Are you interested in leaving money or property to somebody with a disability? If so, you need to carefully consider the planning process. Neglecting to do so could put this person in a difficult position. Fortunately, you can setup a special needs trust in your will to avoid the most common problems.
One of the biggest problems is this: when you leave money or property to a loved one with a disability, you could jeopardize their chance to receive Medicaid and Supplemental Security Income (SSI) – unless you take the appropriate steps, of course.
Owning a car, house, and other material items will not impact eligibility for Medicaid and SSI. That being said, other assets, such as cash, can disqualify them from receiving benefits.
Consider this: if you were to leave your loved one $25,000 in cash, this would disqualify them from receiving Medicaid or SSI. Is that a risk you are willing to take?
The Help of a Special Needs Trust
By putting a special needs trust into place, you can ensure that your loved one gets the money you are leaving to them without the risk of losing eligibility for Medicaid or SSI. In short, you are not leaving the property directly to your loved one but instead leaving it to the trust.
When setting up a special needs trust, you are required to select somebody to serve as the trustee. This person will be in charge of all the money that is left to the trust, as well as spending the money on behalf of your loved one.
Since your loved one does not have control over the money, Medicaid and SSI will ignore the property as far as eligibility is concerned.
How can the Money be Spent?
It is important to note that the trustee is not allowed to directly give money to your loved one. That being said, the trustee is permitted to purchase products and services for this person. For example, a special needs trust is often times used to pay for education, medical expenses, personal care, transportation, and rehab.
With so much gray area, as well as a variety of requirements that must be adhered to, it is important to contact an attorney with special needs trust experience. This will ensure that the trust is 100 percent legal, allowing your loved one to continue receiving Medicaid or SSI benefits.
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