(g) The trust provisions shall not apply to
the following trusts so long as the trust document meets all the requirements
set forth in this chapter:
1. A special needs
trust, that is, a trust containing the assets of a disabled individual and
which is established prior to the time the disabled individual reaches the age
of 65 and which is established for the sole benefit of the disabled individual
by a parent, grandparent, legal guardian of the disabled individual or a court,
may be excluded from the rules regarding the treatment of a trust. To qualify
for the exclusion, the trust shall contain the following provisions:
i. The trust shall be identified as an OBRA
'93 trust established pursuant to
42
U.S.C. §
1396p(d)(4)(A).
(1) The trust shall not contain any
provisions intended to give anyone or a court the power to alter the form of
the trust from an individual trust to a "pooled trust" under
42
U.S.C. §
1396p(d)(4)(C).
Notwithstanding amendments to the trust solely to conform to the requirements
of this subsection and/or
42
U.S.C. §
1396p(d)(4),
there shall be no provisions permitting the trust to be altered for any other
reasons.
ii. The trust
shall specifically state that the trust is for the sole benefit of the trust
beneficiary.
(1) Only trusts which are
intended for the sole benefit of the disabled individual are special needs
trusts. Any trust which provides benefits to other persons shall not be
considered an individual special needs trust. If expenditures are made from the
trust which shall also incidentally provide an ongoing and continuing benefit
to other persons, those other persons who also benefit shall contribute a
prorata share to the trust for the subsequent expenses associated with their
use of the acquisition,
(A) For example, if
the trust acquires housing for the benefit of the trust beneficiary, and other
family members also live in that house, the trust document shall provide that
the trustee shall require and collect a pro rata contribution for the expenses
of uses incurred, and shall return such contribution to the trust. Such
collections shall be reflected in the annual required trust accounting. Any
property acquired by the trust shall be titled solely in the trust's name. In
addition, unless the trust is given equity in any improvements to real
property, the trust shall not pay for upkeep, property taxes or other expenses
associated with the property or any additions to the existing
property.
iii. The trust shall specifically state that
its purpose is to permit the use of trust assets to supplement, and not to
supplant, impair or diminish, any benefits or assistance of any Federal, State
or other governmental entity for which the beneficiary may otherwise be
eligible or which the beneficiary may be receiving.
(1) If the trust provides for food, clothing
or shelter, such expenditures shall be considered income under Social Security
and Medicaid eligibility rules.
(2)
It may be permissible for the trust to acquire property which is used to
provide shelter for the trust beneficiary, but the trustee shall take care to
ensure that such acquisitions do not create unintended problems (such as
disqualifying someone for Federal benefits). Additionally, parents shall not be
relieved of their duty to support their minor child, if they are capable of
doing so. A minor's funds in a trust shall not be expended on routine support,
unless the parents' income is insufficient for these expenses.
3B:12-43.
iv. The trust shall specifically state the
age of the trust beneficiary, that the trust beneficiary is disabled within the
definition of
42
U.S.C. §
1382c(a)(3)
and whether the trust beneficiary is competent at the time the trust is
established.
(1) If the trust beneficiary is
a minor, the trustee shall execute a bond to protect the child's funds or shall
get a court's permission not to do so.
(2) If there is some question about the trust
beneficiary's disability, independent proof may be required.
(3) If the trust beneficiary is a minor, the
trust shall state whether the trust beneficiary is expected to be competent at
his or her majority.
v.
The trust shall specifically identify, in an attached schedule, the source of
the initial trust property and all assets of the trust. If the trust is being
established with funds from the proceeds of a settlement or judgement
subsequent to the bringing of a legal cause of action, Medicaid's claim for its
expenditures that are related to the cause of action shall be repaid
immediately upon the receipt of such proceeds and prior to the establishment of
the trust.
(1) Subsequent additions made to
the trust corpus shall be reported to the appropriate eligibility determination
agency. Subsequent additions to the trust (other than interest on the corpus)
shall cease when the trust beneficiary reaches age 65, or shall be subject to
transfer provisions.
(2) If
subsequent additions are to be made to the trust corpus with funds not
belonging to the trust beneficiary, it shall be understood that those funds are
a gift to the trust beneficiary and cannot be reclaimed by the donor.
vi. If the trust makes provisions
which are intended to limit invasion by creditors or to insulate the trust from
liens or encumbrances, the trust shall state that such provisions are not
intended to limit the State's right to reimbursement or to recoup incorrectly
paid benefits.
vii. The special
needs trust shall state that it is established by a parent, grandparent, or
legal guardian of the trust beneficiary, or by a court.
(1) The trust shall identify the
grantor/settlor by name and as the parent, grandparent, legal guardian, or
court. A court can be named as the grantor, if the trust is established
pursuant to a settlement of a case before it, or if the court is otherwise
involved in the creation of the trust.
viii. The trust shall specifically state that
it is irrevocable. Neither the grantor, the trustee(s), nor the beneficiary
shall have any right or power, whether alone or in conjunction with others, in
whatever capacity, to alter, amend, revoke or terminate the trust or any of its
terms or to designate the persons who shall possess or enjoy the trust estate
during his or her lifetime.
(1)
Notwithstanding the irrevocability provision above, the trust can state that
"the trust shall be irrevocable except that the trust may be amended as
necessary to conform with the requirements of
42 U.S.C.
1396 p and/or state law."
ix. The trustee shall be
specifically identified by name and address. The trust shall state that the
original trust beneficiary cannot be the trustee. The trust shall make
provisions for naming a successor trustee in the event that any trustee is
unable or unwilling to serve. The Bureau of Administrative Control, Division of
Medical Assistance and Health Services, as well as the trust beneficiary and/or
guardian, shall be given prior notice if there is a change in the
trustee.
x. The trust shall
specifically state that the trustee shall fully comply with all State laws,
including the Prudent Investor Act,
3B:20-11.1 et seq. The trust shall
provide that the trustee cannot take any actions not authorized by, or without
regard to, State laws. If the trust gives the trustee authorization or power
not provided for in the Prudent Investor Act, an accompanying letter shall
provide an explanation for each such authorization or power.
xi. Except as approved by court order, after
notice to the Division of Medical Assistance and Health Services, individual
trustee fees shall be in accordance with
3B:18-23 et seq. or, in the case
of a corporate trustee, the corporate trustee's regular fee schedule. The
trustee shall not delay or defer accepting compensation or commissions more
than one year from the date(s) they would otherwise be payable under the terms
of the trust or of any applicable statute or rule. If the trust identifies a
guardian, the trust shall specifically identify him or her by name. A guardian
shall be compensated only as provided by law. The parent of a minor child shall
not be compensated from the trust as the child's guardian.
(1) If an adult beneficiary is not competent,
the trust shall specifically state that the "guardianship protections for the
incompetent's funds which are required by New Jersey law and Court rules are
incorporated by reference into this trust." The trustee shall either file a
bond or shall get the Court's permission not to do so.
xii. The trust shall specifically state that,
upon the death of the primary beneficiary, the State will be notified, and
shall be paid all amounts remaining in the trust up to the total value of all
medical assistance paid on behalf of the beneficiary. The trust shall comply
fully with this obligation under the statute to first repay the State, without
requiring the State to take any action except to establish the amount to be
repaid. Repayment shall be made to the Treasurer, State of New Jersey, and
shall be sent to the Division of Medical Assistance and Health Services, to the
attention of the Bureau of Administrative Control, PO Box 712, Trenton, New
Jersey 08625-0712, or to any successor agency.
xiii. If there is a provision for repayment
of other assistance programs, the trust shall specifically state that the
Medicaid Program shall be repaid prior to making repayment to any other
assistance programs.
xiv. The trust
shall specifically state that if the beneficiary has received Medicaid benefits
in more than one state, each state that provided Medicaid benefits shall be
repaid. If there is an insufficient amount left to cover all benefits paid,
then each state shall be paid its proportionate share of the amount left in the
trust, based upon the amount of support provided to the beneficiary.
xv. No provisions in the trust shall permit
the estate's representative to first repay other persons or creditors at the
death of the beneficiary. Only what remains in the trust after the repayments
specified in (g)1xii, xiii and xiv above have been made shall be considered
available for other expenses or beneficiaries of the estate. The trust may
provide for a prepaid burial plan, but shall not state that it will pay for
reasonable burial expenses after the death of the trust beneficiary.
xvi. The trust shall specify that a formal or
informal accounting of all expenditures made by the trust shall be submitted to
the appropriate eligibility determination agency on an annual basis.
xvii. The State shall be given advance notice
of any expenditure in excess of $ 5,000, and of any amount which would
substantially deplete the principal of the trust. Notice shall be given to the
Division of Medical Assistance and Health Services, Bureau of Administrative
Control, PO Box 712, Mail Code 6, Trenton, New Jersey 08625-0712, or any
successor agency, 45 days prior to the expenditures.
xviii. New Jersey rules and laws do not
permit a trust to create a will for an incompetent or a minor. The money
creating the trust, any additions and/or interest accumulated, cannot be left
to other parties, but shall pass by intestacy. The trust shall not create other
trusts within it.
2. A
pooled trust is a special needs trust, containing the assets of a disabled
individual, which meets the following conditions:
i. The trust shall be established and managed
by a non-profit association;
ii. A
separate account shall be maintained for each beneficiary of the trust, but for
purposes of investment and management of the funds, the trust may pool the
funds from those accounts;
iii.
Accounts in the trust shall be established solely for the benefit of the
disabled individual by the individual, by a parent, grandparent, or legal
guardian of the individual, or by a court;
iv. To the extent that amounts remaining in
the beneficiary's account upon the death of the beneficiary are not retained by
the trust, the trust shall pay to the State of New Jersey the amount remaining
in the account, up to an amount equal to the total amount of medical assistance
paid under Title XIX of the Social Security Act on behalf of the individual. To
meet this requirement, the trust shall include a provision specifically
providing for such payment; and
v.
Funds of an individual 65 or older, which are transferred to a pooled trust
shall be subject to the transfer penalty provisions contained in
10:71-4.10.