After much criticism, the SSA has issued an Administrative Message clarifying its policy regarding (d)(4)(A) Special Needs Trusts created by court order.
Recently, some SSA offices have been refusing to approve court-established (d)(4)(A) trusts because they were not created by a court “order.”
The SSA has now issued an Administrative Message. The message states that “[i] in the case of a special needs trust established through the actions of the court, the creation of the trust must be required by a court order. The special needs trust exception can be met when courts approve petitions and establish trusts by court order.
When the court issues an order approving the creation of the trust, it will meet the requirements of the regulation. In the second example, a judge orders the creation of a trust to hold a settlement, and the trust document lists the settlement as the trust’s original corpus. This trust also passes muster with the SSA. The SSA gives a negative example that when a court approves a trust that has already been created ahead of time, or when a court amends a defective trust with a nunc pro tunc order to make the amendment retroactive to the date the trust was originally created, the trusts will not qualify for the special needs trust exception. As often the case, I believe this position is a bunch of legal %$#%^*, just another example of legalize trumping reasonableness and fairness.
If you are contemplating the creation of a special needs trust especially as a lawyer with a personal injury case you should call to speak with me before you accept any funds from settlement or verdict.
To discuss your NJ Special Needs Trust matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at firstname.lastname@example.org. Please ask us about our video conferencing consultations if you are unable to come to our office.