There are different methods available to you when you are planning your estate when it comes to asset transfers in North Carolina. You should certainly explore your options in an intelligent and informed manner so you don’t wind up doing more harm than good. With this in mind, let’s look at when you might want to consider the creation of a special needs trust in Charlotte North Carolina.
People With Disabilities & Government Benefits
A lot of people have someone in the family with a disability. In many cases, people who have these types of challenges are unable to earn income. As a result, they qualify for need-based benefits such as Medicaid and Supplemental Security Income.
Some people who are perfectly healthy qualify for Medicaid. They have a health insurance safety net if they need it, but they could go years without actually needing any medical care.
Things are very different for someone with a disability who is enrolled in the Medicaid program. Obviously there are many different reasons why someone may qualify for Medicaid. However, to provide an example, it can cost millions of dollars to provide care throughout the lifetime of someone with autism.
Most people simply don’t have this kind of money. Medicaid is a must for these individuals.
Special Needs Planning
In the previous section we used the term “need-based.” To qualify for Medicaid, you have to be able to demonstrate the fact that you have significant financial need. How is the program going to quantify financial need? This is done by imposing upper asset limits.
If your countable assets exceed $2000, you cannot qualify for Medicaid coverage. Many people with disabilities apply for the program without any assets to speak of, so this requirement is not a problem.
However, what would happen to someone who is qualified for Medicaid who suddenly receives a significant inheritance? All of a sudden, this individual is in possession of countable monetary resources that are in excess of $2000. Eligibility for Medicaid is going to be jeopardized.
The way that you account for this possibility would be to create a special needs trust. You create a special needs trust when you want to set aside assets for the well-being of someone who is on government benefits without impacting benefit eligibility.
You cannot give the inheritance directly to the beneficiary, so the beneficiary can’t actually handle and spend the funds that are in the special needs trust. The way that it works is that you name a trustee to administer the resources that you have conveyed into the trust.
This trustee can’t hand out direct distributions to the beneficiary. However, assets that have been conveyed into the special needs trust can be utilized to improve the quality of life of the beneficiary without affecting government benefit eligibility.
John’s practice focuses on the use of Wills and Living Trusts in Estate Planning to help individuals protect their families and preserve their legacies after their deaths, but his practice also focuses on the critical issues of protecting individuals with dementia or other diminished capacity, assisting individuals in qualifying for Medicaid and other government benefits to offset the costs of long-term care, and providing special needs planning.
John is admitted to practice law in North Carolina, South Carolina, Kentucky, and Ohio, and he is accredited by the Department of Veterans Affairs.
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