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Special Needs Trusts (SNTs) are a type of trust that preserves the SNT beneficiary’s eligibility for needs-based government benefits such as Medicaid and Supplemental Security Income (SSI). These trusts may also be called a supplemental needs trusts, or “(d)(4)(A)” trusts after the federal law that authorized them, 42 U.S.C. § 1396p(d)(4)(A). Any individual under 65, who is disabled under the Social Security Administration standard, may place assets in an SNT to establish or maintain Medicaid eligibility. As a general rule, because the SNT beneficiary does not own the assets in the trust, he or she can remain eligible for benefit programs that have an asset limit. Additionally the federal law exempts transfers of assets into an SNT from a penalty.

However, in order to use the SNT to obtain or retain Medicaid benefits, both the trust document and annual SNT accountings must be disclosed and reviewed. There are several requirements in order to establish an SNT. Some of those requirements include but are not limited to:

  • SNT beneficiary has been determined disabled under 42 USC 1382(a)(3)(A).
  • SNT is irrevocable.
  • SNT is for the sole benefit of the SNT beneficiary.
  • Only specific individuals can establish the SNT (parent, grandparent, guardian, court).
  • On the death of the SNT beneficiary, the State of New Jersey is the first remainder beneficiary and will receive all amounts remaining in the trust up to an amount equal to the total amount of Medicaid benefits provided, minus any reimbursement or recovery of Medicaid payments previously received by the State.
  • Transfers to the trust after the SNT beneficiary reaches age 65 are prohibited. Any additions to the trust after that time with assets of the beneficiary are subject to the rules governing the improper transfer of resources.
  • Cash distributions from the trust to the SNT beneficiary must be counted as unearned income.
  • Annual accountings are required to be sent to the eligibility-determination agency, and to the DMAHS Beneficiary Administrative Action Unit (BAAU) at the address highlighted in boldface on the next page.  Click here to view a sample Annual Accounting Form.
  • In the case of a tort (personal injury lawsuit) recovery funding an SNT, the Medicaid agency must first be repaid for the Medicaid payments related to the tort before the SNT can be established.

The New Jersey regulations for SNTs can be found at N.J.A.C. 10:71-4.11(g)1.

The following items can be mailed to the BAAU at the address highlighted in boldface below:

  • Annual and final SNT accountings.
  • Notification of expenditures in an annual period for one item or purpose that exceed $5,000, or any amount which would substantially deplete the principal of the trust.
  • Changes in trustee or trustee contact information.
  • Notification of the death of the SNT beneficiary.
  • A request from the trustee for the amount owed to DMAHS.
  • Questions for the BAAU.

DMAHS Beneficiary Administrative Action Unit
Mail Code 5
PO Box 712,
Trenton, NJ 08625-0712
609-588-3026 or 3089

 

Payments at death should be sent to one of the following addresses (checks should be made payable to “Treasurer, State of New Jersey”):

By regular mail -
NJ Division of Revenue
Lockbox 656
200 Woolverton Ave., Bldg. 20
Trenton, NJ 08646

 

By overnight mail, certified mail, FedEx or courier -
NJ Division of Revenue
200 Woolverton Ave., Bldg. 20
Lockbox 656
Trenton, NJ 08646
Attn: Processing Bureau.

 

For additional information, view the Special Needs Trust Frequently Asked Questions (FAQs) document.

 
 
 
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