When you sit back and take stock of the people you want to include in your estate plan, you have a number of things to take into consideration. You have to decide exactly what you want to give to each person, but you should also make sure that you are providing for each loved one in the correct manner. With this in mind, we will look at special needs trusts in this post.
Government Benefits
People with disabilities are often enrolled in government benefit programs. These would include Medicaid and Supplemental Security Income.
Medicaid is a health insurance program. It is jointly administered by the federal government along with each state government. This program is only available to people who have significant financial need. There are income and asset limits that you must stay within to qualify for Medicaid.
Clearly, people with disabilities are typically going to require ongoing care and treatment, and it can be quite expensive. Health insurance is essential when you are in this position.
Supplemental Security Income provides a source of income for people with disabilities who cannot earn much on their own. This is also a need-based program.
If you name someone who was enrolled in these benefit programs in your last will, this person would receive a direct inheritance. The money would be in the direct possession of the inheritor.
This would change the inheritor’s financial status. As a result, benefit eligibility could be lost.
Special Needs Trusts
To preserve government benefit eligibility, you could make your loved one the beneficiary of a special needs trust. This type of trust is alternately called a supplemental needs trust.
After you fund the trust, you name a trustee to take care of the trust administration tasks. Many people use a bank or a trust company to act as trustee, because these professionals understand the laws thoroughly.
The government benefits help a great deal, but they don’t necessarily pay for everything. When you create a special needs trust, the trustee can use the trust’s assets to satisfy the supplemental needs of the beneficiary. These would be the things that are not being paid for by the government benefits.
These expenditures are allowed under program rules. Benefit eligibility is not impacted.
It is important to understand the fact that the trustee must handle the funds. The beneficiary cannot directly make purchases.
Download Our Free Report
To learn more about special needs planning, download our in-depth report. It is being offered free of charge, and you can obtain access through this page: Special Needs Planning Report.
Schedule a Free Consultation
If you would like to discuss special needs planning with a licensed attorney, we can help. We offer free consultations to people here in the area, and you can click this link to set up an appointment: Bucks County PA Estate Planning.
To learn more, please download our free special needs trust in pennsylvania report
Joe Masiuk, Estate Planning Attorney
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