Special circumstances require special planning.
This is especially true when you want to leave an inheritance to an individual with a disability. If that person is receiving public benefits such as Supplemental Security Income (SSI) or Medicaid, even a modest bequest can cause your heir to lose their income or part of their health insurance.
The problem is these government programs are “means tested,” requiring the recipient to keep their assets below a certain threshold. If they inherit directly from you, then often their bank account will exceed the asset cap and their SSI and Medicaid coverage will stop until the individual spends down those assets. It can be a vicious cycle, driving some parents to disinherit their disabled children completely out of fear they will lose their public benefits.
But there are better ways to plan by using Special Needs Trusts (also called Supplemental Needs Trusts) and Stable Accounts. Special Needs Trusts are written in a way that limits the circumstances when a Trustee can release funds to a disabled individual. Because the public benefits recipient does not have unfettered access to the assets, the government should not count them as part of the individual’s net worth. Therefore, the benefits should continue for them without interruption.
In addition, if a child or young adult becomes disabled at a young age, parents can establish a Stable Account for them. Stable Accounts are a product of the 2014 Able Act signed by President Barack Obama. These accounts allow individuals on public benefits to keep money in a special account and draw on them for expenditures that improve their quality of life. The individual can literally keep hundreds of thousands of dollars in a Stable Account and still maintain their SSI or Medicaid.
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If you have a child with special needs, now is the time to plan for their future. A Special Needs Trust can help you leave an inheritance for your child without them losing their government benefits.
Contact one of our estate planning attorneys today to learn more about setting up a Special Needs Trust for your child.
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Whether you're planning for your parents, your spouse, or even yourself, The Law Practice of Dennison Keller, LLC will meet you at the crossroads of legal and care advocacy to show you one clear path out of the maze and get you on the road toward your own peace of mind.
