A special needs trust is a type of legal instrument that can be used when you want to set aside assets for the benefit of a loved one who has a disability. People with disabilities often rely on government benefit programs that are only available to people with financial need. If a special needs trust is properly established and administered, assets in the trust can be used by the trustee to enhance the beneficiary’s quality of life.
The government benefits that we are referring to would be Medicaid, which is a health insurance program, and Supplemental Security Income. These programs cover certain things, but not everything that the beneficiary could want or need. Assets in a special needs trust can be used to satisfy these unmet needs as long as the expenditures are within the guidelines.
If you were to fund a trust for the benefit of a person with a disability, it would be a third party special needs trust, because the assets used to fund the trust would not be the property of the beneficiary. Under these circumstances, the Medicaid program would not seek reimbursement from the estate of the beneficiary after his or her passing.
It is also possible for a parent, a grandparent, or a legal guardian to use assets that are the property of the beneficiary to create a first party or self-settled special needs trust. The trustee would still be allowed to use the assets to satisfy the supplemental needs of the beneficiary, and government benefit eligibility would not be disrupted.
However, the Medicaid program would seek reimbursement from the beneficiary’s estate when a self-settled special needs trust has been established.
Learn More About Special Needs Trusts
You should act in a thoroughly informed manner if you have a loved one with special needs in your family. Government benefits can be extremely important, so you have to take the correct steps to preserve ongoing eligibility.
We have provided some basic information in this blog post, but you can access a more comprehensive resource elsewhere on this website. Our firm has prepared a number of special reports, and we have a report that specifically focuses on special needs planning.
This report is free, and you can visit this page to obtain access to your copy: Southampton PA Special Needs Planning.
Take Direct Action
You will invariably have many questions if you want to set aside resources for the benefit of a loved one with special needs. We would be glad to answer these questions and help you put a plan in place if you decide to go forward.
Our firm offers free consultations, and you can send us a brief message through our contact page to set up an appointment: Bucks County PA Estate Planning Attorneys.
Marianne Flood, Estate Planning Attorney
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