Families planning for the long-term well-being of a person with a disability face a distinct set of legal and financial challenges. Government benefits like Supplemental Security Income and Medicaid provide critical support for individuals with disabilities, but these programs have income and asset limits that can be disrupted by inheritances, personal injury settlements, or gifts unless assets are structured through legal tools designed to preserve eligibility while still benefiting the individual.
Mandelbaum Barrett PC’s January 2019 Special Needs Newsletter covers developments in special needs planning relevant to individuals with disabilities and their families in New Jersey. The firm’s special needs planning attorneys work with families to design and implement legal strategies that protect government benefit eligibility while ensuring individuals with disabilities have access to resources that enhance their quality of life. The firm’s trusts and estates practice includes comprehensive special needs planning as a core service for New Jersey individuals and families.
Special Needs Trusts
A Special Needs Trust (SNT) is a legal structure that holds assets for the benefit of an individual with a disability without disqualifying that individual from means-tested government benefit programs. Assets held in a properly drafted SNT can be used to supplement government benefits, covering quality-of-life expenses such as education, recreation, therapies not covered by Medicaid, travel, and other needs that improve the beneficiary’s life beyond what government programs provide.
Several types of SNTs serve different circumstances. First-party or “self-settled” SNTs are funded with the beneficiary’s own assets, such as proceeds from a personal injury settlement, and include a Medicaid payback provision. Third-party SNTs are funded by family members or others and do not require a payback provision, making them the preferred vehicle for inheritance planning by families with a member who has a disability. Pooled trusts administered by nonprofit organizations offer an option for smaller funding amounts where individual trust administration may not be practical.
ABLE Accounts
The Achieving a Better Life Experience (ABLE) Act established tax-advantaged savings accounts for eligible individuals with disabilities. ABLE accounts allow individuals and their families to save money for disability-related expenses without affecting SSI and Medicaid eligibility, subject to certain limits. For individuals with modest asset levels and ongoing need for flexible access to funds, ABLE accounts can complement SNT planning as an additional tool for managing resources.
According to the Social Security Administration, SSI recipients must meet both financial and disability requirements, and the agency provides detailed guidance on how assets and income are counted for SSI eligibility. ABLE accounts provide a vehicle for setting aside funds for disability-related expenses outside of the SSI asset calculation, subject to program limits.
Guardianship and Decision-Making for Adults With Disabilities
For individuals with intellectual or developmental disabilities approaching adulthood, families must address the question of legal decision-making authority. When an individual cannot make their own legal and financial decisions independently, guardianship provides a mechanism for a trusted person to make decisions on their behalf. New Jersey courts weigh the degree of support an individual needs before appointing a guardian, and may grant limited or plenary guardianship depending on the individual’s specific needs and capabilities.
Contact Mandelbaum Barrett PC for Special Needs Planning Guidance
If you have questions about special needs trusts, ABLE accounts, guardianship, or other planning matters affecting a family member with a disability, the special needs planning team at Mandelbaum Barrett PC can help.
Reach out through our contact page to speak with our team. We are here to help your family plan thoughtfully and effectively for a loved one with a disability.