There are different estate planning approaches that can be taken, and the right way to provide assets for one person on your list may not be appropriate for the next. This dynamic certainly applies to people with disabilities, and we will explain the details in this post.
Government Benefit Eligibility
A very significant percentage of people with disabilities rely on Medicaid as a source of health insurance, and people in this position also qualify for Supplemental Security Income (SSI).
These are need-based benefits, so you cannot qualify more than $2000 in your name. We should point out the fact that some assets do not count, including a home and a motor vehicle.
Ineligibility has been granted, it is not necessarily permanent. A significant windfall could result in a loss benefits, and this is what special needs planning is necessary.
Supplemental Needs Trust
There is an estate planning device called a supplemental needs trust that can serve as the ideal solution.
If you establish and fund this type of trust, you would name a trustee to act as the administrator. Any competent adult that is willing to assume the role can act as the trustee, but you could alternately use a trust company or some other professional fiduciary.
The government benefits are intended to provide essentials like medical care, food, and clothing. This being stated, the maximum SSI benefit in 2021 is $794 a month, so the idea that it would cover all of these necessities is a bit out of touch.
In any event, the trustee is allowed to use assets in the trust to supplement the assistance that is provided by Medicaid and SSI.
Expenses that the trustee could cover include a home, special equipment, a modified van, education costs, vacations, transportation, computers and other electronic equipment, and a paid companion. This is just a partial list of the goods and services that can be provided.
As long as the guidelines are followed correctly, ongoing eligibility for the government benefits would remain intact.
Medicaid Estate Recovery
A person with a disability that is relying on these programs could establish a supplemental needs trust with their own funds. It would be necessary if a benefit recipient was to receive a personal injury settlement or judgment or come into money in some other way.
After the death of a Medicaid beneficiary, the program is required to seek reimbursement from their estate. There is usually nothing for them to take, but the situation is different if a first party special needs trust has been established.
Under these circumstances, Medicaid would be able to attach resources that remain in the trust that was established by the decedent with their own funds.
The arrangement is entirely different if the funding is coming from a third party. Medicaid would not be able to go after the remainder if the trust is funded by someone other than the beneficiary.
In the trust is established, a successor beneficiary would be named, and the successor would assume the role after the death of the first beneficiary.
Attend a Free Estate Planning Webinar!
We make have to provide educational opportunities for members of our community through the webinars that we offer on an ongoing basis. The sessions are chock-full of important information and it is delivered in a down to earth, fully understandable manner.
There is no charge to attend webinars, and you can join us from anywhere, so this is an investment of time that will pay dividends.
Plus, attendees that absorb the complete presentation qualify for a FREE one-hour virtual consultation. We ordinarily trust $400 for this service, so this is an opportunity they don’t want to miss.
You can see the dates if you visit our webinar page, and when you identify the session you would like to attend, follow the instructions to register so we can reserve your spot.
Need Help Now?
If you are past the learning stage and ready to work with an attorney to put a plan in place, we are here to help. You can send us a message to request a consultation appointment, and we can be reached by phone at 513-721-1513.