WHAT YOU CAN DO TO HELP A DISABLED LOVED ONE
My clients frequently ask me, “How can I help my disabled child (or grandchild) after I am gone?” They often know that if the disabled individual receives an inheritance, he may lose Medicaid or SSI (Supplemental Security Income) benefits.
The client may have considered one of two choices:
1. Disinheriting the disabled individual (and hoping that the individual’s brother or sister will use a portion of the inheritance for the care of the disabled sibling). This will protect against the loss of public benefits, but how will the client know that any care will be provided to the disabled loved one?
2. Establishing a trust to provide for the support and maintenance of the disabled individual. This may seem like a good idea, but will cause him to lose his governmental benefits.
So, how can you provide for your disabled loved one without causing him to lose governmental benefits?
The answer is to create a “special needs trust” (sometimes referred to as a “supplemental needs trust.”). This ensures that the assets will be used for the disabled individual during his lifetime. Thereafter, remaining assets may be distributed to other family members.
The assets are used to supplement (but not replace) government care and services. This may include, for example, drugs, medical procedures, dental care, nursing and attendant care not provided by Medicaid. In addition, the trustee may provide travel and entertainment, or even a new computer or home theater system.
You can create a special needs trust with any type of assets, including cash, stock, personal property, real estate, or life insurance. The parties to the trust include the Grantor (the family member whose assets will fund the trust), the trust beneficiary (the disabled individual), and the trustee (the party responsible for managing and investing the trust assets).
You may include the special needs trust in a revocable living trust where, typically, some of the assets are segregated for the benefit of the disabled individual upon the death of the grantor. Alternatively, you may include special needs trust provisions in your will. In either case, you may choose an individual or a bank as your trustee to manage the assets for the disabled loved one.
The legal requirements for special needs trusts are found in a complex set of federal and state laws and regulations. The attorney drafting special needs trusts should be experienced in drafting trusts and government programs that provide benefits for disabled individuals. In addition, he must consider the governmental program requirements of the state where the disabled beneficiary resides.
For additional information or to schedule an appointment, call Boynton Beach Florida Elder Law & Estate Planning Attorney Martin H. Cohen at 561-880-8223.