A disabled child’s support payment can and often should be paid into a Special Needs Trust to preserve their eligibility for public benefit programs.
In a recent New Jersey case, the court examined whether the assignment of child support payments into a Supplemental Benefits Trust (Trust) was irrevocable. Child support payments may be considered irrevocably assigned to a trust when they are court ordered or when the terms of the assignment cannot be modified. In this case, the trial court did not directly order the child support payments to be paid into the SNT. However, the court neither approved nor disapproved the marital property settlement that generally discussed child support payments, but merely incorporated the general agreement into the judgement of divorce. New Jersey law recognizes that a property settlement agreement is a binding contract and should be enforced according to the original intent of the parties. Because the agreement was incorporated as part of the judgement of divorce and is a binding contract under New Jersey law, the terms of the irrevocable assignment cannot be changed without modifying a court-ordered judgment of divorce and property settlement agreement, and therefore the child support payments were irrevocably assigned to the Trust.
Question Presented to the Court
Whether the assignment of child support payments into the Irrevocable Supplemental Benefits Trust (Trust) was such that the payments should not be considered as income to the minor disabled person for the purposes of determining eligibility for Supplemental Security Income (SSI).
Analysis of New Jersey Law
Child support payments are generally considered to be unearned income to a recipient. However, if a child support payment is irrevocably assigned to a trust that payment is not itself a resource, nor is the payment considered to be income for SSI purposes. If the assignment is revocable, in contrast, the payment remains income to the individual legally entitled to receive it. Child support payments are (generally) considered irrevocably assigned to a trust when they are court ordered or when the terms of the assignment cannot be modified.
In this case, the parents entered into a property settlement agreement which included a provision that child support payments would be made directly to the Trust.
New Jersey law also permits child support payments to be made to a trust, especially when that trust is designed to meet the present and future needs of a dependent, disabled child. Payment of child support from a parent to a trust designed to meet the present and future needs of the dependent disabled child should be considered in the best interests of the unemancipated child and child support payments, therefore, are legally assignable.
To discuss your NJ Special Needs Trust matter, please contact Fredrick P. Niemann, Esq. at (732) 863-9900 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