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If you have a family member or loved one with a disability or special needs, you likely worry about their future. If you get the planning right, your loved one will be provided for and cared for. If you get it wrong, your plan can inadvertently cause your loved one to lose government income and medical care benefits. Idaho Law Group can help you design a special needs plan to provide “supplemental needs” for your loved one while ensuring continued government assistance.
The government offers assistance for those with special needs who cannot provide for themselves (the aged, the blind and those with disabilities which prevent them from working). This assistance comes in the form of “Supplementary Security Income” (SSI) for food and shelter and “Medicaid” for medical care. While this assistance is essential, it only covers the bare necessities of life. If a person with special needs receives financial support from family, friend or charity, the government may revoke the benefits it has been paying.
When a family member, friend or charity gives assets to a properly drafted Special Needs Trust (also called a Supplemental Needs Trust), the Trust will hold the assets until they are needed to provide for the special needs recipient. The special needs recipient is the “beneficiary” of the Special Needs Trust. This type of Trust has built in restrictions to preserve the recipient’s eligibility for SSI, Medicaid, and other government benefits.
This Trust maintains the special needs person’s qualifications for government benefits while allowing the Trustee the maximum flexibility to use Trust funds to improve the recipient’s quality of life. The Trustee can use trust funds to pay for such things as tuition, travel, tools, cultural events, and companion services without disqualifying the beneficiary from government benefits.
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Special Needs Trusts are most commonly used for people who have severe disabling conditions who are receiving, or seeking to receive, the assistance of SSI and Medicaid benefits.
Many disabling conditions are not permanent. Disabling conditions which will last for longer than 12 months often qualify for government assistance. The Special Needs restrictions may be terminated once the beneficiary is no longer considered disabled.
SSI benefits are not enough to pay for hobbies or travel to see family. There may also be some medical issues that are not covered by Medicaid. Many people want to help disabled loved ones in these circumstances.
If assets are given directly to a disabled person or left in a Will for a disabled loved one, that gift may immediately disqualify the recipient from all government assistance (SSI, Medicaid, Section 8 Housing).
Giving a gift to a disabled person without proper planning could cause them to lose essential government benefits, such as:
There are two types of special needs trusts – First-party and Third-party Special Needs Trusts. If the disabled person funds the Trust with his or her own money, then a First-party Trust should be used. If another person is putting money into the Trust, then a Third-party Trust is used.
Third-party Special Needs Trusts are commonly used by persons who do pre-planning for a loved one with special needs.
Typically, the parents of a child with disabilities or special needs will be the persons who establish a Third-party Special Needs Trust. However, a grandparent, a sibling, or any other person (other than the beneficiary) may establish a Third-party Special Needs Trust.
A Third-party Special Needs Trust has fewer restrictions than a First-party Special Needs Trust. A Third-party Trust can name successor beneficiaries you choose.
Idaho Law Group can help you design a Special Needs Trust that supports your goals while maintaining the maximum amount of flexibility allowed under law.
Unlike a Third-party Trust, a First-party Trust contains assets provided by the disabled person. This kind of Trust is commonly used in situations when the person with a disability inherits assets or receives a financial settlement.
Property in a First-party Special Needs Trust can only be used for the sole benefit of the special needs beneficiary.
Unlike Third-party Special Needs Trusts, when a disabled person with a First-party Trust recovers or dies, any remaining funds must be paid back to the State for reimbursement of medical care expenses.
We provide education and counseling to individuals and families so that you can make informed choices with confidence.
