The Medicaid program is a need-based program. It is not available to people who have significant personal resources to draw from. Supplemental Security Income (SSI) is also a need-based program.
Many people who have disabilities rely on these programs. Medicaid provides health insurance to those who can qualify. SSI delivers a modest amount of monthly income.
Because of the fact that these programs are need-based, there are upper asset limits that you must stay within to obtain, and retain, eligibility. If you gain eligibility, you are not permanently eligible regardless of any future changes in your financial status. A large influx of money could render you ineligible.
If someone who was receiving government benefits such as these was to receive a significant inheritance, benefit eligibility could be jeopardized. For Medicaid the upper asset limit is just $2000.
This creates a somewhat vexing estate planning situation. You may be quite motivated to assist someone in the family who has a disability. At the same time, you do not want to do more harm than good in the long run. Medical treatment that is paid for by Medicaid can cost literally millions of dollars. This coverage is absolutely essential to many individuals with special needs.
Supplemental or Special Needs Trusts
The creation of a supplemental or special needs trust can be the solution for many. These trusts are created in a way that allows the trustee to utilize funds that have been conveyed into the trust for purchases that improve the quality of life of the beneficiary.
Because of the nature of the expenditures, the existence of the trust does not jeopardize benefit eligibility.
If you create a supplemental needs trust for the benefit of a family member with a disability, you are providing the best of all possible worlds. The individual in question will enjoy an improved quality of life, but his or her benefit eligibility will remain firmly intact.
Individualized Attention
When you are engaged in the process of estate planning you should understand the fact that there is no one-size-fits-all approach. What is right for one family may not be right for the next.
This is why it is important to develop a communicative relationship with a licensed estate planning attorney.
When you explain your family situation and your estate planning goals to your lawyer, he or she will gain an understanding of the circumstances. Your options will be explained to you, and you can ultimately go forward in an intelligent, measured, and informed fashion.
If you make assumptions without knowing all of the facts you may make costly mistakes.
Should you be interested in discussing your own unique situation with a licensed attorney, contact our firm to schedule a free consultation.
Mr. Horowitz was awarded his Juris Doctor degree with honors from the University of Connecticut School of Law. While attending law school, Mr. Horowitz received the American Jurisprudence Award in Legal Ethics and the Nathan Burkan Award.
After graduation from law school, Mr. Horowitz continued his legal education at New York University School of Law where he received a Post Doctorate Law Degree in Taxation. He has also recently received a national achievement award.
Mr. Horowitz is admitted to practice before all the state courts in the State of Connecticut and the United States District Court.
Mr. Horowitz was selected for Super Lawyers in 2021.
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