When you are planning your estate, you should consider the life situation of everyone on your list. The right way to provide for one person may not be appropriate for the next, and this would definitely apply to inheritance planning for people with disabilities.
Government Benefit Eligibility
Most people in the United States get health insurance through their employers, but many individuals with disabilities cannot work, so this is not an option. Fortunately, there is a safety net in the form of the Medicaid program.
Supplemental Security Income (SSI) is a source of income for people that do not have much earning power because of their challenges, so this is another benefit that they rely on.
These benefits are only available to people that can prove that they have a significant level of financial need. Eligibility can be lost if someone that is relying on these programs was to come into money, and this is why you have to implement an advanced estate planning approach.
Supplemental Needs Trust
There is a solution in the form of a supplemental needs trust. You will also hear the term “special needs trust” used to describe the same device, and the terms are used interchangeably.
To implement this strategy, you fund the trust and you name a trustee to serve as the administrator. Any competent adult that is willing to assume the role can technically act as the trustee, but the person must be a sound money manager that understands the rules of these programs.
Longevity would also be a source of concern if you are using the trust for estate planning purposes. Trust companies and the trust departments of banks provide trustee services for a fee, and this can be the right choice in some instances.
The beneficiary would have no direct access to the resources, but the trustee would be able to use them to provide countless different goods and services that enhance the beneficiary’s life. These are some examples:
- Medical and dental procedures not covered by Medicaid
- Specially equipped motor vehicle
- Home
- Electronic equipment
- Household items
- Recreation
- Travel
- Education and training
- Rehabilitation and therapeutic services
As long as the rules are followed correctly, ongoing eligibility for Medicaid and Supplemental Security Income would not be impacted.
Medicaid Estate Recovery
After the death of a benefit recipient, Medicaid can attach property that is left in the estate. The cupboard is usually bare for the most part because you can’t qualify for Medicaid if you have significant assets in your name.
Of course, the dynamic is different when a supplemental needs trust has been established. There could in fact be a remainder left in the trust after the passing of the beneficiary.
Whether or not the remainder would be protected depends on the source of the funding.
If you fund a special needs trust for the benefit of someone else, it would be a third party trust. A successor beneficiary that you name in the trust agreement would assume the role after the death of the first beneficiary. Medicaid would not be able to touch the remainder.
A supplemental needs trust can be established with assets that are the property of a person with a disability. Under these circumstances, it would be a self-settled trust, and the remainder would be accessible to Medicaid during the estate recovery efforts.
Attend a Free Webinar
We are conducting webinars over the coming weeks that will focus on the most important aspects of the estate planning process. The sessions are free, and they couldn’t be any more convenient, so you should definitely take advantage of one of these opportunities.
You can see the dates if you visit our webinar page, and when you identify the session that works for you, follow the simple instructions to register so we can reserve your spot.
Take Direct Action Today!
Learning is always a good thing, but at some point, direct action is required. If you are ready to work with an attorney from our firm to put a custom crafted estate plan in place, we are here to help.
You can send us a message to request a consultation appointment, and we can be reached by phone at 585-374-5210.
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