Protecting Assets and Securing Benefits
Estate planning for a loved one who suffers from a physical or mental disability can be challenging. How is my child going to survive and thrive after I’m gone? Who will take care of the medical, financial and emotional needs of my disabled child? These are important questions and the laws concerning Supplemental Security Income (‘SSI’) and Medicaid are complex and fraught with pitfalls. Not too many years ago, it was common practice to simply ‘disinherit’ a child or other loved one who suffered from a disability in order to preserve any government benefits that they might have been receiving. Today, there are a number of important strategies to enhance the lives of our disabled loved ones.
Special Needs Trusts & Supplemental Needs Trusts
A ‘special needs’ or ‘supplemental needs’ trust is a very specific type of trust that is designed to supplement what the government might be providing thereby allowing the child (or disabled adult) to obtain such life-enhancing benefits as:
- Education and training,
- Attendance at religious services
- Attendance at sporting events
- Pet supplies
And many other services or benefits that are not being provided by government programs.
A special needs trust, if properly designed, will allow the disabled child to continue to receive government benefits that would otherwise have been lost due to excess resources. For this reason, the trust must be carefully drafted to avoid the beneficiary from being over-resourced and thereby losing critical government benefits.
A special needs trust may be created (and funded) while you are still alive, or you may include such a trust in your Last Will and Testament to be established and funded after you have passed away. There are different types of special needs trusts, depending upon the source of the assets being transferred into the trust. A trust that is funded by the disabled individual’s own assets (such as from a lawsuit or inheritance) requires that the state be reimbursed (or ‘paid back’) to the extent of benefits provided to that individual. On the other hand, a parent or other family member can set up a ‘third party special needs trust’ with their own money, to be used for the benefit of the disabled relative, and no payback is required to be made to the state.
How We Can Help
If you have a loved one who suffers from a disability, it is important to speak with one of our attorneys to learn more about the benefits of special needs trusts.