A concern that many families have, when they are caring for someone with special needs, is protecting that person’s eligibility for government benefits. In some cases, the receipt of a substantial inheritance could jeopardize eligibility for Social Security Income, for instance. But, with an effective estate plan, including a special needs trust, eligibility can be protected. An estate planning attorney can show you how SSI and special needs trusts go hand in hand.
What is a Special Needs Trust?
In general terms, a trust is a legal document that contains specific instructions for managing and distributing the trust property for the named beneficiaries. The goal of a trust is to protect property, reduce estate taxes for the grantor and avoid probate. Special needs trusts are specific types of trusts that are created for the benefit of persons with special needs. They are typically irrevocable and the property placed in a special needs trust is not subject to lawsuits or creditors. The primary goal of a special needs trust is to ensure that the needs of someone with special needs will be taken care of, even after the caregiver is no longer able to do so.
Types of Special Needs Trusts
There are two types of special needs trusts: a general support special needs trust and a supplemental care special needs trust. The general support variety is intended to be the primary source of benefits for someone who is disabled. Unfortunately, the assets held in this type of trust could cause the beneficiary to be ineligible for Social Security Income. On the other hand, a supplemental care special needs trust serves only as a secondary source of income after government benefits have been exhausted. This type can preserve benefits eligibility.
Special Needs Trusts and SSI Eligibility
When eligibility for supplemental security income is determined by social security agencies, that individual’s financial resources are assessed to determine if they have more than $2,000 worth of “countable resources” each month. If the person is married, the resource limit is $3,000. Exceeding these limits by even a few cents can jeopardize eligibility for social security income.
Properly drafting a Special Needs Trust
With assistance from a special needs estate planning attorney, your special needs trust can be appropriately drafted to ensure that eligibility for all possible government benefits remains intact. The special needs trust can serve to supplement those benefits, as needed. An estate planning attorney, will have an understanding of the types of benefits each client is currently receiving and any other benefits, he or she may be entitled to, in order to properly structure the trust agreement.
Whether possible benefits may include Supplemental Security Income (SSI), Social Security Disability (SSD), Medicare or Medi-Cal, a special needs trust needs to be drafted with the different eligibility requirements and benefit limitations in mind. If you have questions regarding special needs trusts, or any other estate planning needs, please contact the Schomer Law Group either online or by calling us at (310) 337-7696.