Planning for the future of your loved ones in the event of your death is generally a difficult topic for many. Unfortunately, those of us who have family members with disabilities cannot afford to ignore estate planning. Many hours of hard work by parents and caregivers go into the qualification process for government benefits for our disabled children and relatives. Twenty-page forms to fill out and hour-long calls with multiple agencies are just a couple of examples of what parents endure to obtain essential benefits for their children. Rules for eligibility for State Waiver programs, SSI and Medicaid are confusing.
What parents, family members, and close friends do not want to see happen is the disqualification of eligibility of benefits. To avoid possible disqualification of benefits, I have seen grandparents attempt to do the right thing and disinherit certain grandchildren, out of love and out of a misguided attempt to protect their loved ones with disabilities from losing benefits. The law provides a better way to protect your loved one’s eligibility for benefits through Special Needs Trusts (“SNT”).
Special Needs Trusts can offer protection of assets and income. Special Needs Trusts allow friends and families to enhance the quality of life of a special needs beneficiary.
“Income” for most public benefits agencies is defined as:
(a) actual cash distributions to the individual, and
(b) distributions that could be converted to food and shelter, and
(c) in-kind support and maintenance.
The more practical trust that is utilized is a 3rd party Special Needs Trust. Parents and grandparents who leave an inheritance to a child with a disability will
(a) create a 3rd Party Special Needs Trust,
(b) obtain a Taxpayer ID Number from the IRs, and
(c) draft a Last Will and Testament naming the trustee of the SNT as the beneficiary.
If you do not have a Will, Texas Intestate Succession law could distribute your estate directly to your child, thus creating another scenario where government benefits could terminate.
Another “funding” source for a Special Needs Trust – If you or someone you know is anticipating the eventual relocation to a nursing home, applicants should review eligibility laws of the Texas Medicaid Program. The state has a “look back” period of 5 years to review transactions that may have been made to spend down an estate to reach eligibility for Medicaid. Many transfers of income and assets can subject the Medicaid beneficiary or applicant to a transfer penalty. There are certain transfers of assets that are not subject to penalty such as contributions to a Special Needs Trusts for a person under the age of 65 with a permanent and total disability. Another transfer example is payment to an attorney for estate planning.
Contact The Filis Law Firm for more information on Estate Planning that will be most suitable for you and your family.