J.B. v. W.B., A-111 September Term 2011; Supreme Court; opinion by Cuff, P.J.A.D., temporarily assigned; decided August 20, 2013. On certification to the Appellate Division. D.D.S. No. 20-1-1056 [36 pp.]
In this appeal, the Court considers for the first time the role of a special needs trust for the benefit of an adult, unemancipated, disabled child and under what circumstances a child support obligation under an existing negotiated agreement may be modified to allow for the creation of a special needs trust.
Plaintiff J.B. and defendant W.B. are divorced parents of an autistic son, A.B., who has special needs. Both acknowledged that A.B. likely would never be emancipated. At the time of their divorce, the parents negotiated a property settlement agreement (PSA) that deferred some issues about their son.
Several years later, when their son enrolled in an out-of-state postsecondary school, J.B. filed a motion to establish financial responsibility for A.B.’s education and to establish a special needs trust. J.B. asserted that his salary had decreased since creation of the PSA, the parties should prepare for the possibility of his untimely death, and W.B. should not receive A.B.’s support payments now that A.B. resides at school. He further asserted that A.B. would be ineligible for certain government benefits if the support payments were not paid into a special needs trust. Concluding that the PSA addressed the support issues before the trial court and that the father had not demonstrated changed circumstances to warrant a modification of his support obligation, the trial court denied the motion. The trial court also observed that the proposed trust plan lacked sufficient detail to permit an informed decision about whether such a trust would be in the best interests of the child.
J.B. appealed, and the Appellate Division affirmed. The panel noted that the PSA contemplated many of the hypothetical situations posed in J.B.’s modification request. Moreover, both parties understood that A.B. likely never would be emancipated and J.B.’s obligations to him would remain throughout his life. J.B. also did not establish with certainty that a special needs trust would render A.B. eligible for any government benefits. Finally, because A.B. was not a party and there were no issues involving parenting time or custody, the panel rejected J.B.’s argument that the trial court should have appointed a guardian ad litem.
The court granted J.B.’s petition for certification.
Held: A parent seeking to modify a negotiated agreement for child support of a disabled child through the establishment of a special needs trust must present a specific plan and demonstrate how the proposed trust will benefit the disabled child. When a disabled child is the subject of a proposed special needs trust, it is within the trial court’s discretion to appoint a guardian ad litem.
Special needs trusts allow disabled individuals to maintain eligibility for needs-based government benefits including Supplemental Security Income (SSI) and Medicaid. Several requirements must be met in order for trust assets to be excluded from the disabled person’s income, including that the assets will supplement, not supplant, government benefits. In New Jersey, child support paid to a parent is considered an asset of the child and will disqualify the child from receiving government benefits. In light of the protections afforded by a special needs trust, it can be an effective tool in planning for the future of a disabled child.
Courts retain the equitable authority to modify privately reached child support agreements. A party to a comprehensive negotiated PSA who is seeking to modify a support obligation must meet the threshold standard of changed circumstances. Although modification may be unfair if the PSA addresses the changed circumstance, the standard will not bar consideration of the motion for modification where resolution of an acknowledged issue was deferred. The guiding principle is the best interests of the child. Redirecting a child support obligation from a parent to a special needs trust should not be considered exceptional or extraordinary relief if the plan is in the child’s best interests.
Here, the original PSA deferred the issue of postsecondary education, as well as the question of establishing a special needs trust. Because J.B. did not commit to fully fund A.B.’s postsecondary education or all future financial needs, his application to establish a special needs trust should have been evaluated in accordance with the best interests of the child standard.
A parent seeking to modify a negotiated agreement for the support of a disabled child must present a specific plan and demonstrate how a proposed trust will benefit the disabled child. When a proposed plan relies on access to government benefits, it must address eligibility rules, the timespan for attaining eligibility, the length of time before benefits are available once the child is eligible, and the means of defraying current costs without compromising the child’s eligibility. The plan also must designate a trustee and address the terms and conditions for disbursement of the corpus of the trust. Because J.B.’s proposed plan meets none of these requirements, the Appellate Division appropriately affirmed the order denying his motion.
No New Jersey rule or statute addresses the question of whether a guardian ad litem should be appointed for a dependent, disabled child who is the subject of a proposed special needs trust. The decision to appoint a guardian is within the trial court’s discretion. When a proposed modification may fundamentally affect a disabled child’s future, the court should not hesitate to appoint a guardian, and should seriously consider doing so when one parent resists the other’s application to establish a trust. Here, the court did not abuse its discretion by declining to appoint a guardian since the proposed plan was speculative and lacked the detail required for an informed decision as to whether it was in A.B.’s best interests.
The judgment of the Appellate Division is affirmed as modified.
Chief Justice Rabner; Justices LaVecchia, Albin, Hoens and Patterson; and Judge Rodríguez (temporarily assigned) join in Judge Cuff‘s opinion.
For appellant — Bonnie C. Frost (Einhorn, Harris, Ascher, Barbarito & Frost, attorneys; Ms. Frost and Christopher J. Roman, on the briefs). For respondent — Paul A. Rowe (Greenbaum, Rowe, Smith, and Davis, attorneys; Mr. Rowe and Lisa B. DiPasqua, on the briefs). For amicus curiae Legal Services of New Jersey — Mary M. McManus-Smith (Melville D. Miller, Jr., President, attorney; Ms. McManus-Smith, Mr. Miller, and JoAnne T. Mantz, on the brief).