Most people get their health care insurance through their jobs, but a significant percentage of folks with special needs cannot enter the workforce. For these individuals, Medi-Cal fills the gap. This is a jointly administered federal/state government program that provides health insurance for people with very limited monetary resources.
Supplemental Security Income (SSI) is another government program that is relied upon by many people with disabilities. As the name would indicate, this benefit serves as a source of modest but much-needed monthly income for people that don’t have much personal earning power.
Since these are both need-based programs, a significant direct inheritance could impact eligibility status. This is something you should take into consideration when you are planning your estate if you have someone with special needs on your inheritance list.
You could convey assets into a supplemental needs trust. These legal devices are alternately referred to as special needs trusts. If you establish this type of trust, you would name a trustee to act as the administrator, and the person that you want to assist would be the beneficiary.
Medi-Cal and Supplemental Security Income will not necessarily satisfy all the needs of benefit recipients. These unmet needs are referred to as “supplemental needs.” The trustee would be allowed to use assets in the trust to satisfy these needs without impacting government benefit eligibility.
It should be noted that the beneficiary would not have direct access to the funds, and the trust would be irrevocable. This being stated, the trustee would have broad latitude with regard to the different goods and services that could be purchased to make the beneficiary more comfortable.
Sometimes an individual with a disability that is relying on these programs will come into money through a personal injury settlement or from some other source. Under these circumstances, a parent, a grandparent, a legal guardian, or a court could use the funds to establish a self-settled or first party special needs trust for the benefit of the person in question.
Everything would be the same with regard to the trustee’s ability to use assets in the trust to satisfy the supplemental needs of the grantor/beneficiary.
The answer is yes and no. If you create a supplemental needs trust for the benefit of someone else with your funds, it would be a third-party special needs trust. In the trust declaration, you would name a successor beneficiary. After the death of the first beneficiary, the successor would assume ownership of the remainder. Medi-Cal would not be able to touch these assets.
On the other hand, if the assets are created with resources that are the property of the person that will be the beneficiary, Medi-Cal would be able to go after the remainder.
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