Estate planning is not a one-size-fits-all endeavor. A well constructed estate plan will be thoughtfully prepared. If you make assumptions and take action without all of the relevant information, unintended negative consequences can result.
With the above in mind, let’s look at the value of supplemental needs trusts.
Need-Based Government Benefits
If you have someone with special needs in the family, you must take government benefit eligibility into account when you are planning your estate. Many people with special needs are enrolled in the Supplemental Security Income program. This program can provide a much-needed source of ongoing income for those who cannot earn much on their own.
This program is only available to people who can demonstrate significant financial need. Eligibility is not necessarily permanent. A change in financial status can result in a period of ineligibility.
Medicaid is a jointly run federal/state government program that provides health insurance for those who can meet the eligibility requirements. Because it is a need-based program, there are income and asset limits. Once again, an improvement in financial status could disqualify a benefit recipient from eligibility.
Supplemental Needs Trusts
It would be possible to provide assets for the benefit of a loved one with a disability through the creation of a supplemental needs trust. These trusts are sometimes called special needs trusts.
When you create and fund the trust you name a trustee. This is the individual or entity who will administer the trust. If you want to be certain that the trust is properly administered, you could choose a corporate trustee, like a bank or a trust company.
The word “supplemental” is operative here. SSI and Medicaid are not necessarily going to pay for everything that the benefit recipient needs. Unsatisfied needs would be defined as supplemental needs.
Under program rules, the trustee can utilize assets that have been conveyed into the trust to provide for the supplemental needs of the beneficiary. These expenditures would not impact government benefit eligibility.
When you use a supplemental needs trust to provide resources for the benefit of a loved one, government benefits remain intact, but you are facilitating an improved quality of life.
Report on Special Needs Planning
We have prepared an in-depth report on special needs planning as it applies to children. If you would like to obtain more detailed information, download your copy of the report.
This report is being offered on a complimentary basis, and you can obtain access through this page: Special Needs Planning Report.
Free Special Needs Planning Consultation
If you would like to discuss special needs planning with a licensed attorney, our firm can help. We offer free consultations, and you can click this link to set up an appointment: Indianapolis Special Needs Planning.
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.