As parents we will always worry about the well-being of our children. Even when they become adults and can take care of themselves, we still worry about our children.
When we have child who has needs that are different we worry about what will happen to them should we die.This is where a special needs trust can help.
What is a special needs trust?
A special needs trust is a financial mechanism designed for disabled children and adults. This trust enables the person with the special needs to get the money they need to live comfortably, without jeopardizing their eligibility for public benefits. Public benefits can include Medicaid, Medicaid and Supplemental Security Income (SSI). The trust creates a financial or “fiduciary” relationship, so an assigned person acts on behalf of the person who has special needs, in accordance with the terms of the trust.
Wording is very important
The wording of the trust is important. If the trust is not created in accordance with New Jersey estate planning laws and regulations it may not be valid. The directives and purpose of the document should be clear and unambiguous. A New Jersey special needs trust must be created before the person with special needs (known as the beneficiary) turns 65.
Who can benefit from a New Jersey special needs trust?
Parents may set up a special needs trust for a variety of reasons. Perhaps a child, or adult child has a mental health issue such as severe depression, bi-polar or schizophrenia. It may be that a child is chronically disabled, for instance has cerebral palsy. Addiction issues can also be the cause for setting up a special or supplemental trust, in order to ensure that money is disbursed in smaller units instead of in one large chunk. Many parents choose a special needs trust for their child or grandchild who is has autism spectrum disorder.
As with any estate planning document, it is always within your best interest to consult with an estate planning attorney.