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 people to be on Medicaid for residential 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.
Fortunately the government 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.
The idea is that money for a person with disabilities should supplement government benefits, not replace them. Benefits meet the person’s basic needs, and the trust pays for special needs.
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, then it may be advisable for you to consider a special needs trust. Please see our Q&A’s and Articles, or call us today at (908) 704-1900 for advice specific to your situation.