Every estate plan is not going to be identical to the next one. This is one of the problems with do-it-yourself estate planning downloads and worksheets. The idea is that you can simply download generic documents online and fill in the blanks. You then have a comprehensive estate plan, and there is no need for any further action.
If you were to go this route you would probably create a Last Will and Testament. Let’s examine what might happen if you use a Last Will to leave behind assets to a family member who has a disability.
Government Benefit Eligibility
People who have disabilities often rely on Medicaid to pay for costly care and treatment. Many of them also receive Supplemental Security Income to provide some ongoing financial assistance.
It can cost millions of dollars to provide the care and treatment that is needed over a lifetime depending on the situation in question. A loss of these benefits could be catastrophic.
Let’s get back to the Last Will that you created online with good intentions. If you name someone with a disability in your Last Will, this person is going to receive a direct inheritance. His or her financial profile is going to suddenly improve.
To be able to qualify for Medicaid coverage, your countable assets cannot exceed $2,000. As a result, this inheritance could suddenly render the disabled recipient ineligible for much-needed government benefits.
What’s the Solution?
The solution would be to set aside assets for the benefit of someone with special needs through the creation of a special needs or supplemental trust.
When you create a special needs trust you name a trustee. This can be someone that you know, but it can also be a professional fiduciary.
Under the rules of these government programs, the trustee could utilize resources in ways that benefit the person with a disability. However, the nature of these expenditures would not jeopardize eligibility for Medicaid and Supplemental Security Income.
Special Needs Trust in Oklahoma City: How Much Does It Cost?
One of the reasons why people sometimes try to use online downloads to create legal documents is because they are afraid of the legal costs that they would incur if they do things right.
When it comes to the creation of a special needs trust, indeed, there will be some legal costs involved. However, imagine the cost of losing the disability benefits. These losses would dwarf any legal expenses that are incurred creating a special needs trust.
If you are in a position to leave behind assets to someone who has a disability, you are probably in a financial position to be able to do it properly. It is very unlikely that the legal costs would be prohibitive.
Blaine Peterson
Author, Attorney
Parman & Easterday
Since founding Parman & Easterday in 1985, Larry has led over 1,000 free, community-service education programs and helped more than 10,000 Oklahoma families go from putting off their estate plan to getting it done. His goal for every client is the same: to become the person their family calls "the one who took care of everything."
Larry is the author of three books: The Straight Shooter's Guide to Estate Planning; Estate Planning Basics; and Guiding Those Left Behind in Oklahoma. He served as Oklahoma's Secretary of State and Secretary of Commerce, and his firm is the only member of the American Academy of Estate Planning Attorneys in the state.
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