When a person in New Jersey has a disabled loved one, they want to ensure that their loved one’s medical care needs are met. Sometimes, a disabled individual qualifies for government benefits, but these benefits may not be enough to cover all aspects of their care. Fortunately, there are other ways to set money aside for the care of a disabled loved one.
Special needs trusts are estate planning vehicles that allow a person to set funds aside for the benefit of a disabled loved one, without having their eligibility for means-tested government benefits compromised. For example, to qualify for Medicaid and Supplemental Security Income, a person must have less than $2,000 in assets, and have an income below a certain threshold. Special needs trusts can provide disabled individuals with funding for the care they need, while still receiving these benefits and without having to become impoverished.
There are two general types of special needs trusts. One type of special needs trust is a first-party special needs trust. This is established by an adult who accumulated assets prior to becoming disabled or had received assets after having qualified for government benefits. Another type of special needs trust is a third-party trust. This is established by a family for the benefit of a child.
Like many estate planning vehicles, special needs trusts can be complex. If they are not legally sound, it could result in a disabled person being disqualified from government benefits. Therefore, those who are considering executing a special needs trust may want to seek professional guidance to ensure the final document accomplishes its intended purpose.