• • Can you give a large direct gift or inheritance to a person with a disability without impacting government benefits like Medicaid and Supplemental Security Income?

• • The answer to this question is no. These are need-based programs, so there are asset limits. A significant inheritance or gift could cause a loss of eligibility until the money was gone.

• • Is there an estate planning solution for people with special needs?

• • Yes, you could establish a supplemental needs trust for the benefit of a loved one with a disability.

• • How does it work?

• • You fund the trust, and you name a trustee to act as the administrator. Since there are complex program rules, you may want to utilize a professional fiduciary. However, from a legal standpoint, any adult that is willing to accept the role can act as the trustee with the exception of the beneficiary. The government benefits do not provide everything that the beneficiary may want or need. These unmet needs are referred to as supplemental needs, and this is why the trust is called a supplemental needs trust. Under the guidelines, the trustee is allowed to use assets in the trust to satisfy these unmet needs. As long as none of the regulations are violated in any way, ongoing eligibility for Medicaid and Supplemental Security Income would not be negatively impacted.

• • What happens if there is money left in the trust after the death of the beneficiary?

• • If you were to use your resources to fund a trust for the benefit of another person, it would be looked upon as a third-party supplemental needs trust. When you are creating the trust declaration, you would name a successor beneficiary. After the first beneficiary’s death, the successor would assume ownership of any remainder that may be left in the trust.

• • Can an individual that is receiving these benefits create a trust with their own money?

• • Perhaps surprisingly, the answer to this question is yes. The individual themselves, a grandparent, a parent, a court, or a legal guardian can use assets that are the property of the beneficiary to establish a supplemental needs trust. One way that a person that is in this position could come into money would be through a personal injury settlement. Under these circumstances, the trustee would have the same powers with regard to the utilization of assets in the trust to make the beneficiary more comfortable in many different ways. All of the above is well and good, but there is one major negative that enters the picture when it comes to self-settled or first party special needs trusts. Medicaid is required to seek reimbursement from the estates of people that were using the program during their lives. When a first party special needs trust has been established, Medicaid can attach assets that remain in the trust after the passing of the grantor/beneficiary. This is not possible when there is a third-party special needs trust in place.

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If you would like to discuss special needs planning with a licensed estate planning attorney, our doors are open. To schedule a consultation appointment, give us a call at 585-374-5210. There is also a contact form on this website that you can use to send us a message.