The estate planning toolkit is extensive, and there is the right tool for the right job as it were. You should carefully consider the life situation of the people that will be inheriting assets from you, and you should utilize the ideal vehicle of asset transfer for each person.
The above in mind, we will look at the value of special needs trusts in this blog post.
The Medicaid Program
Medicaid is a government health insurance program. It is administered by the federal government along with each state government, and it is only available to people who can prove that they have a significant level of financial need.
People with disabilities are often enrolled in the Medicaid program, because they need health insurance, and it can be hard to accumulate assets as a person with special needs.
Once eligibility has been attained, it is not necessarily permanent. An improvement in financial status could cause a loss of Medicaid eligibility. Leaving a lump sum of money outright to persons with special needs affects their financial status, ultimately affecting eligibility.
Supplemental Security Income
Another government program that many people with disabilities rely upon is the Supplemental Security Income (SSI) program. The name of the program explains its purpose: SSI is a source of income for people with special needs who cannot earn much on their own.
Once again, eligibility is based on financial need. An uptick in financial status could result in a forfeiture of benefits.
Special Needs Trusts
You would use a special needs trust to provide resources for a loved one with a disability who is enrolled in government benefit programs that are only available to people with financial need.
The government benefits don’t pay for everything that the recipient may need. These unmet needs are called supplemental needs. The trustee that is named in the trust declaration could use assets that have been conveyed into the special needs trust to satisfy these unmet supplemental needs.
As long as the program rules are followed to the letter, ongoing eligibility for government benefits would not be jeopardized.
We should emphasize the fact that the beneficiary cannot directly access the resources in a special needs trust. The trustee must manage the trust and use the assets for the benefit of the individual in question.
Free Report on Special Needs Planning
We have scratched the surface here, but there is a lot more to learn about special needs planning and the value of special needs trusts. If you take the right steps, you can make life more comfortable for a loved one with a disability without doing any harm in the process.
Our firm has prepared a free report on special needs planning, and this report will provide you with a great deal of in-depth information. To access your copy of the report, visit this page and follow the simple instructions: Grand Forks ND Special Needs Planning.