by Jose D. Roman | Sep 1, 2026 | Estate Administration, Estate Planning, Last Will and Testament, Legal Bulletin, NJ Supreme Court, Probate
Families often assume that a Last Will and Testament clearly reflects a loved one's wishes and that those wishes will be carried out without controversy. Unfortunately, that is not always the case. A recent decision by the New Jersey Supreme Court, Christakos v. Boyadjis, 262 N.J. 447 (2026), highlights how misunderstandings, outdated estate plans, and last-minute revisions can lead to years of probate litigation and significant expense.
The case involved two brothers, Peter and Nicholas Christakos, who had signed wills in 2003 providing that their estates would pass to one another and, ultimately, to certain family members. More than a decade later, they consulted an attorney about updating their estate plans. During that process, the attorney incorrectly interpreted provisions of the existing Wills and later drafted new Wills that did not fully accomplish what the brothers intended. After both brothers died, multiple probate disputes followed, eventually leading to a legal malpractice lawsuit against the drafting attorney.
The New Jersey Supreme Court was asked to decide whether a family member who was not a client of the attorney could sue the attorney for malpractice. The Court held that, under the circumstances presented, she could not. In adopting Section 51 of the Restatement (Third) of the Law Governing Lawyers, the Court emphasized that attorneys generally owe duties to their clients, not to every person who might have expected to inherit from an estate. Because there was insufficient evidence that the decedents intended the claimant to be a beneficiary under the later wills, the malpractice claim could not proceed.
Although the decision focuses on attorney liability, the more important takeaway for New Jersey families is the value of careful and proactive estate planning.
One lesson is the importance of regularly reviewing an estate plan. Many people create a Will and never look at it again. Over time, however, family relationships change, beneficiaries pass away, financial circumstances evolve, and personal priorities shift. An estate plan that made perfect sense twenty years ago may no longer reflect a person's wishes today. Regular reviews help ensure that documents remain consistent with current goals and avoid surprises after death. For more information about creating and updating a Will, see my article on Last Wills and Testaments in New Jersey.
The case also demonstrates the importance of clearly expressing testamentary intent (what the person signing the Will intends). Much of the litigation centered on determining what the brothers actually wanted to happen to their property. When estate planning documents leave room for interpretation, surviving family members may spend years fighting over those questions in court. Clear drafting, thorough communication with counsel, and careful documentation of significant decisions can substantially reduce the likelihood of future disputes.
Another important issue is planning before health concerns become urgent. Questions regarding diminished capacity frequently arise when Wills or estate planning documents are executed later in life. While most older adults retain the ability to make valid estate planning decisions, waiting until a medical crisis occurs can increase the risk of challenges after death. Addressing estate planning needs early is often one of the most effective ways to protect both the plan and the family members who may later be called upon to defend it.
The decision is also a reminder that family members should avoid making assumptions about inheritance rights. A relative may have been included in an earlier Will but omitted from a later one. Beneficiary designations, trusts, and revised estate planning documents can dramatically alter who ultimately receives property. Expectations based on old documents or family conversations often lead to disappointment and lawsuits.
For many New Jersey families, real estate is among the most valuable assets in an estate. Questions about who inherits a home, whether the property should be sold, and how ownership transfers after death are common sources of conflict. If you are dealing with inherited real estate, my article on Inherited Homes in New Jersey discusses several of the practical and legal issues that may arise.
The broader lesson of Christakos v. Boyadjis is that good estate planning is not simply about signing documents. It is about creating a legally sound plan that accurately reflects your wishes, communicating those wishes clearly, and revisiting the plan as life changes. Taking those steps can help minimize uncertainty, reduce the risk of expensive probate disputes, and provide peace of mind for both you and your loved ones.
Estate disputes do not always end up in court. In some cases, alternative dispute resolution may offer a more efficient path forward. You can learn more in our article on Arbitration Clauses and New Jersey Will Disputes. Likewise, major life events can have unexpected consequences for inheritance rights, as discussed in my post about Death During a Pending Divorce in New Jersey.
by Jose D. Roman | Aug 18, 2026 | Estate Administration, Estate Planning, Last Will and Testament, Probate
In a prior post, I explained that you cannot arbitrate a Will dispute in New Jersey — at least not through an arbitration clause buried in the Will itself. That remains the law. But a July 2026 decision from the New Jersey Appellate Division, In re Estate of Roseanne Dyevich, A-1192-24 (App. Div. July 22, 2026), illustrates an important distinction: when the parties themselves voluntarily agree to submit an estate dispute to arbitration, that agreement is enforceable — and the arbitrator's decision is binding and difficult to overturn.
What Happened in the Dyevich Estate
Nicholas and Roseanne Dyevich had four sons: Kevin, James, Thomas, and Michael. After both parents died — Nicholas in 2015 and Roseanne in 2019 — the family found itself in a tangle of litigation. Six separate court matters were pending, involving disputes over the administration of Nicholas's estate, Roseanne's incapacity and guardianship, the disposition of real property, allegations of financial misappropriation, and the conduct of James as executor and guardian.
Rather than litigate all six cases to conclusion, the parties — including a non-family creditor and a corporate entity — agreed to resolve everything through binding arbitration. The arbitrator issued a comprehensive written opinion and a final judgment addressing all of the contested issues. Kevin, who had served as executor, then moved to vacate the award in the trial court, arguing that the other brothers had engaged in misconduct that tainted the arbitration. The trial court denied his motion. Kevin appealed.
The Court's Ruling: Misconduct by a Party Is Not Enough
The Appellate Division affirmed the denial and offered a clear statement of the law. Under the New Jersey Uniform Arbitration Act, N.J.S.A. 2A:23B-23(a), a court may vacate an arbitration award only for six specific reasons. Those grounds are narrow and focused on process, not outcome — things like fraud by the arbitrator, evident partiality of the arbitrator, refusal to hear material evidence, or an arbitrator exceeding their authority.
Kevin's argument was that the defendants had committed fraud — doctoring photographs, destroying financial records, failing to pay the accounting firm. But the court pointed to the critical distinction: under New Jersey law, an arbitration award "may be vacated only for fraud, corruption, or similar wrongdoing on the part of the arbitrators." Rappaport v. Pasternak, 260 N.J. 230, 249 (2025) (quoting Chief Justice Wilentz in Perini Corp. v. Greate Bay Hotel & Casino, Inc., 129 N.J. 479, 548 (1992)). Alleged misconduct by the opposing party does not meet that standard.
The court also declined to consider several arguments Kevin raised for the first time on appeal — including a new claim that the defendants had doctored photographs to influence the arbitrator. Under long-standing New Jersey appellate practice, issues not raised before the trial court are generally not considered on appeal. Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973).
The Key Distinction: Voluntary Arbitration vs. a Will Clause
This case is easy to confuse with the Hekemian situation I wrote about earlier, but the two are fundamentally different. In Hekemian, a testator attempted to impose arbitration on beneficiaries through a clause written into the Will — a unilateral document that the beneficiaries never agreed to, could not negotiate, and were never asked to sign. The Appellate Division held that clause unenforceable because it lacked mutual assent and was incompatible with the Probate Code's grant of authority to the Superior Court over Will disputes.
In Dyevich, there was no Will clause at issue. All the parties — represented by counsel, fully aware of the pending litigation — sat down and agreed among themselves to submit their disputes to an arbitrator. That is a voluntary, bilateral agreement to arbitrate. It is exactly the kind of arrangement that New Jersey's arbitration statute is designed to support and enforce.
The rule, stated plainly: a testator cannot force beneficiaries into arbitration through a Will. But parties to an active estate dispute can agree — on their own terms, with full knowledge — to resolve that dispute in arbitration. Once they do, the resulting award carries the weight of a court judgment and can be vacated only in very limited circumstances.
What This Means for NJ Families Navigating Estate Disputes
Estate disputes are expensive, slow, and exhausting — especially when, as in the Dyevich family's case, multiple cases are pending at once and the litigation involves contested guardianships, financial accounts, and real property. Voluntary arbitration can be a practical path to resolution that offers privacy, speed, and finality. New Jersey courts strongly support it.
But finality cuts both ways. The same deference that makes an arbitration award powerful also makes it very difficult to undo. The New Jersey Supreme Court has described private arbitration awards as subject to "an extraordinarily deferential standard of review." Rappaport, 260 N.J. at 250. An award will not be overturned simply because a court might have decided the facts or the law differently. Courts are not in the business of second-guessing arbitrators.
If you are involved in an estate dispute and someone suggests arbitration as a way to resolve it, understand what you are agreeing to in advance. Once the arbitration is complete and the award is entered, your options to challenge it are narrow. You will not succeed by pointing to the other side's bad behavior during the proceedings — that is a matter for the arbitrator, not for the courts, after the fact.
The bottom line from Dyevich is this: arbitration works in the estate context when the parties choose it freely and with full information. What does not work — as Hekemian makes clear — is a testator trying to impose that choice on beneficiaries from beyond the grave.
by Jose D. Roman | Jun 30, 2026 | Estate Administration, Estate Planning, Intestate Estate (No Will), Last Will and Testament, Probate
A New Jersey appellate decision decided June 29, 2026 — In the Matter of the Estate of Agnieshka Burke — offers a stark illustration of what can happen when someone dies while a divorce is still pending. The case involves a $500,000 life insurance policy, a Will that named the estranged husband as executor and sole beneficiary, and a fight between that husband and the decedent's sister over who gets what. The court's ruling touches on three issues that matter to anyone who is separated, going through a divorce, or simply has not updated their estate plan in years: whether your Will still works the way you intended, who controls your estate when you die, and what happens to assets like life insurance that pass outside your Will entirely.
Dying With a Divorce Pending
Under New Jersey law, a divorce action ordinarily ends when a final judgment of divorce is entered. If one spouse dies before that happens, the divorce proceedings have traditionally abated — meaning they simply stop. The surviving spouse inherits under the Will or under the intestacy laws if there is no Will, and the court's power to divide marital property (called equitable distribution) disappears.
The Legislature changed this rule in January 2024 by adding subsection (h)(2) to the equitable distribution statute, N.J.S.A. 2A:34-23. The new provision states that if a divorce complaint has been filed and either party dies before a final judgment is entered, the court's authority to divide marital property does not abate. In Burke, the Appellate Division confirmed that this right belongs not just to a surviving spouse, but also to the estate of the spouse who died. In plain terms, if you file for divorce and then die before it is finished, your estate (acting through a personal representative) may still be able to pursue a share of the marital assets.
This is a significant development for anyone with a pending divorce. It means that death during divorce proceedings does not necessarily resolve the property dispute. It may simply transfer the fight to a different courtroom.
Your Executor May Have a Conflict of Interest
In Burke, Agnieshka had named her husband Jared as executor of her Will. After she died with the divorce still pending, Jared was appointed executor and also stood as the primary beneficiary under both her Will and life insurance policy. The court found this created an irreconcilable conflict of interest. As the Appellate Division put it, Jared's responsibilities to represent the estate's interests and his own personal interests were "directly adverse."
The court did not remove Jared as executor entirely, but it disqualified him from acting as executor in connection with the equitable distribution dispute — the exact proceeding where the estate's most valuable rights were at stake. It then ordered the Probate Part to appoint a substitute executor for that limited purpose, and noted that Agnieshka's Will had already named her sister as successor executor.
The lesson here is direct. If you are separated or in the middle of a divorce, your spouse is most likely still named in your Will as executor, beneficiary, or both. Unless your Will is updated or the divorce is finalized, that person retains legal authority over your estate when you die. New Jersey law does automatically revoke certain transfers to a former spouse after a divorce is complete under N.J.S.A. 3B:3-14, but that protection does not kick in until the divorce is actually finalized. Separation alone changes nothing.
Non-Probate Assets Are a Separate Problem
Most people assume their Will controls everything they own. It does not. Assets that pass by beneficiary designation — life insurance, retirement accounts, payable-on-death bank accounts — transfer directly to the named beneficiary regardless of what the Will says. These are called non-probate assets, and they pass outside of probate entirely.
In Burke, Agnieshka's $500,000 life insurance policy named Jared as the sole beneficiary. The couple was separated and a divorce was pending, but she had not changed the designation. The Appellate Division sent the question of who is entitled to those proceeds to the Family court for resolution, but it was careful to note that Jared remains the named beneficiary and that no settlement agreement or final divorce judgment existed that would automatically revoke that designation under N.J.S.A. 3B:3-14.
This is where many people are caught off guard. You can update your Will, but if you forget to change the beneficiary on your life insurance policy or your 401(k), those assets still pass directly to your estranged spouse. The only way to ensure your beneficiary designations reflect your current intentions is to change them directly with the insurance company, bank, or plan administrator — a Will cannot override them.
What You Should Do Now
If you are separated or going through a divorce, your estate plan needs immediate attention on several fronts. First, after consulting your divorce attorney, review and update your Will to name a new executor and new beneficiaries. Second, also after consulting your divorce attorney, change beneficiary designations on every account that carries one — life insurance, IRAs, 401(k)s, annuities, payable-on-death accounts. Third, review any powers of attorney and health care proxies that name your spouse as your agent. In New Jersey, the divorce statute does not automatically revoke a health care proxy naming a spouse, so your estranged husband or wife may still have the legal authority to make medical decisions for you if you become incapacitated. For more on how that works, see who makes medical decisions in New Jersey.
There are also Medicaid planning considerations that arise when a couple separates but does not yet divorce — particularly for couples where one spouse may need long-term care. Medicaid's spousal protection rules treat legally married couples as a unit for purposes of resource assessment, which can affect eligibility and planning options. For more on that issue, see Medicaid and divorce in New Jersey.
The Burke case is a reminder that separation is not a legal status that protects you or your estate. Until a divorce is final, your spouse remains your legal spouse for virtually every purpose that matters in estate planning. If your circumstances have changed, your documents need to change with them.
by Jose D. Roman | May 12, 2026 | Estate Administration, Estate Planning, Last Will and Testament, Probate, Trusts
Can a testator include an arbitration clause in their Will that forces beneficiaries to resolve disputes in a private arbitration forum rather than a New Jersey court? For the first time, the New Jersey Appellate Division has answered that question directly — and the answer is no.
In a case published on April 21, 2026, In re Estate of Samuel P. Hekemian, the Appellate Division held that an arbitration provision contained in a Last Will and Testament is unenforceable under New Jersey law.
Background: The Hekemian Family Estate
Samuel P. Hekemian died testate in August 2018, survived by his wife Sandra and their four adult sons: Peter, Jeffrey, Mark, and Richard. His 2002 Last Will and Testament (2002 LWT) appointed his son Peter and longtime advisor Edward G. Imperatore, Esq. as co-executors and co-trustees of three testamentary trusts established under the Will.
The 2002 LWT contained an arbitration clause providing that any dispute regarding the interpretation of the Will or its administration “shall be submitted for settlement by arbitration.” The clause declared arbitration to be “the exclusive remedy” for resolving such disputes and stated that the arbitrator’s decision “shall be final and binding upon all interested parties and shall not be appealable to any court of law.”
The same arbitration provision appeared in reciprocal Wills executed simultaneously in 2001 by Samuel and Sandra that were prepared by the same New York attorney. When Sandra and Richard later filed exceptions to the co-executors’ first intermediate accounting of the estate, the co-executors moved to compel arbitration.
A Second Look at the Same Arbitration Clause
This was not the first time the arbitration provision had been challenged. In an earlier unpublished opinion, the Appellate Division had affirmed the denial of a motion to compel arbitration of Richard’s request for an accounting, finding that the clause was not the product of mutual assent under traditional contract principles and that it failed to explain that Richard was relinquishing his right to bring a claim in court. At that time, however, the court stopped short of declaring the arbitration provision categorically unenforceable.
In the intervening period, Sandra joined the litigation and filed her own exceptions to the co-executors’ accounting. Unlike Richard, Sandra had received distributions under the 2002 LWT. The co-executors argued this distinguished her situation and that her participation in the Will’s benefits, combined with the execution of the reciprocal 2001 Wills, established the mutual assent necessary to compel her to arbitrate. The trial court rejected that argument and denied the motion. The co-executors appealed.
The Court’s Holding: Two Independent Grounds
The Appellate Division affirmed the trial court’s denial, but went further than the lower court by issuing a definitive ruling on a question of first impression: arbitration clauses in testamentary instruments are unenforceable under New Jersey law. The court rested its holding on two independent and mutually reinforcing grounds.
1. Lack of Mutual Assent
An agreement to arbitrate, like any contract, requires mutual assent — a knowing and voluntary waiver of the right to pursue claims in court. The court reaffirmed its earlier conclusion that the arbitration clause failed to explain, in clear and unambiguous terms, that interested parties were relinquishing their right to sue. Citing Atalese v. U.S. Legal Servs. Grp., L.P., 219 N.J. 430 (2014), the court emphasized that “the point is to assure that the parties know that in electing arbitration as the exclusive remedy, they are waiving their time-honored right to sue.”
The co-executors argued that Sandra’s simultaneous execution of a reciprocal Will containing the same arbitration clause demonstrated her assent. The court rejected this. While a meeting of the minds is not required for a Will to be effective — because a Will is a unilateral disposition of property, not a contract — that principle cuts in the opposite direction for arbitration purposes. Precisely because a Will is unilateral, neither Sandra nor any other interested party was afforded the opportunity to consider or elect to waive their right to proceed in court. The court was not satisfied that the simultaneous execution of reciprocal Wills, without more, established the kind of informed, knowing assent required for a valid arbitration agreement.
2. Inconsistency with the Probate Code
Even if the assent problem could be overcome, the court held that arbitration clauses in Wills are incompatible with New Jersey’s statutory framework for estate administration. The Probate Code, N.J.S.A. 3B:1-1 et seq., vests the Superior Court with comprehensive authority over Will disputes, trust administration, and fiduciary accountings. The court catalogued the relevant provisions, including but not limited to:
- N.J.S.A. 3B:2-2 grants the Superior Court "full authority to hear and determine all controversies respecting wills, trusts[,] and estates, and full authority over the accounts of fiduciaries, and also authority over all other matters and things as are submitted to its determination under this title."
- N.J.S.A. 3B:3-17 during probate, the Superior Court "may take depositions to wills[,] admit the same to probate, and grant . . . letters testamentary or letters of administration with the will annexed."
- N.J.S.A. 3B:3-18 requiring that to "prove the transfer of any property or to nominate an executor, a will must be admitted to probate."
Against this backdrop, the court reaffirmed and expressly adopted what had been an observation in its prior unpublished opinion: “arbitration clauses that eliminate the courts’ expected role in resolving Will disputes are inconsistent with the detailed statutory scheme vesting the superior courts with the authority to adjudicate such issues.” Accordingly, enforcement of an arbitration clause in a testamentary instrument is contrary to both the Probate Code and New Jersey’s contract principles. The court held:
We conclude enforcement of an arbitration clause in a testamentary instrument is contrary to the court’s role underlying the Probate Code and inconsistent with our State’s contract principles.
What This Means for Estate Planning in New Jersey
The Hekemian decision settles a question that had been lingering in New Jersey estate practice for years. Estate planners and their clients should take note of several practical implications.
- Arbitration clauses in Wills are unenforceable in New Jersey. Regardless of a testator’s intent, an arbitration provision in a Last Will and Testament cannot compel beneficiaries, heirs, or other interested parties to resolve their disputes outside of court. Any such provision should be considered a nullity.
- Testamentary trusts are also covered. The court’s holding extends to disputes concerning trusts created under a Will, not merely the Will itself. The arbitration clause in the Will purported to cover disputes “regarding the interpretation of this Will and the trusts created hereunder” — both were held unenforceable.
- The result is the same regardless of mutual assent. Even if a testator and their spouse executed reciprocal Wills containing identical arbitration clauses, and even if the surviving spouse received benefits under the Will, that is insufficient to establish the knowing, voluntary waiver of court rights required under Atalese.
- Inter vivos trusts are a different question. The Hekemian decision addresses testamentary instruments — Wills and trusts created by Wills. Arbitration clauses in standalone inter vivos trusts, which are contractual instruments, may be treated differently.
- Will disputes belong in court. Beneficiaries and interested parties who find themselves in estate disputes in New Jersey have a right to litigate those disputes in the Superior Court, Chancery Division, Probate Part — and a testator cannot take that right away through a provision buried in their Will.
A Practical Note for Families
For families navigating an estate dispute in New Jersey, the Hekemian decision is significant. If a co-executor or trustee attempts to invoke an arbitration clause in a Will to divert your dispute out of court, that clause is unenforceable. You are entitled to pursue your claims — whether exceptions to an accounting, removal of a fiduciary, or other relief — in the Superior Court under the full protections of New Jersey law.
For those in the estate planning process, this decision underscores the importance of working with an experienced New Jersey estate planning attorney who stays current with developments in the law. Estate planning documents should reflect the current legal landscape, not aspirational provisions that courts will not enforce.
by Jose D. Roman | Mar 31, 2026 | Estate Administration, Estate Planning, Guardianship, Intestate Estate (No Will), Last Will and Testament, Legal Bulletin, Medicaid, Medicaid Estate Recovery, Medicaid Planning, Medicaid Updates, Trusts
A decision from the New Jersey Appellate Division published June 17, 2025 (In the Matter of G.W.) has clarified a critical and previously unsettled area of law concerning public benefit liens. The court held that a lien issued by the Division of Developmental Disabilities (DDD) is immediately enforceable, while a Medicaid lien cannot be collected until the beneficiary’s death — a distinction with significant consequences for estate planning.
The Background
Gabrielle W., an adjudicated incapacitated adult, received residential services funded by both DDD and Medicaid. When she inherited $600,000 from her sister’s estate, Arc of Bergen and Passaic Counties, her court-appointed property guardian, sought to protect her Medicaid eligibility by transferring those funds to a special needs trust. But standing in the way was a $1,052,304 lien from DDD for the cost of her care — a lien DDD sought to enforce immediately.
The trial court declined to enforce the DDD lien, ruling instead that Medicaid’s future estate recovery rights had priority. The court reasoned it was in Gabrielle’s best interest to preserve her Medicaid eligibility and protect the trust. But on appeal, the Appellate Division disagreed.
The Court's Holding
The Appellate Division reversed the lower court’s order, emphasizing that DDD liens are enforceable immediately under N.J.S.A. 30:4-80.1. These liens attach to the property of a living person who receives services from DDD. On the other hand, Medicaid liens can only be asserted posthumously, pursuant to N.J.S.A. 30:4D-7.2, and only against the estate of the deceased Medicaid recipient.
The court concluded there is no statutory conflict: both liens can coexist, but they operate on distinct timelines. In the case of a living person like Gabrielle, DDD had the only legally viable lien. Medicaid’s recovery rights would not ripen until Gabrielle’s death.
Why This Matters
This case is a clear warning to guardians, trustees, and estate planners: Inherited assets cannot be shielded from DDD repayment obligations simply by invoking Medicaid's future claim rights. If a client receives services from DDD and comes into money, the DDD lien must be addressed promptly — either by repayment or through the statutory compromise process. The court also made clear that a “best interests” argument cannot override a legislatively mandated lien. Courts must enforce the statutes as written.
Planning Tip
If you have a loved one who receives public benefits like Medicaid or services from DDD, careful estate planning is essential. Leaving them an inheritance outright — even with good intentions — can jeopardize their benefits and trigger immediate repayment obligations. Instead, consider using special needs trusts or other protective planning tools to ensure their continued eligibility and long-term care without exposing them to liens or disruptions in services.
The G.W. case illustrates precisely what happens when protective planning is absent. Gabrielle's sister died intestate — without a will — which meant the $600,000 passed to Gabrielle outright under New Jersey's laws of intestate succession. There was no will directing those funds into a Special Needs Trust, no advance coordination with an elder law attorney, and no mechanism to receive the inheritance in a protected form. The result was an immediate lien enforcement proceeding that consumed the entirety of the inheritance and left nothing for Gabrielle's ongoing care needs.
Had Gabrielle's sister executed a will with proper special needs planning, she could have directed her estate — or the portion intended for Gabrielle — into a third-party Special Needs Trust. Unlike a first-party trust funded with the beneficiary's own assets, a third-party SNT is established with someone else's money and carries no Medicaid payback requirement at death. Gabrielle would have received the benefit of those funds without triggering the DDD lien, and without disrupting her Medicaid eligibility.
This is one of the most important and underappreciated points in elder law and disability planning: the person doing the planning is often not the disabled individual, but the family member who intends to leave them something. A parent, sibling, or other relative who has a loved one receiving public benefits should have a will — and that will should account for the beneficiary's disability. Leaving assets outright to a Medicaid or DDD recipient, however well-intentioned, can do more harm than good.
by Jose D. Roman | Mar 18, 2026 | Estate Planning, Last Will and Testament, Medicaid, Medicaid Planning, Trusts
Families planning for a loved one with a disability in New Jersey often face the same question: should we set up a Special Needs Trust, open an ABLE account, or both? The answer depends on the individual’s age, the amount of money involved, and the kinds of expenses you need to cover.
Both tools are designed to preserve eligibility for public benefits like Medicaid and Supplemental Security Income (SSI) while allowing a person with disabilities to have access to additional resources. I’ve previously covered SSI Medicaid eligibility in New Jersey in detail. I’ve also given an overview of NJ ABLE accounts and how they can help a family save, while preserving SSI eligibility. This post focuses on Special Needs Trusts and ABLE accounts, and how to choose between the two tools — or use them together.
What Is a Special Needs Trust?
A Special Needs Trust (SNT) is a legal trust designed to hold assets for the benefit of a person with a disability without disqualifying them from means-tested government benefits. The key is that the trust — not the individual — owns the assets, so they do not count toward Medicaid or SSI resource limits.
There are two main types of Special Needs Trusts in New Jersey:
- First-Party: Funded with the beneficiary’s own assets — for example, a personal injury settlement or an inheritance received directly. Must be established before the beneficiary turns 65. Upon the beneficiary’s death, Medicaid must be reimbursed for benefits paid.
- Third-Party: Funded with assets belonging to someone other than the beneficiary — typically a parent, grandparent, or other family member. No age restriction. No Medicaid payback requirement upon death, which makes this the preferred option for family estate planning.
A trustee — often a family member, attorney, or professional trust company — manages the trust and makes distributions on the beneficiary’s behalf. Distributions must supplement, not replace, government benefits. This means trust funds generally cannot be used for food or shelter without impacting SSI and Medicaid eligibility.
What Is an ABLE Account?
An ABLE account (Achieving a Better Life Experience) is a tax-advantaged savings account available to individuals whose disability began before age 46 (increased from 26 effective January 1, 2026). New Jersey’s program is administered through NJ ABLE. For a full breakdown of eligibility and benefits, see my earlier post: NJ ABLE Accounts: Preserving Benefits for Individuals with Disabilities.
Key features of an ABLE account:
- Funds are not counted as assets for Medicaid or SSI purposes (up to $100,000 for SSI)
- Annual contribution limit: $20,000 in 2026 (with additional contributions allowed under the ABLE to Work Act for working beneficiaries)
- Total account balance cap: $305,000 in New Jersey
- The account holder — or their legal representative — controls the account directly
- Can be used for a broad range of qualified disability expenses, including housing, transportation, education, health, and more
When a Special Needs Trust Makes More Sense
A Special Needs Trust is typically the better choice when:
- The beneficiary is receiving a large sum — such as an inheritance, personal injury settlement, or life insurance proceeds — that exceeds ABLE account contribution or balance limits
- The disability onset was at age 46 or older, making the individual ineligible for an ABLE account
- A family member wants to leave money to a loved one with disabilities as part of their estate plan (a third-party SNT is the preferred vehicle here)
- Complex financial management is required and a professional trustee is needed
- The family wants to avoid the Medicaid payback requirement upon death — only possible with a third-party SNT
When an ABLE Account Makes More Sense
An ABLE account is typically the good choice when:
- The individual’s disability began before age 46
- The goal is to set aside modest amounts for day-to-day supplemental expenses without the cost and complexity of a trust
- The individual wants direct control over their own funds
- The family wants a simple, low-cost planning tool to complement existing benefits
- Contributions from family members, friends, or employers are expected over time
Can You Use Both?
Yes — and for many families, using both tools together is an effective strategy. A common approach:
- Establish a third-party Special Needs Trust in the parents’ estate plan to receive larger inheritances or life insurance proceeds
- Open an ABLE account for the beneficiary to handle smaller, recurring disability-related expenses with greater flexibility and direct access
The two tools complement each other well. The SNT handles larger, longer-term assets with professional oversight. The ABLE account provides the beneficiary with day-to-day financial autonomy without jeopardizing benefits.
Important Caution: Get it Right from the Start
Both Special Needs Trusts and ABLE accounts involve rules that — if not followed carefully — can inadvertently disqualify a person from Medicaid or SSI. With a Special Needs Trust in particular, improper distributions (for example, paying for food or rent directly) can reduce SSI benefits dollar for dollar.
Before establishing either tool, consult with a New Jersey elder law or special needs planning attorney to ensure the structure is right for your family’s situation.
Final Thoughts
There is no one-size-fits-all answer. The right tool depends on your loved one’s age, the assets involved, and your long-term planning goals. For families with a child or adult with disabilities in New Jersey, both a Special Needs Trust and an ABLE account deserve a place in the conversation. Read my earlier post on NJ ABLE Accounts for a deeper dive into how ABLE accounts work.