The ideal way to arrange for the transfer of monetary assets to your loved ones after you die will vary on a case-by-case basis. This is one of the reasons why you should discuss everything in detail with a licensed Indianapolis estate planning attorney before you make any decisions.
When it comes to someone with a disability, you have to consider the matter of government benefit eligibility.
In Indianapolis, many people with disabilities rely on Medicaid. Medicaid is a need-based government health insurance program. If you have assets that exceed a certain amount, you can’t qualify for Medicaid. Someone who was enrolled in the Medicaid program could become ineligible if he or she was to receive a large direct inheritance.
Under these circumstances you would not want to leave a direct inheritance. The creation of a supplemental needs trust for the benefit of the disabled family member would be a better choice.
Supplemental Purposes
A supplemental needs trust in Indianapolis is set up in a way that allows the trustee to use money that has been conveyed into the trust for the supplemental needs of the beneficiary who is receiving government benefits. These expenditures are allowable under Medicaid rules.
In general, assets that have been placed into the trust can be used by the trustee to pay for things that are not covered by government benefits.
The beneficiary of the trust never actually handles the funds directly. Because the beneficiary doesn’t control the assets, the trust can be used for these supplemental purposes without jeopardizing benefit eligibility.
Special Needs Planning
These days we can access a great deal of information on the Internet. There are websites that sell generic legal documents including last wills and living trusts. Many people buy into these do-it-yourself notions without fully understanding all of the facts.
In reality each family is different from the next. The specific dynamic of your family is going to have everything to do with how you plan your estate. There is no “one-size-fits-all” estate plan.
Simply assuming that you can distribute pieces of a financial pie among multiple people using a last will can lead to unintended negative consequences. This is certainly the case when it comes to setting aside resources for the well-being of a loved one with a disability who is enrolled in government benefit programs.
If you have someone with special needs on your inheritance list, you should definitely discuss all of your options in detail with a licensed estate planning attorney. The creation of a supplemental needs trust can be part of the plan.
When you take the right steps you can provide for everyone that you care about in the optimal fashion. On the other hand, if you act without all the necessary information you may wind up doing more harm than good.
To learn more, please download our free Qualified Personal Residence Trust in Indianapolis here.
Paul A. Kraft, Estate Planning Attorney
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.
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