You should consider the creation of a special needs trust if you want to provide for a loved one with a disability, because a direct gift or inheritance could impact government benefit eligibility.
Let’s look at the details.
Medicaid Coverage
Medicaid is a government health insurance program that is potentially available to people who have very limited financial assets. Many people with disabilities rely on Medicaid coverage. An improvement in financial status could result in a loss of eligibility.
Supplemental Security Income
Supplemental Security Income (SSI) is also a need-based program. It provides an ongoing source of income for disabled people who cannot earn much on their own.
The same situation applies to SSI when it comes to a windfall of money. If a benefit recipient was to come into some money, eligibility for Supplemental Security Income could be lost.
Special Needs Trusts
When you create and fund a special needs trust, you name a trustee, and you name the person that you want to provide for as the beneficiary. The trustee could be someone that you know, but it could alternately be a professional fiduciary entity like a trust company.
The government benefits do not necessarily cover everything that the beneficiary may require. These unmet needs are called supplemental needs.
When a special needs trust has been established, the trustee can use assets that have been conveyed into the trust to satisfy these supplemental needs. The expenditures would do nothing to impact ongoing government benefit eligibility.
Ultimately, the beneficiary would enjoy an improved quality of life, but the benefits would remain intact.
A special needs trust that is funded by someone other than the beneficiary is called a self-settled or third party special needs trust. When this type of trust has been created, the Medicaid program would not seek reimbursement from the estate of the beneficiary after his or her passing.
Special Needs Planning Report
If you would like to obtain some in-depth information about special needs trusts, we have a valuable resource that you can access through this website. Our firm has prepared a comprehensive report on special needs planning, and it is being offered on a complimentary basis.
To access your copy of the report, click this link and follow the simple instructions: Smithtown NY Special Needs Planning.
Attend an Upcoming Seminar
We are conducting a number of seminars during the month of December. The seminars are free to attend, and you can obtain a great deal of useful information if you join us.
You can visit our seminar schedule page to obtain more detailed information: Estate Planning Seminars.
Schedule a Free Consultation
Our firm offers free consultations, and you can send us a message through this link if you would like to speak with a licensed attorney: Smithtown NY Estate Planning Attorneys.
Mark S. Eghrari, Estate Planning Attorney
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