When you are thinking about estate planning, you may solely focus on your decisions about final gifts. This is a reasonable way to look at it, but you should also consider the impact that an inheritance will have on each person that is on your list.
The right way to transfer assets to one person may not be appropriate for the next. This is something you should discuss with an estate planning attorney before you make any final determinations.
People With Disabilities
If you would like to use your resources to make a loved one more comfortable after you are gone, you should definitely take pause. Most people with special needs rely on Medicaid as a much needed source of health care insurance, and Supplemental Security Income (SSI) is another key benefit.
These are need-based programs, so a significant improvement in financial status can cause a loss of eligibility. This would enter the picture if you were to leave a direct inheritance to a benefit recipient, but there is a viable estate planning solution.
Supplemental Needs Trusts
Under these circumstances, you could make a loved one more comfortable by establishing a supplemental needs trust. The way that it works is you fund the trust, and you name a trustee to act as the administrator. It can potentially be a person that you know, but you could alternately engage a corporate trustee such as a trust company or the trust department of a bank.
The government benefits do not necessarily satisfy all of the wants or needs of the recipient. Under the rules of the programs, the trustee could use assets that been conveyed into the supplemental needs trust to satisfy some of these needs.
It should be noted that the beneficiary would have no direct access to the funds that have been conveyed into the trust.
Medicaid is required to seek reimbursement from the estates of people that were enrolled in the program during their lives. If you establish this type of trust with your funds for the benefit of someone else, it would be a third-party special needs trust. Assets in the trust could not be targeted during Medicaid recovery efforts.
After the death of the beneficiary, a secondary beneficiary that you name in the trust declaration would assume ownership of any remainder that may be left in the trust.
In some instances, a benefit recipient will come into money via a personal injury settlement or an inheritance that is left by someone that is not aware of the potential negative impact. Under these circumstances, a representative of the beneficiary could use the funds to establish a supplemental needs trust.
The rules would be the same with regard to the ability of the trustee to use resources in the trust to satisfy the supplemental needs of the grantor/beneficiary. However, the assets would be in play during Medicaid recovery efforts.
Attend a Free Seminar
If you would like to learn more about the process of estate planning, we have some great opportunities coming up in the near future. Our attorneys are holding a series of seminars, and they are going to be chock-full of very useful information that will definitely get your attention.
There is no charge to attend these sessions, but we do ask that you register in advance so that we can reserve your seat. You can see the schedule if you visit our seminar page. Once you determine which session you would like to attend, click on it to obtain detailed registration information.
We Are Here to Help!
An attorney from our firm would be more than glad to provide assistance if you are ready to have a one-on-one discussion about your legacy. You can call us at 310-337-7696 to schedule a consultation, and if you would prefer to reach out electronically, send us a message through our contact page.