The document outlines essential planning strategies for parents and grandparents of individuals with special needs, specifically focusing on trust-based planning to preserve financial security and public benefits. Key components include understanding public benefits, establishing special needs trusts, and making informed decisions for the care of disabled loved ones. It emphasizes the importance of foresight in estate planning to ensure proper management of resources and benefits throughout the individual's life.

1. Planning for a Loved One With
Special Needs in Your Trust
and
Trust Based Planning for Parents and
Grandparents of Incapacitated Persons with
Mild or Advanced Developmental and Other
Chronic Disabilities

2. Presented by
Fredrick P. Niemann, Esq.
Elder Law, Asset & Estate Protection
Planning, Medicare, Medicaid and
Veteran’s Benefit Assistance Lawyers
www.specialneedstrustnewjersey.com
www. njelderlawcenter.com
www.njmedicaidlawattorney.com
Visit me at
Hanlon Niemann, PC
3499 Route 9 North, Suite 1F
Freehold, NJ 07728
Phone: (888) 800-7442
fniemann@hnlawfirm.com

3. Fredrick P. Niemann, Esq.
Fredrick P. Niemann offers his clients over 30
years of accomplished practice in the law. He is a
member of the National Academy of Elder Law
Attorneys, the Guardianship and Conservatorship
Committee of NAELA, Monmouth County
Probate and Estate Committee and the Monmouth
County Chancery Practice Committee. Mr.
Niemann is one of the few attorneys in New Jersey,
accredited by the Veteran’s Administration, to
apply for Aid and Attendance benefits for Veterans
and/or their spouses.

4. Legal Wit
What’s wrong with lawyer jokes? Lawyers don’t
think they’re funny, and nobody else thinks
they’re jokes.
How can you tell when a lawyer is lying? His lips
are moving.

5. Cont.
What’s the difference between a good lawyer and
a great lawyer? A good lawyer knows the law. A
great lawyer knows the judge.
The first thing we do, let’s kill all the lawyers.
Shakespeare

6. Facts of Life
1. Persons with disabilities are living longer and public
benefits are often necessary.
2. There is no guarantee that public benefits will provide
adequate resources over the disabled person’s lifetime.
3. There is no guarantee that public agencies will provide
services and advocacy over the disabled person’s
lifetime.

7. What Does Planning Involve?
Preserving your loved one’s financial
security and quality of life
Addressing key issues: Those key issues are:
Understanding the role of public benefits today
Making assumptions about public benefits in the
future
Using estate planning/trusts to protect your assets for
the financial security of your loved one’s future

8. Part 1:
Understanding Public Benefits

9. Public Benefits at a Glance
Financial Benefits
Supplemental Security Income (SSI)
 Means tested: Income and asset limitations for eligibility
Social Security (SS)
&
Social Security Disability Insurance
(SSDI)
 Not means tested but subject to work credits
or parents’ eligibility

10. Public Benefits at a Glance
Medical Benefits
Medicaid
 Automatic with SSI
 Must apply for SS/SSDI for first 2 yrs
Medicare
 After two years of SSDI

11. Supplemental Security Income (SSI)
Must meet SSA’s definition of “disability” and
have limited assets/income
Provides monthly income for food/shelter
Gateway to Medicaid / in-home support
services

12. Social Security (SS) / Social Security
Disability Insurance (SSDI)
Social Security for individuals:
 Disabled before age 22 and
 With parents eligible based on their work record if retired,
disabled or deceased
SSDI for individuals with work record
Social Security benefits may reduce or eliminate
SSI benefits if greater than monthly SSI benefit

13. Medical Assistance & Support
Medicaid:
 SSI recipients automatically receive Medicaid
 Covers “medically necessary” services, equipment,
hospitalization
 In-home services needed to live at home: personal care,
housekeeping, cooking, transportation to doctors
 SS & SSDI individuals must apply for Medicaid
Medicare:
 Medical coverage, including doctors, hospital, skilled care
 Individuals with SS or SSDI eligible for Medicare after 2 years
of eligibility

14. How Benefits Work Together
SSI
Medicaid
SSDI
Medicare

15. Part 2:
Making Decisions About the Future

16. Typical Timeline for a Child
With a Disability
Upon Attaining Age 18
 Deeming of parents’ income and resources to
the disabled child ends.
 Child becomes eligible for public benefits based
upon evidence of disability and the child’s low
income and resources – parents’ resources not
considered in determining child’s eligibility.

Parental decision-making authority ends Guardianship may be necessary.

17. Providing for Persons
with Disabilities
Pitfalls to commonly used eligibility
strategies:
¦ Uniform Gift to Minors Act Accounts (UGMA
or POD Accounts)
¦ Unstructured Beneficiary Designations
¦ No planning at all

18. Uniform Gifts to Minors Act
(UGMA) Accounts
¦Once the child takes control of the account ( age
18 or 21), the child may then use the money for
purposes other than education -- regardless of the
custodian’s wishes.
¦
UGMA accounts are considered available
resources for purpose of SSI eligibility.

19. Unstructured Beneficiary Designations
Naming an SSI, beneficiary Medicaid recipient or
minor child as the beneficiary of a retirement plan
(401k,IRA, etc.), life insurance policy annuity or
any other resource, investment, asset (ie.
brokerage account, CD’s, money market, etc.) will
cause a reduction or elimination of public benefits.

20. No Planning at All
Dying intestate (without a will or trust) will usually leave
all or a portion of the estate of a single parent, person to
the decedent’s children.
¦
Any child receiving SSI or Medicaid will lose
eligibility until the inheritance is either spent down,
converted to a exempt resource, or placed in a Special
Needs Trust.

21. Providing for Persons
with Disabilities:
Special Needs Trust Basics
Purpose - To preserve the disabled person’s
eligibility for needs-based governmental
benefits while providing assets which may be
used to supplement public benefits in order to
improve the disabled person’s quality of life.

22. Third Party SNT
1. Established with assets owned by a third party
(ie: parents, grandparents, aunts, uncles) for
the benefit of the disabled person.
2. Usually established and funded by the parents,
relatives or friends of the disabled adult child
as part of an estate or gifting plan.
3. Other children can be named as remainder
beneficiaries after death of disabled person.

23. Third Party SNT (cont’d)
4. Third Party SNT may be revocable and inter vivos,
or irrevocable and testamentary.
5. No need to pay Medicare or Medicaid liens before
funding.
6. No age limit for disabled beneficiary.
7. “Pay-back” to the State of NJ, Medicaid and
Medicare provision not required (doesn’t matter if
beneficiary is an adult or minor)

24. The Golden Rule
The golden rule in SNT planning - the trustee
should make payments on behalf of the beneficiary
directly to third party vendors for equipment or
services which are not food or shelter. For
example, distributions directly to a retailer for a
radio or television, to an airline for a plane ticket,
or to a companion/aide for services rendered are
not income to the beneficiary.

25. Objectives Should be Expressed in The
SNT and Memorandum of Intent
The trust should set out broad instructions
that are not likely to change.
Example - “I wish that my child live as
independently as possible in the least restrictive
environment”.

26. Objectives Should be Expressed in the
SNT and Memorandum of Intent
The memorandum of intent should reflect
more timely and detailed instructions.
Example - “I have inspected the Monmouth County
Independent Living Center and, in the event of my
incapacity or death, I believe that this facility meets
my son David’s needs. Please make sure that David
is monitored regularly by the care manager, especially
regarding his medication because he is prone to
frequent side effects”.

27. Follow-Up Steps:
(1) Select Resources
Select a combination of resources that will
guarantee adequate funds for the disabled child’s
lifetime, such as insurance, savings, investments,
family assistance, etc., and change the ownership
of each asset to the trustee of the SNT.

28. Follow-Up Steps:
(2) Remove Child as Beneficiary
Remove the disabled child as the beneficiary from all of
the parents’, and others relatives’, financial programs, i.e.,
employer sponsored retirement plans, IRAs, KEOGHSs,
life insurance policies, joint accounts of all types,
brokerage and financial.
A. This is 1 of the 10 Commandments for asset
protection planning.

29. Follow-Up Steps:
(3) Meet With Caregivers
Hold a meeting with all interested parties, i.e., the
Guardian, all Trustees and Successor Trustees and
all siblings, to review the estate planning
documents, discuss plan and management of trust
assets.

30. Case Study: Nathan
Current situation:
18-year-old with autism
Lives with mom
Income from work programs, SSI, Social
Security (from dad who is deceased)
Limited personal assets (clothing, tv)
Qualifies for Medicaid

31. Case Study: Nathan
Future situation:
Who will make health care decisions?
Who will make financial decisions?
Where will he live?
How will his medical expenses be paid?

32. What Plan Could
Nathan’s Mom Make?
Possible Options:
Make no decisions/plans
Leave money to Nathan
Disinherit Nathan
Leave money to a future caregiver
Establish third-party SNT for Nathan
Establish first-party SNT for Nathan

33. Example: Distributions from a
Supplemental Needs Trust Directly
to an SSI Beneficiary
Jill is the trustee of a special needs trust established by her
deceased mother, Paula, for the benefit of Paula’s disabled
daughter and Jill’s sister, Anne. Anne’s living expenses,
including rent, food, transportation and clothing, total
approximately $2,000 per month. Jill sends Anne a check
on the first of every month for $2,000 so Anne can pay her
expenses. Since Anne is receiving cash income in excess
of her monthly SSI benefits, she loses her SSI. Since
Anne received Medicaid based on her SSI payment, she
also loses Medicaid.

34. Example: Distributions from a
Supplemental Needs Ttrust to Third Party
Vendors for Food or Shelter
Jill is the trustee of a testamentary supplemental needs
trust established by Joan under her last will and
testament for her adult disabled daughter, Pamela.
Pamela receives SSI, Medicaid, food stamps and
services from DDD. Pamela lives in an apartment. Jill
signed the lease as trustee of the SNT and pays all rent
directly to the landlord. The rental payments will
result in a reduction, but not the elimination, of
Pamela’s SSI benefits.

35. Example: Distributions from a SNT to
Third Party Vendors for Items Which are
Not Food or Shelter
Jill, a disabled adult, receives SSI. Joan is the trustee
of a special needs trust established by Jill’s parents
for her benefit. Jill likes to read the National Review
not the (New York Times.) Joan arranges with the
local newspaper distributor to deliver the National
Review not the (New York Times) to Jill on a daily
basis, including Sundays, and pays the bill directly to
the newspaper distributor. This is not considered
income, and will not affect Jill’s SSI benefits.

36. Follow-Up Steps:
(4) New Wills for Parents
Prepare Last Will and Testaments for parents
excluding the child from receiving any portion of
the parents’ estate outright and free of trust which
may cause the disabled child to lose government
benefits.

Create a Discretionary Supplemental Needs
Trust to protect future quality of life for the child.


37. Periodic Update and Review
The Estate Plan should be periodically reviewed to:
• Ensure all assets either are owned by the SNT, or
SNT is named as the beneficiary of the assets.
A. The importance of beneficiary designations
• To update trustees and persons representatives and
power of attorney
• Changes in the beneficiary’s condition or eligibility
for benefits.
• Changes in your economic situation.

38. Part 3:
Creating an Effective Plan
for Your Child / Loved One

39. What Steps Should You Take Today?
Step 1: Envision Your Child’s Future
Planning ahead makes a difference:
 Where and with whom will your child live?
 What type/level of care will be required?
 Will a guardian/conservator be necessary?
 Who else will be involved?
 What kind of lifestyle is desired?
 What unforeseen challenges could arise?

40. What Steps Should You Take Today?
Step 2: Create a Memorandum of Intent
Lays out goals/expectations:
 Details preferences, needs, wishes, both medical and personal
 Lists key people in child’s life
Helps guide:
 Family members
 Trustees
 Caregivers
 Others

41. What Steps Should You Take Today?
Step 3: Estimate Income & Expenses
Monthly income:
 SSI, SSDI, Social Security, earned/unearned income
Monthly living expenses:
 Housing, food, transportation, medical, recreation, etc.
 Consider how any shortfall will be met
Income - Expenses = Shortfall

42. What Steps Should You Take Today?
Step 4: Utilize a Third-Party SNT
Provides supplemental funds for living expenses
not covered by other income sources
May be established by parents:
 Through will
 Through living trust
“Living” SNT lets others contribute
Trustee has discretion over distributions

43. The SNT Trustee Responsibilities
What are the trustee’s responsibilities?
Invests/manages assets
Distributes funds
Keeps books
Files tax returns
Hires advocates and care managers, etc., as needed

44. Selecting an SNT Trustee
Who should be the trustee?
 Parent with professional co-trustee
 Corporate or other professional trustee
 Successor trustee

45. What Parents Should Do
Create Memorandum of Intent
Calculate future financial need
Establish SNT through will or living trust
Fund SNT with life insurance
Name SNT as beneficiary of accounts, plans,
etc.
Reduce taxable estate

46. What Your Child Should Do
Sign Advance Directives, if legal capacity
Have a legal guardian appointed:
 When child without mental capacity becomes an adult and
parents want to maintain legal responsibility
 Court appoints legal guardian

47. What If Your Child Has Assets?
Establish a First-Party SNT:
Provides funds for living expenses not covered
by other income sources
Maintains eligibility for public benefits
Must be established by parent, grandparent, legal
guardian or the court
State must be reimbursed from the trust for all
Medicaid expenses

48. Get Started Today
Understand your child’s eligibility for public
benefits.
Make plans for the future to maximize public and
private resources for your child’s benefit.
Make the SNT a key part of your estate plan.
Contact a special needs attorney for the assistance you need.
Fredrick P. Niemann, Esq.
NJ Elder Law and NJ Special Needs Trust Attorney
Hanlon Niemann, PC
3499 Route 9 North, Suite 1F
Freehold, NJ 07728
Phone: (888) 800-7442
fniemann@hnlawfirm.com
www.specialneedstrustnewjersey.com
www.njelderlawcenter.com

49. THANK YOU FOR ATTENDING.
QUESTIONS / COMMENTS?