When you are looking through your inheritance list you should consider the life situation of each person that you are going to be including. There are different ways to transfer assets. The best course of action is going to vary person by person.
This comes into play when you are leaving an inheritance to an individual with a disability.
Government Benefit Eligibility
Many people with disabilities require very expensive care and treatment. Depending on the disability, health care costs can enter the seven figures over the course of a lifetime.
Medicaid is the government health insurance program that will typically pick up these expenses. Medicaid is a need-based program. If you had significant assets in your personal possession, you would have to spend these resources paying for your care out-of-pocket at first. You would not qualify for Medicaid until you had virtually nothing left.
Given the above, if you were to leave an inheritance to someone with a disability, this influx of money could impact his or her government health care benefit eligibility. The inheritance would actually do more harm than good.
Supplemental Needs Trusts
Now that we have provided the necessary background information, we can answer the question that serves as the title of this post.
A good way to leave an inheritance to someone with a disability who is receiving government benefits would be to create a supplemental needs trust. These trusts are alternately referred to as special needs trusts.
The trustee that you choose when you create the trust is empowered to use assets that have been conveyed into the trust to improve the quality of life of the beneficiary. The beneficiary does not control the assets that have been placed into the trust. The trustee handles the resources.
The reason why the trust is called a supplemental needs trust is because the assets in the trust can be used to supplement the government benefits. Medicaid and Supplemental Security Income will not pay for everything that the disabled individual may want or need. The funds that are in the trust can be used to meet the supplemental needs of the beneficiary without impacting government benefit eligibility.
Special Needs Planning Report
This is a brief look at supplemental needs trusts. If you would like to learn about special needs planning in more detail, we have a valuable resource that is available to you absolutely free of charge.
Our firm has put together a series of informative special reports that cover many different estate planning and elder law topics. One of these reports is devoted to special needs planning.
To access this free special report, simply click this link and follow the instructions: Special Needs Planning Report.
Blaine Peterson
Author, Attorney
Parman & Easterday
To learn more, please download our free supplemental needs trust in Oklahoma report.
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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