WHAT IS A SPECIAL NEEDS TRUST (SNT)?

A Special Needs Trust (SNT) is an important part of planning for a relative with a disability and there are several reasons to establish one. You should consult with an attorney knowledgeable in this area because, when done properly, a SNT can supplement your loved one’s needs without jeopardizing their eligibility for crucial benefits, such as SSI and Medicaid.

TRUSTEE OPTIONS

Trustee selection is a key part of this process. A trustee may be an individual, such as a family member, or a corporate entity, such as a bank or an organization like Planned Lifetime Assistance of New Jersey (PLAN|NJ). Any trustee, whether individual or corporate, is entitled to a commission for their services and fees will apply to bank accounts and investment accounts owned by the trust, just as they would for a personal banking or brokerage account.

• Professional: You may wish to approach a professional trustee such as PLAN|NJ to administer the trust. An attorney with expertise in estate planning for people with disabilities can assist in creating a Special Needs Trust document, or you can establish a sub-account in a Pooled Trust such as the PLAN|NJ Community Trust. The professional Trustee monitors financial requests, prepares distributions, and hires a financial manager to invest the trust assets. The investments utilized depend on the size of the trust and the projected needs of the beneficiary. Certain institutions or organizations may serve as a professional Trustee and provide investment management. However not all financial institutions will administer SNTs, so be sure to check.

   

• Family Member: If you 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 related public benefits rules, and be trustworthy enough to manage funds left in trust for your loved one. The Trustee must ensure money is invested properly, and that funds are used only for the beneficiary’s needs, and in ways that protect the beneficiary’s government benefits. A successor should be named to ensure continuity of trust administration in case this Trustee becomes unable or unwilling to serve.

TRUST OPTIONS

• Pooled: The PLAN|NJ Community Trust is a Pooled Trust for individuals with disabilities with PLAN|NJ designated the sole Trustee. You may opt to open a sub-account for your loved one within this PLAN|NJ Pooled Trust, and individuals who are mentally competent can even establish their own sub-account.

• Individual: You may have an attorney create an individual or private SNT and appoint PLAN|NJ as Trustee. An attorney drafts the trust document separately or as part of an estate plan.

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 and Joinder Agreement should always be reviewed with an attorney as they are binding legal documents. The sub-accounts within the Pooled Trust are accounted for separately, but they are pooled together for investment and management purposes, making them a cost-effective option for smaller trusts. Private: You may have an attorney create an individual or private SNT and appoint PLAN|NJ as Trustee. An attorney drafts the trust document separately or as part of an estate plan.

For more information on Special Needs Trusts, read “Special Needs Trusts and Quality of Life.” 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 in English or Spanish.

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