Much has changed in the world of estate planning for the disabled. Gone are the days when an individual had to rely on the generosity of family and friends or face being disqualified from government benefits. In the current age, a beneficiary can fund his or her own special/supplemental needs trust. If a beneficiary is party to a lawsuit or receives an inheritance, he or she can now place those funds into a Self-Settled Special Needs Trust which removes the assets from consideration when an individual is qualifying for government benefits.
A beneficiary is eligible to create these self-settled special needs trusts if they are:
- Disabled, defined as someone who is unable to engage in any substantial gainful activity by reason of medically determinable physical or mental impairment that will last for more than twelve months; and
- Under 65; no new additions after the age of 65 or any such additions will be counted as income for purposes of determining government benefits eligibility.
The trust must include a “pay-back” provision that says that any remaining assets in the trust will be used to pay back Medicaid. Medicaid will be paid back before the funeral or burial expenses, but if a beneficiary purchases a pre-paid funeral plan from his or her trust, the expenses will be taken care regardless of the Medicaid pay-back.
Self-Settled Special Needs Trusts are a way of protecting assets that would normally disqualify a beneficiary from government benefits, but they can also provide a level of independence for disabled beneficiaries. Combined with ABLE accounts, which we will discuss in next week’s article, an individual who has full capacity to manage his or her finances, but who needs the protections associated with a special needs trust can now find financial independence and protection.
By combining Self-Settled Special Needs Trusts, Third Party Special Needs Trusts, and ABLE accounts, a disabled beneficiary can have the freedom of financial independence but the security of lifetime benefits and supplemental income. Careful planning can bring many pieces of disability planning into one cohesive design to provide the best care for yourself or a loved one.
If you need expert advice about setting up a Special Needs Trust for yourself or a loved one, contact Grissom Law, LLC at 678-781-9230.
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