Every parent wants the best for their child. Generally, this is where Estate Planning comes into play. It is not uncommon for parents to set up Trusts with a structured distribution of 1/3 at the age of 25, 1/3 at the age of 35, and the rest at the age of 45.
For parents with handicapped children, the situation is different. The General Grantor Trust will not work for them. Generally, benefits for disabled individuals can include Social Security Income, Medicaid, vocational rehabilitation, subsidized housing, and other benefits based upon the need. For these purposes an individual is considered impoverished if their personal assets are less than $2000.
This means that if a disabled person owns more than $2000, they will not receive any benefits from the government. Any money that you leave your child would be given over to the government to pay for the care that they need. If you decide to give your child’s inheritance to another family member to care for your child and get around this law, this is considered “transferred for purposes of benefit qualification”. The government takes this into account when deciding which benefits to give your child. Meaning, that a handicapped child may not be eligible to receive benefits from the government for up to five years because of this.
This is where Special Needs Trusts come into play. Special Needs Trusts are not looked at by the government, and will not be held against a person with special needs. A Special Needs Trust needs specific language make it qualify as an exemption, and a truly competent estate planner will be able to draft one for you.
The purpose of the Trust is to supplement whatever the government gives a child. It works on a sliding scale with the government on one end and the trust on the other. If the funds from the government are not sufficient, only then will the Trust step in to balance out your child’s needs.
There are Medicaid rules that prevent the Trust from being used for housing or food; however, there is no restriction on social events like dinner parties, vacations, entertainment, and other things of that nature.
So make sure if you or someone you know has a child with special needs, pass along the information so they can make an educated choice for their loved ones.
For parents with handicapped children, the situation is different. The General Grantor Trust will not work for them. Generally, benefits for disabled individuals can include Social Security Income, Medicaid, vocational rehabilitation, subsidized housing, and other benefits based upon the need. For these purposes an individual is considered impoverished if their personal assets are less than $2000.
This means that if a disabled person owns more than $2000, they will not receive any benefits from the government. Any money that you leave your child would be given over to the government to pay for the care that they need. If you decide to give your child’s inheritance to another family member to care for your child and get around this law, this is considered “transferred for purposes of benefit qualification”. The government takes this into account when deciding which benefits to give your child. Meaning, that a handicapped child may not be eligible to receive benefits from the government for up to five years because of this.
This is where Special Needs Trusts come into play. Special Needs Trusts are not looked at by the government, and will not be held against a person with special needs. A Special Needs Trust needs specific language make it qualify as an exemption, and a truly competent estate planner will be able to draft one for you.
The purpose of the Trust is to supplement whatever the government gives a child. It works on a sliding scale with the government on one end and the trust on the other. If the funds from the government are not sufficient, only then will the Trust step in to balance out your child’s needs.
There are Medicaid rules that prevent the Trust from being used for housing or food; however, there is no restriction on social events like dinner parties, vacations, entertainment, and other things of that nature.
So make sure if you or someone you know has a child with special needs, pass along the information so they can make an educated choice for their loved ones.
RSS Feed
