THE THREAT
The provisions of special needs assistance for the disabled contains
regulations that prevent the disabled person from receiving money from any
source, gifts of money, or an inheritance. If these things occur they will
seriously threaten or cause the termination of the government benefits.
Most people are only vaguely familiar or completely unaware of these
regulations, and this constitutes a ticking time bomb for the disabled. To
ignore planning for this situation is inexcusable if you are responsible for
the welfare of a disabled person on government assistance.
If the parents of a dependent disabled child were killed in an accident and
that disabled child was left an inheritance through a Trust or Will...or
lack of a Will, that inheritance would effectively revoke all government
benefits to the child and that child’s care would default to the state
making the child a ward of the state.The Solution...The Special Needs
Trust
Each public benefits program has restrictions that the special needs trust
must comply with in order not to jeopardize the beneficiary’s continued
eligibility for public benefits. Special Needs Trusts allow a disabled
beneficiary to receive gifts, lawsuit settlements, or other funds, and yet
not lose his or her eligibility for certain government programs. Such trusts
are drafted, usually within a Living Trust, so that the funds will not be
considered to belong to the beneficiary in determining eligibility for
public benefits.
As their name implies, Special Needs Trusts are not designed to provide
basic support, but instead to pay for comforts and luxuries that could not
be paid for by public assistance funds.
These trusts typically pay for things like education, recreation, counseling, and
medical attention beyond the simple necessities of life.  (However, the
trustee can use trust funds for food, clothing, and shelter if the trustee
decides doing so is in the beneficiary’s best interest despite a possible
loss or reduction in public assistance.)
Special needs can include medical and dental expenses, annual independent
check-ups, necessary or desirable equipment (such as specially equipped
vans), training and education, insurance, transportation, and essential
dietary needs. If the trust is sufficiently funded, the disabled person can
also receive spending money, electronic equipment and appliances, computers,
vacations, movies, payments for a companion, and other self-esteem and
quality-of-life enhancing expenses.
A parent with a child with special needs should consider buying life
insurance to help fund the special needs trust set up for the child’s
support. What may look like a substantial sum to leave in trust today may
run out after several years of paying for care that the parent had
previously provided. The more resources available, the better the support
that can be provided to the disabled person. And if both parents are alive,
the cost of second-to-die insurance-payable only when the second of the two
parents passes away-can be surprisingly low. |