You should consider the life situation of the people on your inheritance list when you are planning your estate. If you take the right steps, you can provide for each person in the optimal manner.
With this in mind, we will look at third-party special needs trusts in this post.
Medicaid & Supplemental Security Income
If you want to set aside resources for the benefit of a loved one with special needs, you have to consider the matter of government benefit eligibility.
Many people with disabilities are enrolled in the Medicaid program. Medicaid is a need-based health insurance program that is jointly administered by the federal government along with each respective state government.
Because the program is only available to people who can demonstrate significant financial need, there are income and asset limits.
Let’s say that you draw up a last will, and you leave a loved one who is relying on Medicaid a direct inheritance. All of a sudden, his or her financial status is going to improve. As a result, Medicaid eligibility could be lost.
The same dynamic exists when it comes to eligibility for Supplemental Security Income. This is also a need-based program, and it provides an ongoing source of income for people with special needs who have limited resources.
Special Needs Trusts
You can account for the above situation by making your loved one the beneficiary of a third party special needs trust. With this type of special needs trust, the funding is coming from someone other than the beneficiary.
When you have a third party special needs trust in place, you name a trustee to administer the trust. Many people use a trust company or the trust department of a bank.
Under government rules, the assets that have been conveyed into the third party special needs trust can be used to satisfy the supplemental needs of the beneficiary. Supplemental needs are defined as needs that are not being met by the government benefits.
The beneficiary cannot directly handle the funds, but the trustee can use the assets in the trust to improve the beneficiary’s quality of life.
With a third party special needs trust, the government would not seek repayment for monies spent during the life of the beneficiary after his or her passing.
Free Report on Special Needs Planning
In this post we have scratched the surface. If you would like to learn more about special needs planning, we have prepared an in-depth report that we are offering free of charge.
This report will provide you with a great deal of useful information, and you can obtain access through this website.
Get your copy of the report, click this link and follow the simple instructions: Hartford CT Special Needs Planning.
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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