Planning for the future of a loved one with disabilities can be daunting and emotional, especially when considering the risk of losing essential government benefits. A recent article appearing in Success, “What Is a Special Needs Trust?” provides more insight. A Special Needs Trust (SNT) is a vital tool that allows families to provide for their loved ones with a disability without jeopardizing their eligibility for Medicaid or Supplemental Security Income (SSI). At Vick Law, we will support you in creating SNTs that ensure your family member's financial security while preserving their access to necessary support programs.
Things to Consider
Individuals with disabilities who qualify for financial support through Medicaid or Supplemental Security Income (SSI) must have limited assets and income. They become ineligible for benefits and resources if they exceed their state’s limits. A Special Needs Trust (SNT) keeps assets separate.
An estate planning attorney creates the SNT and names a trustee for the funds. The trust's assets are to be used for housing, transportation, education, health and other expenses not covered by government benefits.
In some cases, the SNT shouldn’t be funded until necessary. Once money or other assets are in the trust, its use is restricted. Parents are advised to ensure that well-meaning grandparents or other family members don’t bequeath assets directly to their loved ones with a disability. They have the option of creating an SNT of their own or bequeathing assets to the SNT created by the parent.
There are different kinds of SNTs. A Third-Party Special Needs Trust is created by a parent or other involved person to benefit a disabled child. If any assets are in the trust when the beneficiary of the trust dies, the person who created the trust decides who receives them. They may choose to donate the assets to a charity or a family member.
If an adult becomes disabled later in life, a different type of trust is used: a First Party Special Needs Trust. These trusts are created to own the assets of the disabled individual. For instance, if someone becomes disabled due to a car accident and receives a legal settlement, the money would go into the trust. This allows the person with a disability to continue to receive government benefits. When the person dies, the funds spent on their care are paid back to the government through the Medicaid Repayment Program.
Parents or loved ones need several other legal documents to protect themselves and their family members with a disability. An estate planning attorney will draft a will to ensure that the parent’s assets pass into the Special Needs Trust. Everyone should have a Power of Attorney and Medical Power of Attorney to protect themselves in case of incapacity.
Checking beneficiary designations is especially important if a family member receives funding from a Special Needs Trust. The person named on the beneficiary designations receives assets upon the owner’s death, which could put their government benefits at risk. All assets must go into the Special Needs Trust to protect their Medicaid eligibility.
Vick Law Can Help
Don't wait to secure your loved one's future. Protect their benefits and provide for their needs by establishing a Special Needs Trust with the guidance of our experienced attorneys. Contact Vick Law today to schedule a consultation and take the first step toward peace of mind and financial security for your family.
Reference: Success (Oct. 20, 2024) “What Is a Special Needs Trust?”
