There are many different ways to facilitate asset transfers. It is important to consider the life situation of every person on your inheritance list. The right way to provide for one person may not be appropriate for the next.
This definitely enters the picture when it comes to estate planning for people with special needs.
Government Benefits
In the United States, most people get health insurance through their employers. Unfortunately, a significant percentage of folks with disabilities cannot work, so this is not an option for them.
Obviously, the lack of employment creates financial need along with the lack of health insurance coverage.
The good news, there are government programs that can help these folks manage. Medicaid is a jointly administered federal and state government program. It provides health insurance and Supplemental Security Income (SSI) to individuals who meet eligibility requirements.
Eligibility is not permanent. An individual can loose eligibility status if there has been an improvement in their financial status. Keep this in mind if you intend to leave an inheritance to a loved one with special needs.
Supplemental Needs Trust
The widely embraced estate planning solution is a legal device called a supplemental needs trust.
SSI payouts are extremely modest. In addition, Medicaid does not cover every medical treatment a benefit recipient may want or need. The government is aware of this fact. As a result, an individual’s unmet needs can be satisfied using a supplemental needs trust.
When you establish this type of trust, you name a trustee to act as the administrator. It can be a family member, friend, or colleague. There is another possibility that is preferable for some people.
Trust companies and the trust departments of banks offer trustee services. Using a professional avoids concerns regarding longevity. It also places a financial expert at the helm of managing your estate. The trustee would also have a better understanding of Medicaid and Supplemental Security Income rules.
An individual’s ongoing benefit eligibility will not be impacted as long as everything is done correctly. After the death of the beneficiary, any assets remaining in the trust would go to a successor beneficiary named in the trust declaration.
It is possible for a person with a disability to establish a supplemental needs trust with their own funds. This scenario will sometimes unfold when a benefit recipient receives a personal injury settlement or judgment.
A first part or self-settled trust is created when the funding source comes from the individual who is also the beneficiary. The situation is the same during the life of the beneficiary.
There is, however, one major difference upon the death of the benefit recipient. In all cases, Medicaid is required to seek reimbursement from the estates of benefit recipients after they pass away. However, they cannot attach assets that are in a third-party supplemental needs trust. The remaining assets in a first party trust would be within their reach.
We Are Here to Help!
As you can see, there are unique ways to approach unusual circumstances. If you would like to discuss your unique situation with a licensed Oklahoma City estate planning attorney, our doors are open.
We can gain an understanding of your needs and help you devise a custom crafted plan that is ideal for you and your family. To set the wheels in motion, contact us today at 405-843-6100 or send us a message through our contact page.
- Understanding IRA Inheritance Planning: Key Considerations - September 14, 2023
- Irrevocable Trust Decanting Provides Flexibility - September 12, 2023
- Inheritance Planning Solution for a Spendthrift Heir - September 7, 2023
