Results-Oriented Legal Services

Photo of attorneys John R. Lanza and John E. Lanza

Estate planning tools for loved ones with special needs

On Behalf of | Jun 30, 2023 | Estate Planning |

You might be one of many New Jersey parents who have a child (either minor or adult) with special needs. Or, perhaps, you provide daily care for an incapacitated spouse or other family member. It’s understandable that you might worry about how to provide for your loved one if you die. Can he or she continue to receive government-funded benefits? Can you somehow set additional funds aside to provide for his or her financial needs? There’s an estate planning tool that can help.

By initiating a special needs trust, you can provide for your loved one’s financial needs without jeopardizing payments he or she receives through public assistance. This includes Supplemental Security Income (SSI), as well as Medicaid. This type of trust enables you to supplement government-based financial assistance rather than replace it.

Why not just leave money to your loved one through a will?

If you were to list your child, spouse or other family member with special needs as a beneficiary in your will, he or she would receive whatever assets you wish to give as an inheritance. However, receiving such a gift (by such means) could affect eligibility for certain government-funded assistance programs.

Assets in a special needs trust, on the other hand, are not calculated as income to determine eligibility for government assistance programs. This is why many people choose to fund a trust rather than transfer assets through a will to a loved one with special needs.

Using funds from a special needs trust

There are many financial needs associated with caring for a person with special needs. These may include paying professional caretakers to cover expenses for transportation to and from doctor appointments, or costs associated with education, rehabilitation or even recreation. Monies placed in a special needs trust can help provide for these needs.

Understanding legal terminology

When you create a special needs trust (or any type of trust), you become a “grantor.” You also must designate a “trustee.” This is a person who will manage the trust and ensure proper use of funds for your loved one (the “beneficiary”).

You may also incorporate specific instructions for how to use monies in a trust fund. It’s best to discuss such issues with someone who has experience with special needs trusts before signing any legal documents. This enables you to ask questions and seek clarifications about New Jersey laws that may be relevant to your situation.


FindLaw Network