Planning for the Future: 6 key points when considering Special Needs Trusts

For more information on transition and Special Needs Trust planning, you could also reach out for more information to our Transition Coordinator or the folks at PrimeTime Center (our over 21 program).

WHO qualifies for a Special Needs Trust?

If a person under the age of 65 has been determined disabled under 42 USC 1382(a)(3)(A), the parent, grandparent, or guardian of that person may set up an irrevocable trust for the sole benefit of the disabled beneficiary. The court may also establish a SNT for a disabled individual. The trustee is the person appointed to manage the trust on the beneficiary’s behalf. The trustee must also provide annual reports to various government agencies.

WHAT is a Special Needs Trust?

A special needs trust is an account containing the monetary assets of a disabled individual which preserves that person’s eligibility for need-based government benefits such as Medicaid and Supplemental Security Income (SSI). The assets in the trust may be excluded from the Medicaid rules regarding the treatment of a trust as long as it is written, managed and used in compliance with all applicable Federal and State laws and regulations. These trusts may also be called supplemental needs trusts, or “(d)(4)(A)” trusts after the federal law that authorized them, 42 U.S.C. § 1396p(d)(4)(A). The SNT may include assets gifted to the individual. The SNT must be irrevocable, and must be for the sole benefit of the trust beneficiary.

WHY create a Special Needs Trust?

Money in a special needs trust can cover supplemental needs not covered by Medicaid and SSI. Because the SNT beneficiary does not own the assets in the trust, he or she can still remain eligible for need-based benefit programs that have an asset limit.

WHEN is it best to prepare a Special Needs Trust?

Most parents discuss SNTs with an estate planning attorney when creating their wills, or when starting the process of applying for Medicaid and/or Social Security for the child. Transfers to the trust after the SNT beneficiary reaches age 65 are prohibited.

WHAT agencies need to be aware of the Special Needs Trust?

As part of the Medicaid or SSI application process, the trustee must submit the SNT and its completed Schedule A listing the assets funding the trust to the eligibility determination agency, such as the County Welfare Agency (CWA), the Division of Medical Assistance and Health Services (DMAHS) Institutional Services Section (ISS), or the federal Social Security Administration (SSA) District Office (for SSI beneficiaries). In New Jersey, the trustee must also provide a copy of the SNT document to the (DMAHS), Beneficiary Administrative Action Unit (BAAU) (Mail Code 5, P.O. Box 712, Trenton, NJ 08625-0712), which monitors SNTs. The eligibility determination agency (the CWA, the ISS or SSA), and the DMAHS, BAAU must also receive copies of the annual accountings from the trustee. Any changes to or questions about the SNT should be directed to the BAAU.

HOW to begin the process of a Special Needs Trust?

Ask your case manager to recommend a Special Needs Attorney who can get you started setting up a Special Needs Trust for your child.

https://www.state.nj.us/humanservices/dmahs/clients/snt.html