The Medicaid program is a government health insurance program. This program is administered by the federal government along with each state government in a joint effort. To qualify for Medicaid, an applicant must be able to clearly demonstrate a significant level of financial need. There is a limit on countable assets of just $2,000.
As you might imagine, many children with special needs are enrolled in the Medicaid program. This can be absolutely necessary, because care and treatment for a disabled child can cost millions of dollars over the course of a lifetime. A loss of benefit eligibility could be catastrophic.
If you have a child with special needs in your family, you may have the desire to include this loved one in your inheritance plan. However, you may decide to disinherit the child, because you don’t want to do more harm than good, because the inheritance could result in a loss of Medicaid eligibility.
Take the Right Steps
The logic that we laid out above makes perfect sense on the surface, but in fact, you do not have to disinherit a child that you love to preserve Medicaid eligibility. It would be possible to make your loved one the beneficiary of a special needs trust.
With this type of trust, you name a trustee to handle the assets that are in the trust. The Medicaid program does not cover everything that the child could benefit from, so there would be unmet needs. According to program rules, assets in a properly constructed special needs trust could be utilized by the trustee to satisfy these needs. Benefit eligibility would not be negatively impacted.
A special needs trust can provide the ideal solution if you have a loved one with a disability that means a great deal to you.
This type of situation is relatively common, but it is instructive on a broader level. Everyone in your family is different, and people have different proclivities and different needs. There are various different asset transfer methods, and the best way to get assets to one person may not be appropriate for the next.
Careful and informed planning is the key. If you understand all of your options, you can make sure that you provide for each person that you love in the optimal manner.
We can help if you would like to talk things over with a licensed professional. Our firm offers free, no obligation consultations, and we would be glad to answer all of your questions and become apprised of your family dynamic. Ultimately, we can make recommendations, and we can help you craft a personalized plan if you decide to go forward.
To set up an appointment, send us a message through this page: Indianapolis IN Estate Planning Attorneys.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.