The best way to plan your estate will depend on the exact circumstances.
You may see websites that advertise do-it-yourself estate planning. DIY estate planning doesn’t make sense to many who are informed, because a layperson is not going to be aware of every relevant factor. This comes into play when you have someone with special-needs on your inheritance list.
A high percentage of people with disabilities are enrolled in government benefit programs, such as Medicaid and Supplemental Security Income. Medicaid will typically pay for very costly care and treatment.
For example, consider the circumstances that someone with autism will typically face. Experts tell us that care and treatment for someone with autism can exceed $2 million over the course of a lifetime.
Medicaid is a need-based program. It is not available to people who have their own financial resources. People with special needs cannot work and earn income in many instances. For this reason many can qualify for Medicaid with little resistance.
What happens if someone who is enrolled in the Medicaid program receives an inheritance? The answer is that the individual in question would no longer be eligible for Medicaid until the inheritance was gone.
Now that we have provided the necessary background we can get around to the point of this post. When you are planning your estate you can create a legal device called a supplemental trust. These trusts are sometimes called special needs trusts.
You make the person with special needs the beneficiary of the trust, and you name a trustee to administer the trust.
The trustee cannot give cash directly to the beneficiary without impacting government benefit eligibility. However, the trustee can use money that has been conveyed into the trust to make purchases that improve the quality of life of the beneficiary.
What types of purchases can be made without jeopardizing eligibility for Medicaid? In general, the trustee could use the trust’s assets to provide for the supplemental needs of the beneficiary. These would be goods and services that are not covered by Medicaid.
Special Needs Planning Consultation
When you are planning your estate, you should go forward with the benefit of informed counsel. You could make unintentional errors that actually do more harm than good if you are not fully informed.
If you have someone with special needs on your inheritance list, we invite you to contact our firm to set up a free consultation.
We will explain supplemental trusts to you in detail and help you create a comprehensive estate plan for the benefit of everyone that you love if you decide to go forward.