People with special needs are often going to qualify for government benefits that are only available to people with limited financial resources. The Medicaid program is a source of health insurance for financially needy individuals, and though it is not exclusively designed for disabled people, many people with special needs do rely on the program for coverage.
Another government benefit that enters the picture here is the Supplemental Security Income program. This program is for people with disabilities, and it provides an ongoing source of financial support for those who cannot earn much on their own.
Since these are need-based government benefits, your eligibility is always tenuous, because you could lose your benefits if you were to experience a significant positive change in your financial status. This could take place through the receipt of a personal injury settlement or inheritance.
First Special Needs Trusts
If a person with a disability who is relying on government benefits was to receive a windfall, a parent, a grandparent, or a legal guardian could use the assets to set up a first party special needs trust. The trustee would be allowed to use assets in the trust to satisfy certain unmet needs. These expenditures would not result in a loss of benefit eligibility.
The trust is called a first party special needs trust because the funding is coming from the beneficiary. When this type of trust is in place, the Medicaid program would seek reimbursement from the beneficiary’s estate after his or her passing. As a result, assets that remain in first party special needs trust could be absorbed by the state after the death of the beneficiary.
There is another type of trust called a third party special needs trust. Someone other than the beneficiary would fund a third party special needs trust. There would be no reimbursement efforts by Medicaid after the death of the beneficiary when a third party special needs trust has been established.
Special Needs Planning Report
You probably have a lot of questions if you have a loved one who is relying on need-based government benefits. We have provided a bit of basic information in this blog post, but you can learn much more if you take the time to download our special report.
This in-depth report will answer most of your questions, and it is being offered free of charge right now. To get your copy of the report, visit this page and follow the simple instructions: Free Report on Special Needs Planning.
Schedule a Consultation
Written information is great, but there is no substitute for a one-on-one consultation with a licensed attorney. If you are ready to take action, contact us through this page to request a free consultation: Grand Forks ND Special Needs Planning Attorneys.