There is no cookie-cutter, one-size-fits-all estate plan, and this is why it is necessary to receive personalized counsel from a licensed estate planning attorney before you make any decisions. Every situation is unique, and your own financial position and your intentions will be a large part of the equation. On the other side of the coin, you should also take the life situation of each person on your inheritance list into account.
With the above in mind, if you have a child with a disability on that list, you should definitely speak with our firm about special needs planning. If you take action on your own without the appropriate legal guidance, you could make mistakes that wind up yielding negative consequences in the future. This is because of the fact that many children with disabilities rely on need-based government benefits.
One of these is Medicaid, which is a source of health insurance for people that have very limited financial resources. Supplemental Security Income is another program that provides a modest stream of income for people that cannot earn money on their own because of disabilities. Since these are need-based programs, a sudden improvement in financial status could cause a forfeiture of eligibility.
Fortunately, there is an estate planning solution that can be utilized to address the situation if you want to provide for someone with special needs without doing any harm in the process. You could establish a supplemental needs trust for the benefit of a loved one that you would like to make more comfortable. These legal devices are sometimes called special needs trusts.
The trustee that you name in the trust declaration would be empowered to use assets that you conveyed into the trust to satisfy the supplemental needs of the beneficiary. These expenditures would not impact benefit eligibility, but it is important to note that the trustee would not be able to provide direct monetary distributions to the beneficiary. Educational expenses, medical and dental costs that are not covered by Medicaid, vacations, electronic devices, and many other goods and services would be supplemental needs that could be satisfied by the trustee.
If you establish a special needs trust for the benefit of someone else with your funds, it would be a third-party special needs trust. Under program rules, Medicaid is required to seek reimbursement from the estate of a deceased individual that was enrolled in the program. However, the Medicaid program cannot seek reimbursement from assets that remain in a third-party special needs trust after the death of the beneficiary.
Sometimes, a person with a disability will come into some money through a personal injury settlement or judgment. In other instances, a well-meaning individual could leave an inheritance to someone that is enrolled in these government programs. Under these circumstances, it is possible for a parent, a grandparent, a legal guardian, or a court to establish a first party or self-settled special needs trust with the funds.
The same situation would exist with regard to the ability of the trustee to use the assets in the trust to satisfy the supplemental needs of the beneficiary. However, there is one major difference. After the death of the beneficiary, assets that remain in the trust could be absorbed by Medicaid.
Our estate planning attorneys are very committed to education, because knowledge is power when it comes to estate planning and elder law matters. You can obtain some great information if you visit this website on a regular basis, and we also offer Webinars on an ongoing basis. There are a number of sessions on the calendar at the present time, and we urge you to take a look at the schedule and make plans to attend one of these informative Webinars.
They are offered on a complimentary basis, but we like to know how many people to expect, so we ask that you register for the Webinar that works for you in advance. There is a complete list of the dates of our Webinar schedule page, and you can follow the simple instructions to register so your seat will be reserved.
If you are ready to take action to discuss special needs planning or any other estate planning matter with one of our attorneys, we would be more than glad to help. You can send us a message to request a consultation, and if you would prefer to speak with someone in person, give us a call at 775-823-9455.
A supplemental needs trust, or SNT, is a very specialized type of trust that is intended to be created to help with the financial needs of a physically or mentally disabled individual or someone with a chronic illness. Assets held by an SNT may be used to cover expenses that are not covered by government funded programs like Medicaid, public housing or Supplemental Security Income. In many ways, a SNT operates just like any other trust; however, there are important distinctions. If you have a family member who is disabled or suffers from a chronic illness, you may not have considered creating a SNT based on your belief that you are able to cover the costs associated with your family member’s care yourself and therefore no need exists for a SNT. Although this may be the case, there are still a number of reasons why you may wish to consider creating an SNT.
The government programs that are available to your family member are there to help. They are available to all who qualify even if the applicant is from a family that is financially comfortable. A properly drafted SNT will not prevent your loved one from qualifying for government funded assistance.
Assets held in an SNT are also protected from a beneficiary's creditors or liabilities. In other words, if someone sues your loved one, the assets held in the trust cannot be touched which prevents your loved one from being an easy target for fraudulent lawsuits. Your finances could take a down turn in the future. By creating a SNT now, you know that your loved one will be well-taken care of regardless of your financial situation.
By creating an SNT, you will know that your loved one will be able to maintain qualification for public benefits and will be financially secure even after your death without having to depend on other family members to care for him or her. Planning for a child with special needs is highly technical and the stakes are high if a mistake is made. Even many estate planners do not have the knowledge or experience to plan in this are. Make sure that the furture of your loved one is placed in the hands of a qualified and experienced special needs planner.
