Self-Settled Trusts Available for Individuals with Disabilities

By adding two words (“the individual”) from the Special Needs Trust Fairness Act of 2015 to an existing statute, special needs individuals are now able to create their own self-settled special needs trust. President Obama signed the 21st Century Cures Act approving the change and opening the door for individuals who previously could not open a special needs trust on their own.

trustsPrior to the act, there were two options for individuals with disabilities to set up their own self-settled special needs trust: (1) have a living parent or grandparent create it for them, or (2) go to court. With the implementation of the new act individuals with disabilities are no longer required to rely on others to advocate for their needs.

As described in New Jersey’s Medical Assistance and Health Services Regulations, a special needs trust is “established for the sole benefit of the disabled individual by a parent, grandparent, legal guardian of the disabled, or the court.” The changes to the federal Act will expand this definition to allow the individual to establish their own trust as well.

A special needs trust is intended to allow an individual to have assets to supplement, but not replace, any benefits or assistance from any federal, State or governmental entity for which the beneficiary is eligible or receiving benefits. Currently, the New Jersey Medicaid eligibility regulations allow individuals to exclude assets from the resource test only if those funds are in a special needs trust. Therefore, a special needs trust is valuable in protecting a sudden increase in assets from endangering eligibility for crucial public benefits. Additionally, an individual’s needs may not be fully taken care of through their Medicaid or Social Security Disability (SSD) payments. Setting up a special needs trust is useful for supplementing these payments and allowing the individual to live comfortably.

Any individual seeking to set up a special needs trust should seek advice from an attorney. Because public assistance programs are subject to intense budgetary pressures, it is important that the special needs trust is set up properly.

When forming a special needs trust, a skilled attorney can help you determine what kind of trust is best for your family and financial situation. The attorneys at Hunziker, Jones, and Sweeney P.A. are experienced in dealing with the creation of trusts. Call (973) 256-0456 or fill out our contact form for a consultation.

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