Special Needs Trusts
A trust is a document that determines how your property will be divided after you die. A trust allows you to distribute your money, property, and belongings according to your wishes. Establishing a special needs trust (or supplemental trust) allows you to leave money or assets to a loved one who will need continued financial assistance in the future.
Preserving Benefits Through A Special Need Trust
Special needs trusts are important for several reasons. First, a special needs trust can help you protect your loved one’s eligibility for government benefits. If your loved one benefits from government aid, it is important for you to ensure that he/she continues to collect these benefits in the future. Some government programs, like Medicaid and SSI, are only available to individuals with minimal or nonexistent incomes.
For instance, if you leave your special needs child a large sum of money via an inheritance, he/she may become ineligible for Medical and Supplemental Security Income (SSI). A special needs trust allows you to preserve your loved one’s government benefits. Assets left through a special needs trust are will not disqualify the beneficiary from receiving government benefits in the future. Sometimes this type of trust can be used to preserve benefits for an elderly parent as well.
Medicaid eligibility – Medicaid is a program that allows individuals with disabilities to receive health insurance that would otherwise be denied. Medicaid is only offered to people who lack the finances to obtain health insurance without help. Adults and child may qualify for Medicaid if their assets and monthly income are below a certain limit. In most states, the asset limit for Medicaid eligibility is set at $2,000. For example, if you willed more than $2,000 to a loved one, he/she may not be able to collect Medicaid benefits in the future. However, only money that your loved one has direct access to will be counted against his/her eligibility. A special needs trust does not allow the beneficiary direct access to the funds. Thus, the trust money is uncountable and will not keep your beneficiary from receive the Medicaid benefits that he/she needs.
Supplemental Security Income (SSI) eligibility – Like Medicaid, SSI eligibility may be negated by an inheritance. SSI is available for children and adults with limited income and resources. SSI is cash benefits are intended to cover basic necessities like food, housing, and clothes. However, a substantial inheritance could affect the beneficiary’s ability to collect SSI benefits. Protecting your loved one’s SSI benefits is especially important because most SSI candidates are automatically made eligible for Medicaid.
Special Needs Trust Requirements
Generally speaking, only close relatives are allowed to establish special needs trusts. This includes parents, grandparents, and legal guardians. Under no circumstances is the beneficiary allowed to establish the trust and any funds left in the trust cannot be immediately available to the special needs beneficiary. Special needs trusts cannot be established for individuals with non-permanent disabilities; the beneficiary must be “permanently and totally disabled.” A special needs trust can hold any amount of money and you may add to it at any time.
Pittsburgh Estate Planning Lawyer
Temple & Frayer Law Office is a high-quality Pittsburgh estate planning firm. If you need help establishing a special needs trust for your child or loved one, contact us today. Our attorneys have 65 combined years of experience helping people like you protect their family’s future through prudent estate planning. When you work with us, you can have peace of mind knowing that your estate plan is in good hands. Fill out a no-obligation case evaluation to see what our Pittsburgh estate planning lawyer can do for you or call us at 412-998-1197.