Many residents of New Jersey have relatives and loved ones who face physical or mental challenges. The special needs of these loved ones can make it very hard for them to support themselves or even to live without constant assistance.
Aside from a natural desire to leave such people an inheritance, New Jersey residents may also recognize that their loved one truly needs all the financial help he or she can get. For these and other reasons, a person will likely want to include a gift or inheritance for their loved one as part of their estate planning.
However, it is important to use caution when doing so. Many people with special needs rely on certain government benefits, like Medicaid or Social Security, for their financial support and medical care. These benefits are often based on one's financial need.
Should such a person receive a large inheritance outright, it may mean he or she is no longer eligible for benefits. In the long-term, this could put the person in a worse financial position than had he or she not received an inheritance at all.
In this scenario, an estate planning device called a special needs trust can prove particularly helpful. As the name implies, a special needs trust is set up in such a manner that a family member can in some way provide for a loved one with special needs but can do so without compromising that loved one's eligibility for need-based benefits.
Even if benefits are not an issue, a special needs trust can still be helpful for families who have loved ones with special needs.
Creating a special needs trust properly requires a knowledge of the law and considerable experience with estate planning. Someone who thinks that a special needs trust might be right for their situation should consider speaking with an experienced attorney.