Transition Planning for the Future: Special Needs Trusts—Six Key points

Transition Planning for the Future: Special Needs Trusts—Six Key points

father looking at son

Planning for your kids’ future can be daunting, but parents of children with special needs must take a few extra steps to make sure their children will be taken care of in adulthood. If your child is or will be receiving government benefits, be sure that any money you bequeath in your will or any other monetary gifts to the child are paid through a special needs trust (SNT). A special needs trust is set up by an attorney so the money you bequeath will be deposited into a trust managed by a trustee whom you appoint. To set this up, consult with an attorney who specializes in special needs trusts. Be sure to fully discuss these options with your support team, as your own individual challenges will dictate the best options and resources for your family.

The 6 key points to consider when starting the process of a Special Needs Trust?

WHO qualifies for a Special Needs Trust?

  • If a person under the age of 65 has been determined disabled under 42 USC 1382(a)(3)(A), the parent, grandparent, or guardian of that person may set up an irrevocable trust for the sole benefit of the disabled beneficiary. The court may also establish a SNT for a disabled individual. The trustee is the person appointed to manage the trust on the beneficiary’s behalf. The trustee must also provide annual reports to various government agencies.

WHAT is a Special Needs Trust?

  • A special needs trust is an account containing the monetary assets of a disabled individual which preserves that person’s eligibility for need-based government benefits such as Medicaid and Supplemental Security Income (SSI). The assets in the trust may be excluded from the Medicaid rules regarding the treatment of a trust as long as it is written, managed and used in compliance with all applicable Federal and State laws and regulations. These trusts may also be called supplemental needs trusts, or “(d)(4)(A)” trusts after the federal law that authorized them, 42 U.S.C. § 1396p(d)(4)(A). The SNT may include assets gifted to the individual. The SNT must be irrevocable, and must be for the sole benefit of the trust beneficiary.

WHY create a Special Needs Trust?

  • Money in a special needs trust can cover supplemental needs not covered by Medicaid and SSI. Because the SNT beneficiary does not own the assets in the trust, he or she can still remain eligible for need-based benefit programs that have an asset limit.

WHEN is it best to prepare a Special Needs Trust?

  • Most parents discuss SNTs with an estate planning attorney when creating their wills, or when starting the process of applying for Medicaid and/or Social Security for the child. Transfers to the trust after the SNT beneficiary reaches age 65 are prohibited.

WHAT agencies need to be aware of the Special Needs Trust?

  • As part of the Medicaid or SSI application process, the trustee must submit the SNT and its completed Schedule A listing the assets funding the trust to the eligibility determination agency, such as the County Welfare Agency (CWA), the Division of Medical Assistance and Health Services (DMAHS) Institutional Services Section (ISS), or the federal Social Security Administration (SSA) District Office (for SSI beneficiaries). In New Jersey, the trustee must also provide a copy of the SNT document to the (DMAHS), Beneficiary Administrative Action Unit (BAAU) (Mail Code 5, P.O. Box 712, Trenton, NJ 08625-0712), which monitors SNTs. The eligibility determination agency (the CWA, the ISS or SSA), and the DMAHS, BAAU must also receive copies of the annual accountings from the trustee. Any changes to or questions about the SNT should be directed to the BAAU.

HOW to begin the process of a Special Needs Trust?

  • Ask your case manager to recommend a Special Needs Attorney who can get you started setting up a Special Needs Trust for your child.

Research the ABLE Account in your state

You can open the account for yourself, or an authorized individual can open one on your behalf, if your disability was present before the age of 26; and one of the following is true:

  • You experience blindness as determined by the Social Security Act; or
  • You are entitled to receive SSI or SSDI benefits or have a similarly severe disability with a written diagnosis from a licensed physician.(The account owner or authorized individual must certify the disability. See Plan DisclosureDocuments for details.)

For more information go to:

Additional Points to Keep in Mind

  • DDD registration should be done at the age of 18 not the year prior to graduation. 
  • When choosing a support coordinator, it is always a good idea to ask for recommendations from friends, school or Primetime Center. Call and interview different Support Coordinators prior to making your decision. Choosing a good support coordinator is critical for success in the adult world .
  • You are able to access your child's budget as soon as they turn 21 . You do not have to wait until they graduate. If you have not received a tier assignment by the age of 21 reach out to DDD to get it.
  • Community Care Program (CCP). If both parents are 55 or older or if there is a reason a parent cannot support a child once they turn 21, they child can be put on the Priority One wait list for CCP. This will escalate their application and placement on the waitlist
You could also reach out for more information to our Transition Coordinator or the folks at PrimeTime Center (our over 21 program).

Request a Tour of The Gateway School

Since 1980, RKS Associates has been a leader in providing the needs of special education students and helping children grow to their fullest potential. Each of our schools seeks to empower each student with skills for life, work, and recreation; we believe that every individual possesses the dignity and potential to contribute to a better world.

As part of the RKS Associates Network of schools in New Jersey, the goal at the Gateway School is to assist all students in becoming as independent as possible and help them get ready for the future. Located in Carteret, NJ, we serve individuals throughout Central and Northern New Jersey. Contact us at our main office at 732.541.4400 with any questions or schedule a private tour of the Gateway School today.

Chris Hoye, Principal-The Gateway School of Carteret, NJ