The process of estate planning involves careful decision-making. You should act in an intelligent and informed manner so that you do not make mistakes that cause unintended negative consequences. With this in mind, we will look at special needs trusts in this post.
People With Disabilities
There is no one-size-fits-all estate plan, because every family is different, and every person is unique. When you have someone with a disability in the family, you should certainly act in a measured fashion when you are putting your estate plan together.
Individuals who have special needs are typically enrolled in the Medicaid program. Medicaid is a health insurance program that is jointly administered by the federal government along with each respective state government.
The Medicaid program is designed for people who have significant financial need. As such, if you want to qualify, you must be able to meet the income and asset requirements. For an individual, the asset limit in most states is just $2000.
Depending on the disability, medical care and treatment can cost millions of dollars over the course of a lifetime. People who are in need of this level of care certainly need health insurance, so Medicaid is something that they cannot do without.
If you were to use a last will to leave someone with a disability a direct inheritance, all of a sudden his or her financial status would change. As a result, Medicaid eligibility could be lost.
Special Needs Trusts
A special needs trust can provide the ideal solution. These trusts are alternately referred to as supplemental needs trusts.
For the most part, there are two different types of special needs trusts that are utilized to preserve government benefit eligibility. The first party or self-settled special needs trust is funded with the beneficiary’s own resources.
The trustee that is named in the trust agreement can use these resources to satisfy the supplemental needs of the beneficiary without impacting Medicaid eligibility. Supplemental needs are needs that are not being paid for by government benefits.
When a self-settled special needs trust is in place, the Medicaid program will seek reimbursement from the estate of the beneficiary after his or her death.
There are also third party special needs trusts. These trusts are funded by someone other than the beneficiary.
The same circumstances exist with regard to the utilization of assets to meet the supplemental needs of the beneficiary.
However, with a third party special needs trust, Medicaid would not seek reimbursement after the death of the beneficiary.
Free Report on Special Needs Planning
If you would like to learn more about special needs planning, download our in-depth report. This report is yours free of charge at the present time, and you can access your copy through this link: Hartford CT Special Needs Planning.
Mr. Nirenstein is licensed to practice before the courts of the State of Connecticut and the United States District Court. He is a member of the Connecticut and Hartford County Bar Associations, and the Estate and Probate, Elder Law, Business Law and Real Estate Sections of the Connecticut Bar Association.
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