To effectively plan your estate, you must carefully consider the specific needs of each person on your inheritance list. There are numerous different ways to facilitate asset transfers. The best course of action will vary on a person by person basis. When you act in an informed manner, you can prevent unintended negative consequences. With this in mind, we would like to explain the value of special needs trusts.
Government Benefit Recipients
Many people who have disabilities are enrolled in government benefit programs. Medicaid and Supplemental Security Income are often relied upon by people with special needs. Medicaid is a government health insurance program that is jointly administered by each state along with the federal government.
People with disabilities are typically going to need ongoing medical care and treatment. As we all know, health care costs are very high. A lifetime of medical care can be very, very expensive, so Medicaid is a lifeline for many people with special needs.
Supplemental Security Income is a source of income for disabled people who cannot earn significant income elsewhere.
Both of these programs are available to people who can demonstrate financial need. If you have a significant store of assets, you would not be able to qualify for Medicaid and Supplemental Security Income.
Special Needs Trusts
If you were to leave a direct inheritance to someone who was receiving need-based government benefits, imagine the scenario that would ensue. Suddenly, the benefit recipient is in a different financial situation. This can result in a disqualification from benefit eligibility.
The way that this situation is often handled is through the creation of a special needs trust. These trusts are alternately called supplemental needs trusts.
Government benefits don’t necessarily cover all of the recipient’s needs. Under existing laws, the trustee that you name to administer the special needs trust may use the trust’s assets to satisfy needs that are not met by government benefits.
Benefit eligibility is not jeopardized by these expenditures. We must emphasize the fact that the trustee would be managing the funds in the trust; the beneficiary cannot directly utilize the assets.
When you create a special needs trust for the benefit of someone with a disability, you can improve his or her quality of life without causing a loss of benefits.
Special Needs Planning Report
Our firm has assembled a series of special reports that cover a number of different estate planning and elder law topics. One of these reports examines special needs planning in detail. This particular report is focused on special needs planning for minor children.
If you would like to access the report, which is being offered free of charge, click this link and follow the simple instructions: Special Needs Planning Report.