WHY A SPECIAL NEEDS TRUST?Katherine E. Ingrassia, Esq.

October 17, 2012Courter, Kobert & Cohen

1001 Route 517Hackettstown, NJ 07840

(908) 852-2600

ADVANCED PLANNING

One of the most important things parents or family members can do for a disabled child is to create a trust for his or her benefit.• A trust is created when property (i.e., money, stock) is

managed by someone for another person's benefit. • The person managing the property is called the "trustee". • The person whose benefit it is for is called the "beneficiary".• The trust lasts as long as it is needed.• This usually means the trust will go on until the beneficiary's

death or until the funds are spent down.

Katherine E. Ingrassia, Esq.

ADVANCED PLANNING

• A trust provides a much safer vehicle for providing funds to care for a disabled child.

• The trust will protect assets from the claims of creditors and should, if properly drafted, allow the child to continue to qualify for the governmental assistance which is vital to the child's continued well-being.

Katherine E. Ingrassia, Esq.

SPECIAL NEEDS TRUST

The trust that most benefits a person with disabilities who is under 65 is a Special Needs Trust (or Supplemental Needs Trust – the term is used interchangeably). This trust is designed to provide for supplemental and extra care over and above that which the government provides while preserving the person’s eligibility for those benefits.

Katherine E. Ingrassia, Esq.

SPECIAL NEEDS TRUST - ADVANTAGES

• Government benefits• SSI, Medicad, Vocational Rehabilitation, Subsidized

Housing, and Other State Social Services

• Money held without penalty• Pool of funds • Family or friends can add at any time

• Can receive gifts, inheritances, etc. • Available to those not currently receiving benefits

Katherine E. Ingrassia, Esq.

SPECIAL NEEDS TRUST - ADVANTAGES

• Available to those not currently receiving benefits• SSI, Medicaid, Vocational Rehabilitation, Subsidized

Housing, and Other State Social Services

• Money held without penalty• Pool of funds • Family or friends can add at any time

• Can receive gifts, inheritances, etc.

Katherine E. Ingrassia, Esq.

WHAT DOES IT COVER

• May not be used for basic needs• Created for the supplemental care of the disabled• Cannot be used to pay for housing, medical treatments

covered by Medicaid, or clothing• Cannot be used to pay for unauthorized items covered

by SSI or Medicaid

• Only used for supplemental care• Supplemental care must be defined

Katherine E. Ingrassia, Esq.

THREE TYPES OF SPECIAL NEEDS TRUSTS

• Third-Party Special Needs Trusts• Most common• Usually created by parent or family member• Can be set up by anyone• Does not need to contain “payback” provision

• Self-Settled or First Party Trust• Established by parent or family member• Created upon receipt of assets (settlement or

inheritance)• Needs to include “payback” provision

• Pooled Special Needs Trust• Managed by non-profit organizations

Katherine E. Ingrassia, Esq.

NAMING A TRUSTEE

• Trust must be managed by person other than the disabled

• Trustee may be parent, grandparent, trusted family member

• Trustee has discretion over distribution of funds• Trustee has fiduciary duties

Katherine E. Ingrassia, Esq.

WHEN TO SET UP A SPECIAL NEEDS TRUST

• Can be created during one’s lifetime or through a person’s Will upon death

• Testamentary of special needs trust• Living or inter vivo special needs trust

Katherine E. Ingrassia, Esq.

HOW CAN IT BE FUNDED

• Family savings• Stock investments and mutual funds• CDs• Military benefits• IRAs• Real property• Standard government benefits

Katherine E. Ingrassia, Esq.

WHAT INFORMATION IS NEEDED

• Information to provide an attorney may include:• Likes, dislikes, personal habits, special needs• Medical diagnosis• Social security number• Sources for and amounts of funding• Trustee information• Distribution of remaining funds

Katherine E. Ingrassia, Esq.

OTHER ADVANCED PLANNING

• Your own estate plan• Inheritance for the disabled child• Beneficiary designations• Protection against estate tax

• Your child’s estate plan

Katherine E. Ingrassia, Esq.

WHY USE A SPECIAL NEEDS TRUSTTO SUMMARIZE

• The disabled beneficiary will keep his/her income (SSI or SSD) and health care benefits.

• Money in the trust can be used to pay for items and services not covered by government benefits

• Parents control how trust assets are utilized for the benefit of the child and determine who makes these decisions after they die.

Katherine E. Ingrassia, Esq.

THANK YOU

Katherine E. Ingrassia, Esq.

Questions