Medicaid & Special Needs Trusts
When you are making plans for the latter stages of your life and the ultimate distribution of your assets to your loved ones after your death you have to take number of things into consideration. When it comes to estate and inheritance planning per se there is the purely financial part of the equation when you optimize, protect, and prepare your assets. During the earlier stages of your planning this can feel a lot like the other forms of financial planning that you have engaged in throughout your life.
But as you get older and enter into your twilight years your legacy tends to become more immediately relevant to you, and that is when the human side of inheritance planning can sometimes take center stage. You may start to consider the specific family members who will be receiving inheritances and exactly how you would like to provide for them. Each person is different and you may find that there is more to it than simply carving up a piece of the pie and distributing it accordingly.
If you have any people that you would like to leave an inheritance to who have physical or mental disabilities exactly how you go about it can be a very important matter. Many people who are disabled rely heavily on Medicaid benefits to pay for very costly long-term medical care. These benefits are earmarked for people who do not have the financial capabilities to contribute to their own medical expenses, so leaving such a person an inheritance can do more harm than good.
But what you can do is create a third-party supplemental needs trust to provide for a disabled loved one without impacting their Medicaid eligibility. The trustee can only authorize expenditures for the supplemental or special needs of the beneficiary without violating Medicaid rules, so the verbiage of the trust and the actions of the trustee must be precise.
This is why the assistance of an elder law attorney who is experienced with special needs planning is so very crucial. It should be mentioned that these trusts are revocable, and a secondary beneficiary can be named who would receive any remainder that may be left in the trust upon the death of the beneficiary.
