New Jersey Statutes 3B:31-37. Special needs trusts
Terms Used In New Jersey Statutes 3B:31-37
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Governing instrument: means a deed, will, trust, insurance or annuity policy, account with the designation "pay on death" (POD) or "transfer on death" (TOD), security registered in beneficiary form with the designation "pay on death" (POD) or "transfer on death" (TOD), pension, profit-sharing, retirement or similar benefit plan, instrument creating or exercising a power of appointment or a power of attorney, or a dispositive, appointive, or nominative instrument of any similar type. See New Jersey Statutes 3B:1-1
- Grantor: The person who establishes a trust and places property into it.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- person: includes corporations, companies, associations, societies, firms, partnerships and joint stock companies as well as individuals, unless restricted by the context to an individual as distinguished from a corporate entity or specifically restricted to one or some of the above enumerated synonyms and, when used to designate the owner of property which may be the subject of an offense, includes this State, the United States, any other State of the United States as defined infra and any foreign country or government lawfully owning or possessing property within this State. See New Jersey Statutes 1:1-2
- Trustee: A person or institution holding and administering property in trust.
Even if a trust contains a spendthrift provision, the following shall apply:
a. Special Needs
(1) “Protected person” means a person who is:
(a) an aged, blind, or disabled individual as defined at 42 U.S.C. § 1382c;
(b) developmentally disabled as defined in section 2 of P.L.1979, c.105 (C. 30:1AA-2); or
(c) under age 18, or over age 18 and a full-time student, with serious disabilities that reasonably may prevent the individual from being self sufficient as an adult.
(2) “Special needs trust” means an OBRA ’93 trust, as defined in subsection a. of section 3 of P.L.2000, c.96 (C. 3B:11-37), or trust governed by a written instrument which:
(a) grants a trustee broad discretion to determine whether and when to distribute;
(b) limits distributions during the trust term to distributions to benefit one or more protected persons, although the trust shall have at least one protected person as beneficiary;
(c) provides that the trustee does not have any obligation to pay the protected person’s obligations or fund his support;
(d) does not give the protected person any right to require the trustee to distribute at a specific time or for a particular purpose or to assign or encumber interests in the trust; and
(e) evidences the grantor‘s intent to supplement rather than replace or impair government assistance that the protected person receives or for which he otherwise may be eligible.
b. Notwithstanding any other provision of this act or other law:
(1) trustees of a special needs trust have broad discretion over distributions;
(2) no creditor of a protected person may reach or attach a protected person’s interest in a special needs trust and no creditor may require the trustees to distribute to satisfy a protected person’s creditor’s claim; and
(3) a special needs trust shall terminate at such time as provided in its governing instrument.
c. A special needs trust shall not be required to repay government aid provided to a protected person unless the aid was provided on the basis that the special needs trust would repay the aid when the protected person dies, or the special needs trust terminates sooner and the special needs trust instrument expressly calls for such repayment. This provision does not apply to a first-party, self-settled OBRA ’93 trust as defined in subsection a. of section 3 of P.L.2000, c.96 (C. 3B:11-37).
d. Notwithstanding N.J.S. 3B:31-35 and N.J.S.3B:31-36, trustees of a special needs trust shall exercise their discretion in good faith to further trust purposes and courts may exercise their equity authority to remedy trustee abuses of discretion.
L.2015, c.276, s.1.