Superior Court Judge in Monmouth County Authorizes The Establishment Of Third Party Special Needs Trusts Within An Intestate Estate

As reported on my blog, Judge John Malone, Presiding  Judge of the Chancery Division of the Superior Court in Union County, 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 Special Needs Trust, often referred to as a Supplemental Benefits Trust, within an intestate estate to protect 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 accomplished two goals: first, the trust protected the disabled adult child’s eligibility for the needs-based public benefits he was receiving. Second, any assets remaining in the trust after the disabled adult child passed away would be distributed to the decedent’s family rather than to the State of New Jersey. I believe that Judge Malone’s ruling, the first in New Jersey (I believe) to establish a Special Needs Trust in an intestate estate, will prove to be a very helpful tool in promoting the independence of New Jersey’s disabled population.

Recently, on July 10, 2009, Judge Patricia Del Bueno Cleary, a Superior Court Judge in Monmouth County, like Judge Malone, entered an Order authorizing the Administrator of an intestate estate to establish two Supplemental Benefits Trusts within an intestate estate to protect the intestate shares of a deceased parent’s estate which passed to the parent’s two disabled adult children. Both of the disabled adult children receive needs-based government benefits, and they would have lost their eligibility for the benefits if their intestate shares were distributed outright to them rather than in trust. Judge Cleary established the trusts after concluding that the intent of the deceased parent was to establish Supplemental Benefits Trusts for her disabled children had she not passed away first. Judge Cleary’s ruling is another step forward in protecting the disabled population in New Jersey.

A copy of Judge Cleary’s signed Order in PDF format can be found here: Order Establishing Special Needs Trusts In Intestate Estate

August 7, 2009 UPDATE: Today, I received a brief and several certifications from the State of New Jersey in support of a motion for reconsideration in which the State asks Judge Cleary to revisit and reverse the Order mentioned above establishing third party special needs trusts in an intestate estate. The State’s motion will be heard by the Court on September 18, 2009.

November 14, 2009 UPDATE: Yesterday in Monmouth County Courthouse, Judge Cleary heard oral argument on the State’s motion for reconsideration of the Court’s prior Order establishing and funding a third party special needs trust in an intestate estate. Deputy Attorney General Diana Rosenheim appeared on behalf of the State of New Jersey, and I appeared on behalf of the applicant, the Administrator of the intestate estate. In August 2009, as described above, the Administrator successfully sought an Order (1) establishing special needs trusts for the decedent’s two disabled adult daughters in the decedent’s intestate estate, and (2) authorizing the funding of the trusts with the beneficiaries’ intestate shares. I am happy to report that Judge Cleary denied the State’s motion for reconsideration, and dictated a superb bench opinion providing her reasons for the denial. Although Ms. Rosenheim told me that the State may appeal to the Superior Court, Appellate Division, I believe that the Court had a solid legal basis for the decision, and that it will be upheld, if an appeal is filed.