Recently our office successfully appealed to the Monmouth County Superior Court to allow the creation of a supplemental special needs trust (SNT) for an adult disabled daughter who otherwise would have lost her public benefits. Specifically, we asked the judge to direct that the funds left by her brother under his last will, be placed into a third party supplemental benefits trust established by her guardian who was her surviving brother.
Background Facts
Our disabled client’s brother died intestate. His surviving brother was appointed Executor of his estate and Co-Trustee of the Testamentary Trust created under his Last Will and Testament, drafted almost 30 years earlier. The beneficiary of the testamentary trust was his sister who is a person with a disability.
The testamentary trust created under the decedent’s Last Will and Testament was drafted as a special needs trust, but unfortunately contained provisions for support and maintenance for his sister that violated present Social Security and Medicaid law.
For many years, our client did not attempt to access means-tested government benefits, but since her brother’s death her family privately paid for care, first at an assisted living residence. Having now satisfied the private pay requirement, she wanted to apply for Medicaid. The existence of the 30-year old Trust rendered her categorically ineligible. Unless reformed, the corpus of the Trust will not qualify as an exempt resource, and our disabled client would not be able to access means tested government benefit programs like Medicaid.
Medicaid is of paramount importance for her now as she will never be able to care for herself independently or support herself economically. As an individual with a disability, she is vulnerable to abuse, neglect and exploitation. As such, it is desirable to conserve her trust resources in a manner that will provide constructive benefits to her while ensuring that the resources do not render her ineligible for important means-tested government benefits and programs, such as Medicaid.
Our application to the court requested that the corpus of the testamentary trust be placed into a new Supplemental Benefits Trust which complies with state and federal law to both protect her and preserve her eligibility for government benefits and programs. This approach was fully supported by Federal and New Jersey law.
Legal support to create a supplemental needs trust
Because of our client’s disability, the cost of meeting her needs privately could exhaust her funds in as little as a few months, leaving her with no protection for the future. Instead, we argued her funds should be used for the following purposes.
- Protection – Special Needs Trusts and Supplemental Benefits Trusts are recognized as an effective planning tool for individuals with a disability. In New Jersey, they are a preferred planning tool: [i]t is in the public interest to encourage persons to set aside amounts to supplement and augment assistance provided by government entities to persons with severe chronic disabilities.” J.S.A. §3B:11-36(a). “The Law invites, rather than discourages, the creation of special needs trusts.”
- To fill gaps in public services and supports – Funds in a SNT can be made available for expenses for which there is no other source of payment. For example, day programs, extra therapies, elective surgery, dental care, supplemental medical insurance, transportation, recreation and specialized training are often not covered by many government programs.
Because our client’s life expectancy is measured in years, it is in her best interest to have funds available to meet any contingency rather than using those funds to meet her basic needs that could otherwise be met through government programs.
I am pleased to report that the court granted our request to take the funds from the Family Trust created under her brother’s Last Will and Testament and ordered they be placed in a new Supplemental Needs Trust prepared by our office.
To discuss your NJ special needs trust, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.
By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County, NJ Special Needs Trust Attorney