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  >  New Jersey Long term care planning   >  Alternatives to 1st Party Special Needs Trusts – Part 1

Alternatives to 1st Party Special Needs Trusts – Part 1

I have written previously in this blog about situations that call for a 1st party special needs trust.  For example, we receive calls from personal injury attorneys who have achieved settlements for their clients who are on Medicaid.  In other cases clients on Medicaid receive an inheritance from a family member which is to be paid out directly to them instead of being paid to a 3rd party special needs trust.

While a 3rd party trust can be funded no matter the age of the beneficiary, a 1st party special needs trust has an age restriction.  It cannot be funded after the beneficiary reaches age 65.  This obviously presents a problem for individuals in the above situation who have “aged out” of a 1st party SNT.  What then can be done with a lump sum of assets that will push the beneficiary over the asset limit of $2000 and cause the loss of government benefits?

For some clients who are Medicaid eligible, they are not receiving much – or sometimes nothing at all – in the way of benefits.  Losing those benefits wouldn’t cause them a hardship.

For others, however, who are in nursing homes for example, losing these benefits would require them to use these assets towards the cost of care at a rate of $12,000 or more and when spent down then reapply for Medicaid.  This influx of money doesn’t in any way enhance their quality of life.  They are using the funds to pay for what Medicaid previously covered.

So, is that it or are there any other options available to them?  The answer is yes, there are other options.  Next week we’ll review those alternatives.