If the last few years have taught us anything, it is that life is not predictable. The economic crash seemed to come out of nowhere. The weather appears to be totally weird and unpredictable, with tornadoes and floods occurring with fierce and dangerous intensity.
So, too, our health and physical wellbeing are not entirely predictable. Despite our best efforts to eat healthy food and exercise regularly, we can have a car accident or suffer a bad reaction to medication and become ill or disabled.
For some of us, our financial resources and health insurance may not be enough to cover our care needs. When that happens, we sometimes have to seek governmental assistance to provide for our healthcare.
Many of my clients had no idea they would end up depending on Supplemental Security Insurance (SSI) or Medicaid for assistance, but those progams can be a lifeline for those with disabilities and longterm care needs.
How can we plan for our loved ones and family members who are on governmental assistance programs? How can we provide for their needs without jeopardizing their public benefits programs?
One way is to establish a special needs trust for the benefit of the person with a disability. A special – or supplemental needs trust, as I’ll call it- is an entity established to hold assets so that those assets are available for the needs of the person with a disability that are not provided by the governmental benefit. The person with the disability is not the trustee, does not own the assets, and cannot control the assets, so the assets aren’t counted for purposes of qualifying for benefits.
SSI and Medicaid generally restrict the recipient of those programs from having more than about $2,000 in assets, but the assets in the trust aren’t calculated in that $2,000. Most of the time, the trust is established by a parent or grandparent, but If the assets did not belong to the person with a disability to begin with, anyone can establish the supplemental needs trust and anyone can contribute assets to that trust. The trust can be the recipient of gifts or inheritance.
We’ve discussed how to choose a trustee in previous blogposts,
http://bit.ly/rfPKWc but for a supplemental needs trust I usually recommend appointing a professional trustee to manage the assets in the trust. The intricacies of public benefits programs can be daunting for most people, so even though they charge for the management, professionals with experience with supplemental needs trusts can save money in the long run.
So, even though life seems unpredictable, you can at least plan for some of the supplemental needs of your loved one with a disability.