Special Needs Trust

Planning For The Elderly

Often elderly married couples find one of the partners required to be institutionalized for health-care reasons. This can create financial burden's on the community (non-institutionalized) spouse and family. Often Medicaid benefits may be available for the institutionalized spouse provided that the institutionalized spouse does not have assets. One way to protect both the institutionalized spouse and the community spouse and their assets is to create Special Needs Trust.

Essentially the Special Needs Trust is used to take the institutionalized spouse's elective share from the community spouse's estate and apply same into a trust to be used for the institutionalized spouse's needs for which Medicaid does not pay. In order to accomplish this end the community spouse must draft a new Will leaving the institutionalized spouse the right to an elective share thus disinheriting the institutionalized spouse to the fullest extent possible in order to protect assets.

The Special Needs Trust can be quite large depending upon the amount of inheritance. Even $1,000,000.00 will not invalidate a Special Needs Trust.

The current problem in New Jersey is the state's theory to attempt to prevent the institutionalized spouse from receiving Medicaid benefits for a period of time based upon the value of the assets waived based upon the elective share. There's currently debate that the state will soften its opinion on Special Needs Trusts. Individuals should carefully review this area with their attorney as a potential estate planning device.