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If you want to leave money or property upon your death to someone with a disability, you must plan carefully. Special Needs Trusts are sometimes referred to as Supplemental Needs Trusts and their purpose is to leave money and other assets to a disabled loved one without jeopardizing their ability to receive government benefits such as supplemental Security Income (SSI) and Medicaid.
How does a special needs trust work?
The Social Security Administration reduces SSI payments if an individual receives more than $2,000 in income annually. A way around losing eligibility for SSI or Medicaid is to create a Special Needs Trust in your will or living trust. Instead of leaving money and property directly to your loved one, you leave it to the Special Needs Trust. Money paid directly from the trust to the providers of medical care, education and entertainment does not reduce SSI payments. Money paid directly to providers of food, clothing and shelter within certain limits also does not reduce SSI payments.
You must name a trustee who will be responsible for administering the trust property and spending the money for the care of your loved one. Under this arrangement, the trustee cannot give money directly to your loved one but can spend it for professional care, housing or other needs. Special needs trust funds can be used to pay for medical and dental expenses, physical rehabilitation, personal care attendants, education, recreation, vehicles and home furnishings.
It’s important to set up a special needs trust so that it supplements available public benefits. If too much money is available, your loved one may become ineligible for government assistance. In addition, it’s essential that your loved one does not have direct control over the assets or the income they generate. Only the trustee may have the ability to manage and distribute the assets.
If you have a loved one with a disability and want to provide for them when you are gone, contact the estate planning attorneys at Tuesley Hall Konopa to schedule a free initial consultation. Their estate planning expertise in the area of Special Needs Trusts can help you plan for the future of your loved one.
