Union County Judge Enters An Order, The First Of Its Kind In New Jersey, Establishing A Third Party Special Needs Trust In An Intestate Estate

For a number of years now, elder law attorneys in New Jersey have often achieved success in court applications seeking to reform a support trust established under the will of the parents or relatives of a disabled adult child so that the amended support trust met the statutory requirements of a special needs trust (“SNT”). After doing so, the disabled beneficiary was able to continue receiving needs-based government benefits such as Supplemental Security Income (“SSI”) benefits, Medicaid and Section 8 Housing Benefits, among others public benefits, which are often critical to the beneficiary’s well-being and which the beneficiary would have been ineligible for had the inheritance remained in a support trust. Further, because the SNT was established by the Court within the parents’ estate, any estate assets remaining in the SNT after the death of the disabled adult child could be left to other family members, rather than the State of New Jersey. More recently, New Jersey courts have shown increasing willingness to establish a SNT in the estate of the parent of a disabled adult child even when no trust of any kind was established by the deceased parent if the disabled applicant could show that it was or would have been the intent of the testator, i.e., the deceased parent, to establish a SNT had the parent known that by doing so the disabled beneficiary would have maintained eligibility for SSI and other needs-based benefits. However, until now I do not believe that any court in New Jersey had ever established a SNT within an “intestate” estate, or an estate left by a deceased parent of a disabled adult child who had no will.

In what I believe is the first ruling of its kind in New Jersey, Judge John Malone, the Presiding Judge of the Chancery Division of the Superior Court in Union County, recently entered an Order authorizing the Administrator of an intestate estate, i.e., an estate of a decedent who died without a will, to establish a SNT (referred to as a “Supplemental Benefits Trust” in the Order) within the intestate estate to hold the intestate share of the decedent’s estate which passed to the decedent’s disabled adult child. By establishing a trust within the intestate estate rather than distributing the intestate share outright to the disabled adult child, the court protected the disabled adult child’s continuing eligibility for the needs-based public benefits he was receiving. In addition, under the terms of the SNT any assets remaining in the trust after the trust beneficiary (i.e., the disabled adult child) passed away would be distributed to the decedent’s other family members rather than to the State of New Jersey. The Court established the SNT after concluding, even in the absence of a will, that the intent of the decedent would have been to establish a SNT for her disabled child.

A copy of the signed Order in PDF format can be found here: signed-order.