This trust was supposed to protect money. Was it a mistake?


Q. My father was a New Jersey resident and he died in March 2019. As part of his will he wanted a trust set up for me to protect the funds if I ever need a nursing home. I’ve lived in Florida since 2005 and it seems Florida isn’t following the trust. Is that right?
— Beneficiary

A. Without seeing the trust, we can’t be positive, but here’s what we think based on the information you provided.

It seems your father established a third party funded special needs trust, which is also sometimes called a supplemental needs trust, said Catherine Romania, an estate planning attorney with Witman Stadtmauer in Florham Park.

“A supplemental needs trust is a type of special needs trust established and funded by someone other than the person that needs the governmental benefits such as Supplemental Security Income (SSI) or Medicaid, that preserves the beneficiary’s eligibility for such needs-based government benefits,” Romania said.

The funds from the trust, if used for support of the beneficiary, can disqualify the beneficiary from government assistance, she said. That’s why the terms of the trust must provide the trustee with discretion to supplement the beneficiary’s benefits but not supplant the benefits, she said.

“Many government benefits such as SSI and Medicaid are provided by federal statute but implemented by the states with some variation,” she said. “As a result, in situations where the beneficiary lives in a state other than the state where the trust is established, the trustee of the trust should be made aware of the rules affecting distributions to the beneficiary in the state in which the beneficiary resides.”

Email your questions to moc.p1606594757leHye1606594757noMJN1606594757@ksA1606594757.

This story was originally published on Sept. 11, 2020. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.