by: Begley Law Group

by Thomas D. Begley, Jr., CELA


Housing for an individual with disabilities is a major concern. The purchase of a residence is a very important decision involving a number of factors. This is particularly true where the individual is receiving means-tested public benefits such as Supplemental Security Income (SSI) and Medicaid. If there is a special needs trust involved, the SSI and State Medicaid Regulations must be carefully considered.

Selecting the Right Home

Often, a home must be made handicap accessible. In selecting a home, care must be taken to ensure that the home can be adapted for the individual with disabilities.

How Much to Spend

In determining how much to spend for the home, there are certain constraints that must be observed. The trust should last the lifetime of the beneficiary. How much can be spent on the home depends on the size of the trust. Most professional trustees will limit expenditures for a home purchase to between 15% and 25% of trust assets.

Who Should Own the Home?

In New Jersey, if the trust pays for the home, it must be titled in the name of the trust. This means that there are only two good options for homeownership:

  • Special Needs Trust Purchases the Home. If the Special Needs Trust is a First-Party Special Needs Trust, that is funded with assets of the beneficiary, such as proceeds of a personal injury settlement, an inheritance, or equitable distribution, there are many disadvantages to the trust owning the home:
  • One disadvantage is that when the trust beneficiary dies, the home must be sold to payback Medicaid.
  • Sole Benefit Of. First-Party Special Needs Trusts follow a “sole benefit of” rule. If other individuals reside in the home with the beneficiary, such as other family members, they must contribute toward the operating expenses of the home.
  • Parents Purchase the Home. Another option is to ask the court for an allocation of the personal injury settlement proceeds to one or both parents. Courts will usually be willing to make such an allocation, so long as it is reasonable. If the parents own the home, the Medicaid payback is avoided. However, if the parents own the home, the trust can only pay a pro rata share of the expenses of maintaining the home. If the family consists of two parents and two adult children, all of whom live in the home, the trust could only pay 25% of the expenses of maintaining the home.


Homeownership in personal injury settlement is always a complex issue. If the plaintiff suffers from disabilities, a First-Party Special Needs Trust should always be considered, and a professional trustee should be engaged to administer the trust.