In the absence of a Special Needs Trust, government benefits may be entirely diminished or withdrawn if the disabled person inherits cash or property, when the person has more than the allowable sum to qualify for the benefits.If you are looking for more tips, check out Amicus Law Firm – Estate Planning Attorney in Logan.
What can be done by a Special Needs Trust?
Instead of leaving it to the incapacitated person themselves, the family may bring money, property, and other assets into the Trust. The disabled person is designated as the Trust’s receiver and a Trustee is named on your loved one’s behalf to invest the money on the Trust. The Trust funds will be used to cover costs above and above the government benefits that your loved one gets, such as vacations, travel expenses, leisure events, medical and dental expenses that would have to be charged out of pocket, etc.
Supplemental First Party Requires Confidence
An Irrevocable Trust is a First Party Supplemental Needs Trust that can be set up for a disabled person under the age of 65 using the disabled person’s properties. This is most widely used when a disabled person can obtain an inheritance or settlement that will surpass the $2,000 cap on their countable assets.
If the funds are not invested in a Special Needs Trust of the First Party, government services such as Medicaid will be stopped and the disabled person will be expected to cover their own medical costs from the assets they earned before they are exhausted down to the $14,400.00 cap of countable assets.
For the benefit of the disabled person, the funds in this Trust must be expended and the language of the Trust must include provisions that enable the state Medicaid agency to recover the remaining funds in the Trust up to the sum it has spent on the disabled person.
Special Needs Trust from Third Party
A Third Party Special Needs Trust is formed by the disabled person’s family members or friends. The person with an impairment can be of any age and will be the Trust’s beneficiary. For families who wish to leave behind an inheritance for their loved one without affecting their right to receive Medicaid and other benefits, a Third Party Special Needs Trust is an ideal estate planning instrument.