs trust means losing control of how the money is used. In reality, the trust names a trustee who manages the assets, and that trustee is typically a trusted family member, friend, or professional chosen by you. The trustee must follow the trust’s instructions and act in the best interest of the beneficiary.

Call Our New Jersey Special Needs Trust Attorney Today

At Poulos LoPiccolo PC, our New Jersey estate planning attorney has extensive experience with special needs planning, including special needs trusts. If you have any specific questions about special needs trusts, please do not hesitate to contact us today for a fully private case review. With an office in Monmouth County, we provide special needs trust planning services across New Jersey.

Source:

nj.gov/humanservices/dmahs/clients/snt.html