There are a number of different trusts in Indiana that are used in the field of estate planning, and one of them is the special needs trust.
An Indiana special needs trust, which is alternately called a supplemental needs trust, is utilized to provide financial assets to someone who has a disability. Providing monetary resources to those who have disabilities can be tricky because government benefit eligibility is in play.
Many people with special needs are enrolled in the Medicaid program. This is a jointly run federal-state government subsidized health insurance program.
Medicaid is not available to people who have the financial resources to pay for their own health care or health care insurance, even temporarily. As a result, there are guidelines that you must adhere to as someone who is seeking Medicaid eligibility.
At the present time there is an upper asset limit of just $1,500. If your countable monetary assets were to exceed this amount you could not qualify for Medicaid until you spent everything that you had except $1,500.
Imagine the situation that could materialize if you were to name someone with a disability in your last will. You leave this person a direct inheritance that is well in excess of $1,500. Your intention was to provide for someone that you love who has significant financial need and no ability to earn additional income.
However, your good intentions could backfire because this windfall of money would catapult the recipient into a different financial stratosphere. As a result, this person with a disability could lose his or her Medicaid eligibility.
Many people who have disabilities are also receiving limited income from the Supplemental Security Income program. This too could go away if the person in question was to inherit a significant sum of money.
The creation of a special needs trust can be the ideal estate planning solution when you want to set aside assets for the well-being of someone who has a disability who is receiving government benefits. Under the rules of these government programs distributions from the trust can be used for certain supplemental purposes without hindering government benefit eligibility.
This special needs planning strategy is effective because the trust owns the assets that have been conveyed into it, not the beneficiary. Because the person with a disability does not actually own the assets they are not counted by the benefit program evaluators.
The trustee that you select when you create the special needs trust is in charge of the funds. This individual or fiduciary entity cannot give assets directly to the beneficiary. However, assets that have been conveyed into the special needs trust can be utilized to purchase various different products and services that would enhance the quality of life of the beneficiary.
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.