There are those who are always looking for a bargain. They don’t think that there is ever a need to pay for something of quality. In many instances they look for do-it-yourself solutions. This can even extend to the area of estate planning. With this in mind, let’s look at do-it-yourself estate planning in Indianapolis and how it may interface with special needs planning.
Providing for a Person With a Disability
If you have someone with a disability on your inheritance list, this person may well be heavily reliant on government benefits like Medicaid and Supplemental Security Income. These programs are available to people who have significant financial need. Those who are disabled oftentimes cannot work at all, so the financial need is there.
Let’s say that you download a generic last will form off the Internet. You are told that you can fill in the blanks and you are all set.
You want to leave something to a family member who has a disability. This individual is enrolled in the Medicaid program, and he or she is receiving some monthly income through SSI.
In Indiana, there is an upper asset limit of $1,500 that you must stay within to remain eligible for Medicaid coverage. If the person in question receives a significant inheritance via the terms of your last will, he or she will suddenly have assets that exceed this figure. The inheritance recipient may no longer be eligible for much-needed benefits.
Special Needs Planning in Indianapolis
How do you leave behind something for someone who relies on government benefits without doing more harm than good? This is where special needs planning comes in. It is generally going to involve the creation of a supplemental or special needs trust. The person that you want to provide for is the beneficiary. You also name a trustee to administer the trust.
The beneficiary cannot personally spend assets that have been conveyed into the trust. However, the trustee may use the trust’s resources for certain supplemental purposes that benefit the family member who has been named as the beneficiary.
This arrangement does nothing to impact eligibility for Medicaid or Supplemental Security Income.
What Is the Cost?
The bargain hunters may wonder about the costs involved in the creation of a special needs trust. In a real sense, this discussion is inappropriate. If you want to provide for a loved one with a disability without doing any harm, you have to incur certain costs to make sure that it is done correctly.
The real question is this: do you really want to improve the quality of life of a special needs family member? The cost of a little bit of legal advice is certainly not going to be prohibitive if you are comfortable enough to leave behind an inheritance that would make any type of a difference.
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.