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Schomer Law Group, Los Angeles Estate Planning and Elder Law and Elder Law Attorneys

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Home » Special Needs Planning Can Protect Benefits

Special Needs Planning Can Protect Benefits

Estate planning is often looked upon as a one-way street. The idea is that the only decision that you have to make is how you are going to be distributing slices of a pie. People that adopt this perspective do not think about the life situation of each respective inheritor.

In fact, this is an important consideration, and it is well demonstrated by the fallout that can materialize when a person with a disability is receiving an inheritance.

Need-Based Government Benefits

The majority of Americans get affordable health insurance through their employers. Since many people with disabilities cannot work, this option is not available to them.

Everyone needs health insurance, but the need is even more significant for folks that are in this position. And then there is the matter of income, and this void speaks for itself.

Fortunately, there are safety nets in place. Medi-Cal is a jointly administered federal/state government health insurance program for people with very limited resources. Supplemental Security Income is a very modest but welcome source of monthly cash.

Eligibility is contingent on ongoing financial need. If a benefit recipient was to receive a sizable direct inheritance, their profile would change dramatically, and they could lose their benefits.

There Is a Solution

The above scenario is a bit disconcerting on the surface, but there is an estate planning solution in the form of a supplemental needs trust. People alternately use the term “special needs” trust to describe these devices.

If you establish this type of trust for the benefit of a loved one, you would be called the grantor of the trust. The person that you want to assist would be the beneficiary, and you would empower a trustee to act as the administrator.

When it comes to the choice of trustee, you can go in a couple of different directions. It is possible to get someone that you know personally to agree to act as the trustee.

Of course, if you are creating a trust as an estate planning tool, you have to consider the anticipated longevity of the trustee. You may not know anyone with the proper qualifications, and there are strict rules that must be followed to the letter.

The other option would be to engage a professional fiduciary like a trust company or the trust department of a bank. If you go this route, you can go forward with the knowledge that the trust will be competently administered, and there would be no succession concerns.

Medi-Cal does not cover every medical, dental, and therapeutic treatment that the beneficiary may want or need. Supplemental Security Income is extremely limited, and no one could live on these payouts comfortably.

Under the program guidelines, the trustee would be able to use assets in the trust to satisfy these unmet or supplemental needs. As long as the rules are followed correctly, benefit eligibility would not be lost.

Medi-Cal Estate Recovery

The last piece to the puzzle that you should understand is the matter of estate recovery. When a benefit recipient dies, Medi-Cal can attach assets that remain in their estate.

With the exception of a home, you cannot qualify if you have more than $2000 in your own name, so there is usually nothing to take. However, there is a shade of gray when it comes to the beneficiary of a special needs trust.

If you use your funds to establish a third-party trust, Medi-Cal could not go after the remainder. It would fall to a successor beneficiary that you would name in the trust declaration.

Sometimes a person with a disability that is enrolled in these benefit programs will receive a personal injury settlement or judgment, or they may come into money in another way. Under these circumstances, a first party supplemental needs trust could be established.

The arrangement would be the same with regard to the trustee’s ability to make the beneficiary more comfortable without impacting benefit eligibility. However, assets that remain in the trust after the passing of the beneficiary would be available to Medi-Cal during the recovery phase.

We Are Here to Help!

Our doors are open if you would like to put a custom crafted plan in place that is ideal for everyone in your family. You can schedule a consultation right now if you give us a call at 310-337-7696. If you would rather reach out electronically, simply fill out our contact form and we will get back in touch with you promptly.

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Testimonials

Client Review
July 29, 2020
    

We need to update our Living Trust and attended Schomer Law Group’s seminar. Afterwards we made an appointment and were impressed by the attention Scott Schomer and Liran Aliav gave to our case answering all questions and making suggestions how to minimize the estate tax. All the office staff is very friendly and we highly recommend Schomer Law Group.

Frank & Jutta R
Client Review
July 29, 2020
    

Mr. Schomer does an amazing job at explaining all the intricacies of establishing a trust. He and his team help you every step of the way so you always know what to expect and what you are preparing for. Best education you can get and the best gift you can give your family.

Paula M.
Client Review
July 29, 2020
    

We put off getting a trust for years. After attending a seminar with Scott Schomer we realized that the time had come to get a trust. We were given very good reasons for why we should get a trust. No pressure, just the plain facts. We are very relieved and happy to finally get our trust. Scott and Cesar were very knowledgeable, helpful and listened to our ideas of what we had to say. Any questions that we have now and in the future they are available to assist us to solve them. I recommend the Schomer Law Group and I wish we knew about them years ago.

Phillip G.
Client Review
July 29, 2020
    

When you’re presented with an invitation to attend in a mailer, you may have reservations, this was a truly gift!! My wife and I were educated and guided through the process of creating a family trust.
Both of our parents had attorney’s that “worked” with wills/trusts, but came up short. Fortunately, the Schomer Law Group was there! This is a group of attorney’s that only specialize in estate planning, law, and financial advice, so you know you’re getting expert and personalized advice. This is the best money we’ve ever spent!! Thank you!

Bob L.
Client Review
July 29, 2020
    

We knew we had to update our 10 year old ( 20 page ) trust. After several detailed meetings, Liran and Cesar produced a large ( 300 pages + ) highly detailed trust document that we have used to make sure our family estate is well managed and clearly understood.
They were all very helpful in answering myriad questions and explaining all the various options…

We would strongly recommend the Schomer Law Group to anyone with an estate of even modest means, to assure proper planning…

Bob S.
Client Review
July 29, 2020
    

We had contemplated updating our will and starting a trust for a number of years. After attending a talk by Scott Schomer we realized we were long overdue and the potential downside of not having our affairs in order was significant. Scott and his excellent team made the process simple and seamless. They were great listeners, addressed all our concerns and even pulled and processed all the paperwork from our financial institutions. If you are looking for assistance with estate planning, wills and trusts, we highly recommend Schomer Law Group.

Robert F.
Client Review
July 29, 2020
    

Very competent & informative – friendly atmosphere – ready to answer the most mundane questions – relaxed.

Joan S.
Client Review
July 29, 2020
    

Mr. Schomer was excellent in getting our family trust and estate affairs in order. My husband and I had put off doing this and Scott really made the process easy! He is very passionate in making sure his clients get all that they need and we really appreciated it. I would highly recommend him and look forward to the many years he will be available to assist our family.

Kim

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