Estate Planning for People with Disabilities is a Delicate Issue
When estate planning is discussed, many people believe that naming beneficiaries in a Will is all there is to it. This can be a mistake, especially when it comes to planning an estate for people with disabilities. Let’s look at the details.
Government Benefits
You can potentially provide for each person on your inheritance list in a different manner. In most cases, this is not necessary. However, in some situations, it may be the best course of action. Special needs planning for people with disabilities would certainly fit into this category.
When you pass down assets to someone in this position, you have to be concerned about government eligibility. Most people with disabilities get health insurance through Medicaid, and they receive income via the Supplemental Security Income (SSI) program.
These are need-based benefits, so a significant improvement in financial status can disrupt eligibility. This is why you should consult with an estate planning attorney before you leave a direct inheritance to someone that is in this position.
Estate Planning for People With Disabilities
There is an ideal solution in the form of a supplemental needs trust. This device is sometimes called a special needs estate. To implement this strategy, you establish and fund the trust, and you designate a trustee to act as the administrator.
Any adult who is willing to assume the role can technically act as the trustee. You can be the trustee if you create the trust. You can choose someone who is financially and legally savvy. If you do not know anyone that would fit this description, you can use a professional fiduciary like a trust company or the trust department of a bank.
Medicaid does not cover every medical and dental procedure that a person may want or need. The maximum Supplemental Security income payout for an individual is $943 per month, which is not much. The trustee could purchase goods and services to improve the beneficiary’s quality of life in many ways. The trustee can provide vacations, with or without companionship. They can also provide transportation, a vehicle that is specially equipped, training, tuition, electronic equipment, furniture, and more. Cash payments for food and shelter are the only prohibited expenditures.
Medicaid Estate Recovery
Medicaid is required to seek reimbursement from the estates of beneficiaries after they pass away. Medicaid will not be able to take anything if you do not qualify if you have over $2,000 in assets. We have already stated that the beneficiary has no direct access to resources and never owned assets. This means that property held by the trust will be protected during the Medicaid estate recover phase. A successor beneficiary that you name in the trust would assume the role.
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