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Tag Archives: Wills

Special Needs Trust

Special Needs Trust – The Keystone of Disability Planning

Who is Eligible for a Special Needs Trust?

Commonly, a Special Needs Trust is a trust established by parents or loved-ones who have children who are covered under a disability and are receiving state or federal government benefits. The trust is specifically tailored to permit the parents to furnish some economic benefits to their children without disqualifying them from public assistance. Less frequently, but also applicable, a special needs trust may be used to provide for elderly persons who are disabled, such as a parent. For elderly persons, however, transfers of funds or assets into the trust cannot be made once the beneficiary reaches the age of 65.

Purpose of Special Needs Trust

A special needs trust, also known as a supplemental needs trust, is a trust intended to allow a disabled individual to maintain eligibility for certain needs-based government benefits.  Since government benefit programs are only intended to provide basic needs and critical items, i.e., food, shelter, clothing and medical care, a special needs trust provides supplemental items to improve the beneficiary’s quality of life.  The supplemental or non-necessary items a special needs trust may provide include, birthday and holiday gifts, electronics, such as a computer, laptop or television, educational expenses or a vacation.  Assets placed in a special needs trust are made available to provide for the disabled beneficiary’s special needs and to supplement, not supplant, public benefits.  The availability of these supplemental assets can greatly impact and improve the disabled beneficiary’s quality of life.Government benefits programs provide basic necessities for disabled persons, however, these programs, such as Medicaid and Supplemental Security Income (“SSI”), are means-base tests and enforce financial limitations on personal eligibility. For instance, a person can only qualify for SSI’s assistance program if they have resources of less than $2,000 in their own name.  Some assets are retainable that are not included in the $2,000 limit, such as, your car and life insurance policies with a face value of less than $1,500.  A special needs trust, therefore, enables a disabled person to have assets and funds in trust for his benefit, which do not count towards SSI’s $2,000 cap.

Requirements of a Special Needs Trust

A properly drafted special needs trust must satisfy specific requirements imposed by federal and state law in order to exclude the contents of the trust from the beneficiary’s personal income calculation. The most important requirement, recognized at both the federal and state level, is that the state must receive all amounts remaining in the trust upon the death of the trust beneficiary up to an amount equal to the total medical assistance paid on behalf of the individual under a State plan.  Additionally, the trust must specifically state that the trust is for the sole benefit of the beneficiary, must be irrevocable, and must state with specificity, that the trust’s purpose is to permit the use of trust assets to supplement, not supplant, impair or diminish, any benefits or assistance of any Federal, State or other governmental entity for which the beneficiary may otherwise be eligible or which the beneficiary may be receiving.  These provisions are codified at the Federal level in 42 U.S.C. § 1396p(d)(4)(a) and at the State level in N.J.A.C. 10:71-4.11(g)(1). For more information regarding disability planning and special needs trusts, please feel free to contact an experienced trust attorney to help you and your family understand the benefits and details of a special needs trust or supplemental needs trust.  An experienced attorney can help guide and explain the options that will effectuate your goals and objectives for disability planning.

Learn More About Wills and Trusts

Power of Attorney Document

Why you Need a Power of Attorney Document in NJ

A Power of Attorney document (POA) is a document that provides an efficient and cost effective transfer of authority from you to another. With a power of attorney, you can rest assured that in the event of your incapacity, a person you have selected will have the authority to act on your behalf with a clear understanding of your priorities and goals.

Without a POA, you expose yourself and your family to costly and potentially confusing legal proceedings, and the intervention of state authority. It is simply a fact that in the absence of a POA, you have created a vacuum of authority wherein the court, not you, makes the call as to the identity of your agent. That agent will then have the authority to proceed on your behalf, to make binding decisions that may or may not be in accordance with your intent.

Power of Attorney authority may be granted temporarily, and it can be withdrawn in the event that you change your mind as to either your selected agent or the scope of the authority granted therein.

When there is no Power of Attorney, legal costs can decimate one’s estate with an undesirable outcome. The worst calls we receive are, “My dad has Alzheimer’s and now he cannot sign a check.” It’s too late then. You should create a POA before the fact, while you’re lucent and competent. In fact, we recommend creating a POA at 18, when you become an adult. No one knows how their lives will proceed, all we can do is prepare ourselves so that whatever occurs, our families and ourselves are protected and prepared to the full extent possible. As Benjamin Franklin professed, “a stitch in time, saves nine.”

Q: What type of situation warrants the need for a Power of Attorney?

A: Incapacity – the onset of a short-term or long-term debilitating condition either physical, mental or emotional – typically triggers the use of a POA.

Q: What details should be covered in the document

A: The Power of Attorney grants the authority to do what you want to have done. POAs are typically narrowly construed by the court, so the document should be detailed according to your wishes. Unless powers are specifically and clearly stated, they do not exist.

A Power of Attorney can be limited to a single financial account or can encompass the entirety of an individual’s estate. In the former, each asset should be considered. We highly recommend adding additional powers that should be covered in your Power of Attorney and listed as follows:

Health Care Decisions – In a world where HIPAA limits a physician’s ability to disclose health care information, it is vital for an agent to have authority to interact with the medical community to make decisions on your behalf.

Long-term Health Care – Long-term health care planning powers should be expressly stated. The more guidance you can provide your agent and your family, the easier you will make their decisions.

Financial Authority – Money supports your care. A plan should be in place so that your agent understands the authority he has been granted and your wishes as to the liquidation/expenditure of your assets.

Real Estate – whether the POA should grant the agent’s authority to sell, transfer, and/or mortgage real property is an important discussion, especially where Medicaid considerations are involved.

Gifting / Discretionary Spending – without express written authority from you to make gifts, your agent will not be able to give Christmas or Birthday gifts to your family, or even tithe to your church.

Q: Why should I hire an attorney to create a Power of Attorney?

A: An experienced attorney can provide insight and understanding in the creation of a document that is too often treated as a throw-away. The fact is a well-crafted document, within the context of our hopes and intentions, can support our families in times of crisis. Simple legal forms often lack the express authority and detail required to perfect an individual’s goals and objectives.

Further, a carefully drafted and properly executed POA is a form of litigation prevention. In a world where families can be extraordinarily aggressive in asserting authority over still-living elders, a defendable POA is the first layer of protection to ensure that your intentions will be honored.

For more information about Power of Attorney documents, you should contact an experienced estate planning attorney. An experienced attorney may help you understand the benefits and details of a POA to help enable you to make the proper decisions for you and your loved ones.