If you have a child or grandchild with a disability and you want to leave them money or property, you must plan carefully. Otherwise, you could jeopardize their ability to receive Supplemental Security Income (SSI) and Medicaid benefits. By setting up a "Special Needs Trust" in your Will, you can avoid some of these problems.
Owning a house, car, furnishings, and normal personal effects does not affect eligibility for SSI or Medicaid. But other assets, including cash in the bank, will disqualify your loved one from benefits. For example, if you leave your loved one $10,000 in cash, that gift would disqualify your loved one from receiving SSI or Medicaid.
A way around losing eligibility for SSI or Medicaid is to create a Special Needs Trust. Then, instead of leaving property directly to your loved one, you leave it to the Special Needs Trust. You choose someone to serve as trustee, who will have complete discretion over the trust property and will be in charge of spending money on your loved one's behalf. Because your loved one will have no control over the money, SSI and Medicaid will ignore the trust property for program eligibility purposes. The trust ends when it is no longer needed--commonly, at the beneficiary's death or when the trust funds have all been spent.
The trustee cannot give money directly to your loved one--that could interfere with eligibility for SSI and Medicaid. But the trustee can spend trust assets to buy a wide variety of goods and services for your loved one. Special Needs Trust funds are commonly used to pay for personal care attendants, vacations, home furnishings, out-of-pocket medical and dental expenses, education, recreation, vehicles, and physical rehabilitation.
If you have questions about Special Needs Trust or other estate planning techniques to care for disabled or special needs family members, give us a call at 253.858.5434. We proudly serve clients throughout Washington and Idaho and are available to meet in person, by phone, or via Skype or FaceTime.