You have a lot to take into consideration when you are facilitating postmortem asset transfers to your loved ones. Preparing your assets properly is part of the equation, and you have to decide on the extent of the inheritances that you will be leaving to each respective family member.
On the other side of the transfer, when you are planning your estate, you should consider the personal situation of each person who will be receiving an inheritance. With this in mind, we will look at special needs trusts, Medicaid, and Supplemental Security Income in this blog post.
Preservation of Government Benefit Eligibility
If you have someone with special needs in the family, you may want to make things more comfortable for this person. This is understandable, but you have to go about it in a particular way to preserve eligibility for need-based government benefits.
A significant percentage of people with special needs are enrolled in the Medicaid program. This is a jointly administered federal/state government program that provides health insurance for people with limited resources.
Supplemental Security Income is another need-based government program that provides income for people with disabilities who are not in a position to earn much income on their own.
Because you must be able to demonstrate a significant level of financial need to qualify for these benefits, a change in financial status could yield negative consequences. Benefit eligibility could be lost if a recipient was to receive a significant lifetime gift or inheritance.
Special Needs Trusts
Special needs trusts are used to preserve benefit eligibility under these circumstances. You would be creating a third-party special needs trust if you are funding this type of trust for the benefit of someone else.
The trustee that is named in the trust declaration would handle the trust administration tasks. To preserve government benefit eligibility, the beneficiary could not directly handle the assets.
However, the trustee could use the assets to purchase certain goods and services for the benefit of the individual with special needs. These expenditures would be allowed, and benefit eligibility would not be jeopardized.
Free Report on Special Needs Planning
We have provided a very basic explanation of the value of special needs trusts in this brief blog post. If you would like to dig deeper, we have a valuable resource that you can access through this website.
Our firm has produced a number of different special reports that cover various estate planning and elder law topics. There is a report in our electronic library that is devoted to special needs planning.
To access your copy of the report, which is being offered free of charge at the present time, click this link and follow the simple instructions: Grand Forks ND Special Needs Planning.