Your estate plan is meant to not only give you peace of mind, but also assist each of your loved ones in different ways. If someone you care about has a disability, the best way to provide for that individual may be setting up a special needs trust. In particular, people with developmental conditions have long-term needs, so placing funds in trust ensures that your loved one who has such a condition can maintain a good quality of life. Furthermore, many disabled individuals rely on state and federal programs that have complex legal and tax requirements – trust instructions can ensure the assets in your estate keep in compliance with these regulations.
Setting up the right kinds of trust for your family’s situation is important – as is every other aspect of your estate plan. However, the estate planning process can seem daunting and difficult to start, so many adults put it off longer than they should. SGW Law’s team is here to make it easier and ensure your plan is optimized. Our highly skilled NJ estate attorneys are ready to guide you through the entire way with even the most specialized and complex trust situations – contact us online now or view some of the most important considerations for special needs trusts below.
Medical and Health Expenses
Many disabled people have low-cost medical insurance coverage provided by state governments through Medicaid. Like any insurance plan, however, there are some health-related expenses Medicaid may not cover. In this instance, a special needs trust can pay these costs without jeopardizing Medicaid eligibility.
For example, some types of dental care may be paid for by Medicaid, but other dental procedures, such as implants, may not, so cash from a special needs trust can readily be used. Likewise, any other uncovered medical care, deemed non-essential in an insurance context, is a good use of money from the trust. Alternative treatments such as acupuncture or chiropractic visits fall into this category. Furthermore, physical, occupational, or speech therapy and assistive technology such as mobility aids, prosthetics, and hearing aids can be paid for with a special needs trust.
Personal Care and Support Services
Personal care services, such as the assistance of private caregivers or home health aides, may be a physical health necessity for people with disabilities. Professionals such as these maintain quality of life by helping with needs like hygiene, medication administration, and nutrition, among others. But services like these are typically not covered by insurance and thus should be considered when setting up a special needs trust. Other types of supportive services for the beneficiary, including companionship and individual case management, may also be included in the terms of the trust.
Transportation
Just as all residents of most areas need transportation access for work, school, errands, and recreation, so do people with disabilities – even more so for those with a physical disability. A special needs trust can be used for any kind of transport-related consideration: Purchasing a vehicle, making accessibility modifications such as a wheelchair lift, public transportation like buses or trains, or ride services like taxis or rideshare apps. This is an essential inclusion as individuals who are disabled risk isolation without workable transportation.
Education and Training
In New Jersey, minors with disabilities have a right to a free appropriate public education, and this right has strong legal protections. While disabled adults may have to pay for continuing education, a special needs trust can easily help with educational costs. Things a trust can pay for under this category include not only tuition, but also books, other supplies, and tutoring services. This applies if the beneficiary is attending any kind of educational program, including private special education, vocational training, or job coaching.
Recreational and Leisure Activities
Leisure time is considered essential to anyone’s quality of life, and so a special needs trust can be used to pay for any number of kinds of recreation for the beneficiary, as well as for a companion to accompany them as needed. This may include vacation and travel expenses (such as flights, hotel costs, and dining), hobby supplies and classes, membership fees to clubs and organizations, and tickets to events such as theater performances or concerts. Moreover, leisure costs can also include electronics, adaptive sports equipment, and other items used recreationally.
Legal and Financial Services
People with disabilities may need help advocating for themselves in order to enjoy the use of their rights and participation in society. Therefore, funds from special needs trusts may be used for the fees of attorneys and financial planners as well as guardianship and other advocacy services. This applies not only to the beneficiary – the trustee may also need financial planning in order to optimally invest the cash in trust so that it can grow over the long run, for example.
Miscellaneous
While the above categories include the most common usages for cash held in a special needs trust, many other common everyday goods and services can be paid for with this kind of trust as well. For example, whenever the beneficiary needs to buy clothes or furniture, money from the trust can be used without issue. Certain kinds of subscriptions and monthly payments such as telephone and cable bills and streaming service fees may also be covered in a special needs trust. And, although this fact may not be obvious, a special needs trust can also pay for life insurance premiums, which is often a wise financial decision.
What a Special Needs Trust Cannot Pay For
A special needs trust is clearly a versatile document that can help to provide for the beneficiary in a vast variety of ways. However, there are a small number of ways in which money held in this kind of trust should never be used, for legal and financial reasons. The most important thing to avoid is direct cash payments to the beneficiary, because this would constitute income. The beneficiary could potentially lose disability-related benefits including Medicaid if their income is too high.
While most kinds of living expenses can be paid with a special needs trust, this does not include the most basic – namely, food and housing costs. It may not seem like this should count as a form of income, but using cash held in trust in this way could cause problems with eligibility for Supplemental Security Income (SSI). The cardinal rule is to avoid any situation where benefits might be lost, and an attorney can advise you on how to do this if there is any ambiguity or you have questions.
Contact Our NJ Trust Attorneys
If you want to set up a special needs trust in New Jersey but don’t know where to start, turn to the experience and skill of the attorneys at SGW Law. Our team includes leading names in the Garden State’s estate and disability law fields, and our aim is to make the entire estate planning process, including trusts of any kind, as easy and effective as possible. Contact us now to get started with the peace of mind of a fully realized estate plan.