Elder Law
Social Security and Supplemental Security Income (SSI) Attorney, Wayne, NJ
Understanding Social Security and SSI
While government benefit programs such as Social Security Income (SSI) and Medicaid offer substantial healthcare coverage, the available cash benefits are minimal. As an experienced elder law attorney in Wayne, New Jersey, I specialize in developing, designing, and drafting Special Needs Trusts. These trusts preserve a disabled person’s eligibility to receive government benefits while providing additional funds to enhance their quality of life.
My legal team assists families of disabled individuals in planning their estates and structuring monetary judgments or settlements to avoid jeopardizing eligibility for government benefits. A properly designed and administered Special Needs Trust supplements public benefits like SSI and Medicaid without risking eligibility. We help you create a plan to protect these public benefits for your disabled child, ensuring they are safeguarded throughout their lifetime.
What Is a Special Needs Trust?
A Special Needs Trust is created to ensure that beneficiaries who are disabled or mentally ill can enjoy the use of property intended for their benefit without losing access to essential government benefits. In addition, if a beneficiary lacks the mental capacity to handle their financial affairs, assets can be better managed within the trust.
Special Needs Trusts are essential for Medicaid recipients and can provide benefits to, and protect the assets of, physically or mentally disabled individuals. These trusts are frequently used to receive an inheritance or personal injury settlement proceeds on behalf of a disabled person. They can also be funded from compensation for criminal injuries, litigation, or insurance settlements.
The primary purpose of a Special Needs Trust (also known as a Supplemental Needs Trust) is to provide benefits to a beneficiary who would otherwise lose eligibility for public assistance programs like SSI or Medicaid. The beneficiary typically qualifies for public assistance due to a disability that makes them unable to hold meaningful employment and with insufficient assets for adequate support.
Types of Special Needs Trusts
First-Party or Self-Funded Trusts
These trusts, recognized by federal and state statutes, are established with property or funds belonging to the person with the disability. Known as d4A trusts (referring to the U.S. Code citation 42 U.S.C. § 1396p(d)(4)(A)), they can be established for any person under the age of 65. The trust must be established by the person’s parent, grandparent, guardian, or the court.
Upon the death of the disabled beneficiary, the trust must reimburse the state for expenditures made under Medicaid.
Third-Party Created Trusts
Trusts funded by someone other than the beneficiary are Third-Party Trusts. A third-party trust may benefit a person with a disability as long as it is structured as a Special Needs Trust. This kind of trust can be established either as a Living (Inter Vivos) Trust or a Testamentary Trust (created by a will).
Living Trusts
A Living Trust is ideal for a parent who wants to create a trust for a child with a disability but does not want the child to lose eligibility for public benefits. Other family members who wish to leave assets to the disabled individual can contribute to the existing trust without creating separate trusts in their wills. The parent can make lifetime gifts or bequests through their will to the trust.
Testamentary Trusts
A Testamentary Trust is created through a will and includes provisions for a Special Needs Trust for the child with a disability. This option does not allow other relatives to leave assets to the disabled child without establishing their own trusts in their wills.
What Can a Special Needs Trust Pay For?
The Special Needs Trust is designed to provide for supplemental needs, which are non-support items that enhance the beneficiary’s quality of life without replacing public benefits. The trust cannot provide for basic support expenses such as food or shelter, as this could render the trust assets countable and jeopardize eligibility for SSI and Medicaid.
Permissible expenditures include:
- Medical and dental care not covered by Medicaid
- Rehabilitation services and therapies
- Education and training programs
- Transportation, including the purchase and maintenance of a vehicle
- Assistive devices and equipment, such as wheelchairs or communication devices
- Personal care attendants
- Recreation and vacations
- Personal items, including clothing, toiletries, and electronics
- Household goods and furnishings
Prohibited expenditures include:
- Basic food and shelter costs, including rent, mortgage payments, property taxes, heating fuel, gas, electricity, water, and sewer services
- Cash given directly to the beneficiary
All purchases should be made directly by the trust to third-party vendors. The trustee should never give cash directly to the beneficiary.
Selection of Trustee and Trustee Discretion
The choice of trustee is absolutely critical. The trustee should be knowledgeable in:
- Government benefits law
- Medicaid regulations
- Tax laws
An inexperienced trustee can jeopardize the trust and the government benefits the disabled individual receives.
The trustee must have sole and absolute discretion over distributions. The beneficiary cannot have the authority to compel distributions from the trust. While the trustee can consider the beneficiary’s requests, the final decision rests with the trustee. Prior approval by the trustee is essential; the beneficiary should not incur expenses expecting the trust to reimburse them without consent.
If the trustee is uncertain whether an expenditure is permissible, they should consult an attorney experienced in Special Needs Trusts.
How We Can Help
As an elder law attorney in Wayne, New Jersey, I am dedicated to helping families protect the future of their loved ones with disabilities. Our legal team will:
- Design and draft a Special Needs Trust tailored to your family’s needs
- Ensure compliance with federal and state laws to maintain eligibility for government benefits
- Advise on trustee selection and responsibilities
- Assist in estate planning to structure inheritances or settlements appropriately
- Provide ongoing support to trustees managing the trust
Protect your loved one’s future today. Contact my office to schedule a consultation and learn how a Special Needs Trust can provide security and enhance the quality of life for your family member with special needs.
Additional Resources
- Social Security Administration – Understanding SSI
- State of New Jersey – Division of Developmental Disabilities
- The Arc of New Jersey – Advocacy and Resources
Planning for the future of a loved one with special needs is a complex but essential task. Let us guide you through the process with compassion and expertise.