A supplemental needs trust can be useful if you want to provide for someone that you love who has a disability. We will look at the facts in this blog post.
People with disabilities oftentimes rely on the Supplemental Security Income program. This program provides income for people with special needs who are not in a position to earn much on their own. To qualify, you must be able to prove that you have significant financial need, and you could lose eligibility if your financial status was to improve.
Medicaid is another government program that is important for many people with special needs. This is a health insurance program, and clearly, people with disabilities are going to required medical care and treatment. Depending on the situation, a lifetime of care can cost millions of dollars.
Once again, this is a need-based program. If someone who is enrolled in the Medicaid program was to come into money, benefit eligibility could be lost.
Supplemental Needs Trusts
You could use a supplemental needs trust to help out a family member who has a disability without jeopardizing government benefit eligibility.
The benefit programs do not cover everything that the recipient may require. The needs that are not being met by the benefits are referred to as supplemental needs.
When a supplemental needs trust has been established, the trustee can use assets in the trust to satisfy these supplemental needs. Since the needs are not being met by the government benefits, the expenditures are allowed, and government benefit eligibility is not impacted.
We should point out the fact that the Medicaid program will not seek reimbursement from the estate of the beneficiary if the supplemental needs trust has been funded by someone other than the beneficiary.
It is also possible for a parent or grandparent to establish a trust that is funded with the beneficiary’s own resources. This would be a first party or self-settled special needs trust. The same situation applies with regard to the trustee having the ability to use assets in the trust to satisfy the supplemental needs of the beneficiary.
However, when this type of trust is in place, the Medicaid program would seek reimbursement from the beneficiary’s estate after his or her passing.
Special Needs Planning Consultation
It takes careful planning to properly provide for a loved one with special needs who is relying on government benefit programs. If you take the right steps, you can improve the beneficiary’s quality of life significantly while benefit eligibility remains intact.
If you would like to learn more about special needs planning, our firm can help. We offer free consultations, and you can contact us through this page to set up an appointment: Dallas TX Special Needs Planning.