I’m Disabled, Not Incompetent…Why Can’t I Establish My Own Trust?

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Special Needs Attorney

Special Needs Trusts (SNTs) are an important tool in an elder care attorney’s toolbox. Established correctly, SNT’s allow a person to qualify for public benefits such as Medicaid and/or SSI while maintaining assets in a trust to supplement the funds provided by such programs. SNTs are established with funds that are owned by and belong to the beneficiary. By placing the assets into an SNT, the beneficiary can reduce his or her resource level to below the $2,000 threshold required by Medicaid and SSI to qualify for benefits. Unlike SNTs established with the funds of others (i.e., parents, grandparents, relatives, etc) a first-party SNT requires that a government payback provision be set forth in the trust.

Since 1993, it has been a legal requirement that a special needs trust be established by a parent, grandparent, guardian or court. This requirement has caused problems for many competent disabled adults who want to establish their own trusts. Certain other trusts which qualify as a form of a special needs trust that are run by non-profit third parties for beneficiaries allow beneficiaries to create their own trust. Because of this unfairness, the Special Needs Trust Fairness Act was filed with Congress in 2015 asking for a law allowing competent disabled adults to establish their own SNTs for themselves.

Currently, the act has passed the U.S. Senate and is now under consideration by Congress. As an issue of policy, it is likely the bill will pass the full Congress as well. Passing this bill will cut down on unnecessary costs for disabled adults. It will also offer us, as elder care attorneys, another option to protect clients who are receiving benefits. Imagine the convenience to the disabled that will be achieved by establishing their own trust, picking their own trustees and having funds readily available for the remainder of their lifetimes to supplement their SSI benefits without the necessity of court intervention.

To discuss your NJ Special Needs matter, 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 consultations if you are unable to come to our office.

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