3 Reasons To Establish A Special Needs Trust
Many individuals with disabilities receive government assistance in the form of Medicaid. Eligibility for Medicaid is determined by evaluating the individual's income and assets. Family members of disabled individuals often want to ensure their loved ones will be cared for after their passing, but they don't want to compromise Medicaid eligibility.
Special needs trusts are designed to help provide access to financial help without interfering with Medicaid benefits.
1. Influx of Money
One of the reasons you may want to consider a special needs trust for your disabled loved one is if the individual has recently experienced an influx of money. This money can come from a legal settlement, the divorce of the individual's parents, or an inheritance from a relative.
First party special needs trusts are funded by the disabled individual. Placing the money into a first party trust prevents it from being counted as income by Medicaid, ensuring that your loved one has access to both his or her cash and the Medicaid benefits that pay for living expenses.
2. Parental Bequeaths
You spend a significant amount of time, money, and effort caring for a disabled child. You certainly want this care to continue after your death. Parents who want to leave an inheritance to their disabled child without compromising Medicaid benefits can do so by establishing a third-party special needs trust.
The major benefit of a special needs trust is that these trusts are not subject to Medicaid payback, which means your child will receive the full benefit. You can work with an attorney to establish a trust for your child now, or you can stipulate that the trust be established in the event of your death in your will.
An experienced estate planning attorney will be required to help ensure the trust is set up properly and that your child will have ongoing access to financial resources after your passing.
3. Spouse in a Nursing Home
Special needs trusts are not only available to parents of disabled individuals. They can also be used by the spouses of individuals in nursing homes. Once the spouse living outside the nursing home passes, the other spouse will receive his or her estate.
This influx of cash can often disqualify the spouse from accessing the Medicaid benefits needed to retain residency in a nursing home. You can establish a third-party trust to give your spouse access to your estate without increasing his or her monthly income or net worth.
For more information, contact a special needs trust lawyer.