Special
Needs Trusts and Real Estate
by
Herbert D. Hinkle, Esq.
Herbert D. Hinkle
Law Office
2651 Main Street
Lawrenceville, New Jersey 08648
(609) 896-4200 or (215) 860-2100
In planning for
the future of child with a disability, it is helpful to use a special
needs trust to ensure that assets are available in (1) ways that do
not interfere with eligibility for services, and (2), in ways that
do not expose the assets to government claims for the reimbursement
of the costs of services provided.
One clause that
we have found to be useful is a provision allowing the trust to hold
real estate for the benefit of the person with a disability. Coupled
with this is a clause that allows the trustee to charge the beneficiary
rent.
Why charge rent?
Isnāt this contrary to the purpose of the trust? It serves several
purposes. First, the person with a disability cannot put his/her own
assets into trust. But, if the person is employed, this is a way to
overcome this problem and place assets indirectly into trust by charging
rent.
Second, if the
beneficiary is receiving Supplemental Security Income ("SSI")
or Medicaid, then free shelter can lead to a reduction and in some
cases an elimination of benefits. Charging rent overcomes the reduction
because it avoids free shelter and then maximizes the benefits.
Finally, Section
8 housing vouchers are available through the Federal Department of
Housing and Urban Development ("HUD") to offset a portion
of the rent expenses. Right now it is an unanswered question whether
real estate held by the trust will qualify for a HUD voucher. HUD
regulations permit vouchers for housing unless the tenant " .
. . has an interest in the real estate." Is the interest in the
trust an interest in the real estate? Probably not, but the authors
know of no situation in which this has been raised.
If readers have
had an experience with this, the authors would appreciate hearing
from them.
Copyright 2000
H.D. Hinkle. All rights reserved.
Mr. Hinkle maintains
a multi-state law practice with offices in Lawrenceville, Florham
Park, and Marlton, NJ, and Yardley, Pa. Mr. Hinkle and his colleagues
Ira Fingles, and Paul Prior lecture and write frequently on topics
of law, aging, and disability, and are available
to speak to groups in New Jersey and Pennsylvania
at no charge. Call (609) 896-4200.
