Estate planning and divorce are complex because you must make challenging and emotional decisions about what happens when you pass at an already stressful time in your life. Everyone has unique assets and concerns to consider. You should consider establishing a special needs trust for a dependent. As part of your divorce and child custody case, you can protect your loved one with special needs and ensure they are cared for if you become incapacitated or die. You must discuss your options with a New Jersey family law attorney.
What is a Special Needs Trust?
Also referred to as a supplemental needs trust, these are estate planning documents that describe what happens to a family member with special needs. It allows them to receive lawsuit settlements, financial gifts, and funds without impacting their government assistance and benefits.
The special needs trust will provide money for services and items not covered by benefit programs. This can include
- leisure activities
- living expenses
An appointed trustee will manage the funds in the beneficiary’s best interests. The person who established this trust must ensure they put sufficient funds into it to cover reasonably expected expenses.
Special Needs Trusts, Divorce and Child Support
If you are going through divorce, child support or a child custody case in New Jersey, the child support can be contributed directly to a special needs trust, and then the trust can make distributions to pay for some of your child’s needs. The New Jersey court order can direct that child support payments must be made to the trust.
Who Should Have a New Jersey Special Needs Trust?
Establishing a special needs trust is the best way to maximize financial resources to protect the financial future of a loved one with special needs. Family members with special needs benefit from an SNT because they can get government assistance to treat their condition without personal funds impacting eligibility. Many government programs are contingent on income, and having a trust excludes these funds from consideration.
Many situations and people can benefit from an SNT, including people with a permanent disability. The disability must impair the person from working. Individuals with special needs that do not require long-term benefits are also eligible for these trusts. When the condition can be treated and improved in the future, it is a good idea to look into an SNT. You can terminate the trust when it is no longer necessary.
Conversely, individuals with a condition that could progress into a disability can also establish a special needs trust. People who have conditions like ADHD, bipolar syndrome, and other developmental disorders and have a hard time managing their finances can benefit from SNTs.
3 Types of Special Needs Trusts
Within a special needs trust, you will have different subcategory options. The best one for your family member with special needs will depend on assets.
A first-party trust helps individuals who suffer an injury that permanently disabled them. The funds come from disabled people and are used for their benefit. These are best when the person has a substantial legal settlement or inheritance. Upon the person’s passing, the government collects the funds to reimburse them for their assistance.
A third-party trust provides stability for special needs persons who cannot live alone or work. A family member or other third party funds these accounts for the beneficiary. There are no limits to the fund usage or amounts, and the government has no claim on the funds.
Pooled trusts are for individuals who have limited funds, families without financial resources, and no trustees. Non-profit organizations administer these accounts. The organization will handle various beneficiaries, but each has an individual account. No government reimbursement is available, and the remaining funds are returned to the non-profit.
What Can A Special Needs Trust Purchase?
A special needs trust can buy anything the disabled person needs to live that is not covered by government assistance. You can buy a home, car, or van with the funds. Similarly, you can pay for vacations that meet specific guidelines. There Is no limit to the number of funds you can put into these trusts. They can hold a few thousand dollars or much more.
What Are ABLE Accounts?
An ABLE account is a tax-free savings account for a person with a disability. The account does not interfere with eligibility for government benefits requiring means-testing. Programs that sometimes require means testing are Medicaid and SSI. ABLE accounts are different from SNTs. The regulation governing will vary, and ABLE accounts are for persons who have a disability before the age of 26.
How Can a Family Law Attorney Help Protect Your Special Needs Family Member?
There are many intricacies with establishing a supplemental needs trust. Whether you are a family member or a disabled person, there are some terms you must know, and they are vital to your estate planning. A grantor is a person who funds the trusts and is the primary party in the process. They are funding the trust and must have the money and an understanding of what that entails.
Trustees and successor trustees will manage the assets and ensure the beneficiary gets the services needed from the trust. Trustees can be family, friends, an organization, a professional, or a colleague. The beneficiary is the disabled person in the trusts who will benefit from these funds. These are preliminary decisions that your New Jersey family law attorney can help with, but there are many other intricacies.
The New Jersey Family Law helps clients with their estate planning issues.
Protect What Matters With Stolfe Zeigler
A family member with special needs requires additional care. When you are a primary caregiver, you want to protect them at all costs. If something happens to you, there is no telling what will happen to your loved one. When you are estate planning, you should consider beneficiaries, assets, and your special needs loved one. If you do not address their future, the courts will, and it might not be a fruitful situation for anyone. Call the office of Stolfe Zeigler Family Law Firm at 732-240-9555 for a consultation with a New Jersey family law attorney.
Serving clients throughout the state of New Jersey.