Special Needs Trusts to protect a loved one with Disabilities

Posted on: September 29th, 2014 by Mark R. Friedman

If you are unable to work due to a long-term disability, then you may be eligible for subsidized healthcare (Medicaid), cash assistance (SSI), and other benefits.  (For people with developmental disabilities, Medicaid is especially important, as New Jersey’s Division of Developmental Disabilities (DDD) now requires folks to be on Medicaid to receive adult services.)

However, these programs have very strict financial limits, and applicants must have minimal assets to qualify.  If you have nearly any money at all in your possession, Medicaid will quickly show you the door.

It is a difficult dilemma.  On the one hand, at a maximum rate of $740 dollars per month, SSI benefits do not pay enough to live on.  But on the other hand, foregoing benefits is usually not an option.  People who are unable to work due to a disability often have complex special needs, and even with savings in your name, without Medicaid and other benefits the money will run out.

Fortunately the government recognized this dilemma and created a way to set aside private funds to help a person with disabilities, without affecting the person’s eligibility for benefits – the special needs trust.

A special needs trust is a legal arrangement in which money is set aside under the control of a trustee, who uses it to buy things that benefit a person with disabilities.  Because the person with disabilities doesn’t own the money, the person is still eligible for benefits like Medicaid and SSI, even though the money can only be used to help the person with disabilities.

We usually help clients establish a special needs trust in two scenarios.  First, if a parent has a child with a disability (or sibling, spouse, etc.), then the parent’s will should include a special needs trust, so that any inheritance will be protected.  Second, if a person with disabilities recovers money in a lawsuit (often for medical malpractice), then the money should be set aside in a special needs trust in order to maximize its value.

If you or a loved one is unable to work due to a long-term disability, we are happy to help you create a special needs trust.  Please see our Q&A’s and Articles, or call us today at (908) 704-1900 to make an appointment.

As this website provides general information and isn’t tailored to your particular situation, it doesn’t constitute legal advice and may not take into account rules and exceptions that affect you. Although updated from time to time, this website may not take account of recent legal developments or differences in laws from state to state. For safety sake, obtain individual legal advice before you act! You assume all risk of acting on information contained in this website. This website doesn’t constitute legal advice, and no attorney-client relationship exists unless FriedmanLaw and you execute a written engagement agreement. Please contact us at 908-704-1900 to discuss engaging FriedmanLaw to help resolve your legal concerns.
Homepage photo: Cows grazing at Meadowbrook Farm, Bernardsville, NJ by Siddharth Mallya. October 23, 2012.
Interior photo: Somerset hills pastoral scene by Lawrence Friedman.