Special needs planning is important for lots of different reasons, including to provide protection for important benefits during the lifetime of a disabled person. Special needs planning can also affect the Medicaid estate recovery process. You need to understand what the Medicaid estate recovery process is and how special needs planning works if you are planning on making any gifts or providing any financial assistance to someone with a disability.
Eghrari Wealth Training Law Firm understands Medicaid rules, as well as the rules for special needs trusts. Our Suffolk County special needs planning lawyers will help you to protect assets from estate recovery when possible and will assist you with the entire process of helping a disabled person to be as financially secure as possible. Give us a call today to find out more.
What is Special Needs Planning?
Special needs planning involves creating a specific type of trust. There are first and third party special needs trusts.
First party special needs trusts are created by parents or guardians, or by grandparents. In some cases, these trusts are created based on court order. A first party trust is funded with assets belonging to someone with a disability (including assets coming from a personal injury settlement). The assets can be used for the benefit of the person who is disabled and can be managed for the disabled person by a trustee, without counting as resources that result in disqualification from Medicaid coverage (Medicaid has strict resource limits).
Third party special needs trusts are created by anyone who wishes to make a gift to someone who is disabled without causing a loss of access to government benefits. The trusts can be funded with as much money as the trust creator (the settlor) desires and the trusts can also be named as beneficiaries to a life insurance policy so they are funded by death benefits. Again, a trustee manages the money for someone who is disabled, and the trust assets don’t count as resources in determining Medicaid eligibility. The big difference is, the person who is disabled never owned the assets – which is important when it comes to Medicaid estate recovery.
How Does Special Needs Planning Affect Medicaid Estate Recovery
Medicaid estate recovery occurs after someone who was receiving Medicaid benefits has passed away. Since the state spent money to provide Medicaid benefits, the state is required to try to recoup that money in certain circumstances, such as when the money was spent on someone aged 55 or older or when money was spent on nursing care. The state of New York makes claims on the estate of the person who was disabled after that person’s death. The reason why estate recovery is allowed is because the government wants to let people who are disabled keep some of their assets during their lifetime, but still wants to be able to access those assets to repay funds that were spent on care.
The Medicaid estate recovery process works differently for first party versus third party special needs trusts. Money in a first party special needs trust did belong to the person who was disabled, so it can be accessible to the government after the death of the person with the disability. Money in a third party special needs trust, on the other hand, did NOT belong to the person who received Medicaid coverage. The state cannot gain access to the money or property in the special needs trust. With third party special needs trusts, the settlor can name a beneficiary who will inherit any remaining funds in the trust
How can a Suffolk County Special Needs Planning Lawyer Help You?
You cannot afford to take a chance when it comes to special needs planning, as both your assets and essential government benefits could be at risk. Getting the right legal advice as soon as possible is of paramount importance. Before you take action to provide for or assist someone who is disabled, you ned to talk with a Suffolk County special needs planning lawyer.
Eghrari Wealth Training Law Firm is here to help. We understand Medicaid rules, the estate recovery process, and the legal tools you can use to protect assets and provide for a disabled loved one. To find out more about what special needs planning entails, join us for a free seminar. You can also give us a call at (631) 265-0599 or contact us online to to learn more about the special needs planning process and how it impacts Medicaid estate recovery.
- Can Medicaid Planning Still Help Me If I Need to Qualify Now? - November 30, 2022
- Should I Tell My Loved Ones the Details of My Estate Plan? - November 23, 2022
- Protecting Assets with an Intentionally Defective Grantor Trust - November 16, 2022