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We all worry about our children and grandchildren. When your child or grandchild has special needs, your worries are often even more pervasive: how will she care for herself when I am no longer able? Will an inheritance cause her to lose her public benefits? Proactive planning can make a significant difference.
A great way to protect a loved one with special needs is to set up a Supplemental Needs Trust (also known as a Special Needs Trusts or SNT). SNTs allow persons with disabilities to receive an inheritance or other funds without losing their eligibility for means-tested government benefits, such as Supplemental Security Income (SSI) or Medicaid. Such trusts provide for needs “supplemental” to what is being paid for by the government, i.e. education, cell phone bills, counseling, etc.
A first-party SNT holds the beneficiary’s own assets. A beneficiary who is receiving government benefits and obtains a large sum of money may be allowed to keep both their money and their benefits. At death, the state is reimbursed up to the amount it paid for the beneficiary’s care.
A third-party SNT is funded with the grantors’ (i.e. the individuals who establish the trust) assets and can hold various types of assets, e.g., houses, investment accounts, life insurance policies, etc. When the SNT beneficiary dies, the remaining assets can pass to other family members and are not subject to pay back to the state.
A SNT must be properly drafted so the assets are not countable for Medicaid and SSI purposes and do not jeopardize benefit eligibility. If you’re considering this type of planning speak with an attorney experienced in drafting SNTs.
The attorneys at Pearson Bollman Law practice in the areas of estate planning, probate/trust administration, special needs trusts, and elder law, which includes Medicaid and VA Pension Planning. If you would like to schedule a free consultation please give us a call at 515-727-0986.