Everyone has different needs. A tailor-made estate plan will take the needs of each individual inheritance recipient into account.
With this in mind, let’s look at the legal device called the supplemental needs trust.
Inheritances & Government Benefits
People with disabilities often rely on need-based government benefits like Medicaid. This is a health insurance program that is crucial for many individuals with special needs. Many people in this situation require care that is very expensive. For example, it can cost millions of dollars to provide care and treatment for someone with autism throughout his or her life.
You must be able to demonstrate financial need to be able to qualify for Medicaid. If someone who was on Medicaid were to receive an inheritance, he or she may be catapulted into a different financial stratosphere. Under these circumstances benefit eligibility could very well be lost.
In the end, the inheritance could do you more harm than good.
Supplemental Needs Trusts
Medicaid will pay for most care, but it won’t pay for everything that someone who has a disability may need or want. You could provide for someone with a disability when you are planning your estate by making this person the beneficiary of a supplemental needs trust.
The trustee that you name when you create the trust can use assets that you have conveyed into the trust for the supplemental needs of the beneficiary. The expenditures would be for things that government benefits won’t pay for, so they are allowable without jeopardizing benefit eligibility.
These trusts are alternately called special needs trusts.
Do-It-Yourself Dangers
There are those who are always looking for DIY solutions online. You can find a lot of useful information on the Internet, but sometimes a little bit of knowledge is a dangerous thing.
You can buy a download online that will allow you to fill in the blanks and create your own last will. If you were to do this and name someone with a disability in the will, you could ultimately be jeopardizing this person’s benefit eligibility.
Clearly, you meant well. However, if you act without enough information, a loved one may be left behind to suffer the consequences.
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.
- What You Need to Know about the Medicaid Look-Back Rule - January 3, 2023
- How to Pass Down Your Legacy in Your Estate Plan - October 3, 2022
- Practical Steps to Take after Receiving a Terminal Diagnosis - September 30, 2022
