Special Needs Trusts
A Special Needs Trust (SNT) is an important part of planning for a relative with a disability. Done properly, a SNT can provide for your loved one's needs without jeopardizing his or her eligibility for crucial benefits, such as SSI and Medicaid. There are several options for setting up a SNT and an attorney knowledgeable in this area should be consulted regardless of the option chosen. Remember that any trustee, individual or corporate, is entitled to a commission for their services and that fees will apply to bank accounts and investment accounts owned by the trust, as they would for a personal banking or brokerage account.
- You may wish to approach a professional trustee such as PLAN/NJ to administer the trust. An attorney knowledgeable in estate planning for people with disabilities can assist in creating a Special Needs Trust document. Such institutions or organizations will serve as trustee and provide investment management. Some financial institutions will not administer SNTs, so be sure to check.
- You may wish to name a family member as trustee. An attorney would need to prepare a SNT. The family member appointed as trustee should have some financial knowledge, be willing to learn about the requirements of SNTs, and be trustworthy enough to manage funds that are left in trust for your loved one. The trustee must ensure that the money is invested properly, that the money is used only for the beneficiary's needs, and that the money is not used in such a way as to jeopardize the beneficiary's government benefits. A successor trustee should be named in case the family member appointed as trustee is unable or unwilling to serve, and to ensure continuity of trust administration.
- You may opt to open a sub-account with a Pooled Trust such as the PLAN/NJ Community Trust. The PLAN/NJ Community Trust is a Pooled Trust for individuals with disabilities and PLAN/NJ is the sole trustee. The Community Trust has a Master Trust and Joinder Agreement, therefore a new trust document does not have to be created by an attorney. However, the Master Trust is a binding legal document and should always be reviewed with an attorney. The sub-accounts within the Pooled Trust are accounted for separately but are pooled together for investment purposes, so this can be a good option for smaller trusts.
- You may have an attorney create an individual or private SNT and appoint PLAN/NJ as co-trustee. An attorney drafts the trust document separately or as part of an estate plan. The professional co-trustee monitors requests, prepares distributions and invests the trust assets. Trust assets are invested by a financial manager hired by the professional co-trustee. The investments utilized depend on the size of the trust and the projected needs of the beneficiary.
PLAN/NJ would be happy to speak with you in detail about your family's individual needs. Please contact our Director of Trust Services, Nancy Dilliplane, at (908) 575-8300, extension 15 for more information or to schedule a consultation.