When deciding on where you want your assets to go after death, it is common for people to think of their loved ones first. The process of transferring your assets to your family usually happens smoothly and runs into no problems. However, for loved ones with disabilities who are under government benefits like SSI or Medicaid, it can put their benefits at risk. For many of these programs, countable assets that are more than $2000 will cause them to lose their benefits. Oftentimes. benefits will be put to a halt until the entirety of the inheritance has been used up. Afterwards, an application for benefits must then be redone in order to get their benefits back. Instead of leaving your disabled family members out of your estate plan, there are possible solutions to prevent your loved ones from getting government benefits.
- Leave Your Assets to Other Relatives.
- Oftentimes, people leave their assets to relatives that they believe to be trustworthy. It is the most simple and effective way to give assets to people with disabilities. However, it is also possible that after you pass, they will end up keeping the money for themselves.
- Create a Special Needs/Supplemental Needs Trust.
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- A special needs trust allows a disabled person to transfer money into the trust without having that money restrain the strict resource limits for Medicaid or SSI. This allows the beneficiary to still be eligible for government benefits but will not “replace them”. In this trust, it calls for a beneficiary and a trustee. The trustee is the one who is technically in charge of all the assets in this type of trust but the assets can only go towards the beneficiary. Although this may sound like a good option, there are pros and cons to it.
- Some Advantages to Having a Special Needs Trust:
- An individual can maintain eligibility for government programs and benefits
- Allows for disabled person to have extra funds
- Funds are exclusively used to care for the person with a disability
- Some Disadvantages to Having a Special Needs Trust:
- Initial fees of setting up and annual fees of managing a special needs trust can possibly be financially daunting depending on where you go
- Beneficiary has to request funds from the trustee in order to use funds from the trust
Although options may seem limited, there are always ways to include family members with disabilities into your estate plan. Everyone should have an equal chance of being able to be a beneficiary. If you or a loved one wants to know more about how to include disabled family members into your estate plan, please contact the Law Office of Inna Fershteyn at (718) 333-2394.