Coastal Senior is a monthly periodical covering the South Carolina and Georgia low country. Bob Mason is its legal columnist.
An old rule says “Never say never”. Let’s break that rule. The parents of a disabled child should never disinherit that child simply because she is disabled. Never.
There is a better way.
Parents of a disabled child want to ensure that the child will receive adequate financial protection while at the same time providing equitably for other family members. Maybe a parent is worrying about her own nursing home care but wants to insure her assets can be used for her disabled child.
An inheritance left directly to a disabled child will soon be gone.
Sadly, many parents (with inadequate or no advice) simply leave everything to the “non-disabled” children with the hope those children will “look after” their disabled sibling. Not good. Unfortunately, greed, divorce, lawsuits or carelessness can throw this plan awry.
A “special needs trust” might be a great alternative. The trust holds the assets for “supplemental needs” only, and should not affect the disabled individual’s eligibility for entitlement benefits or be accessible to the individual’s creditors, including the government.
The idea is to supplement, not reduce or replace, entitlement benefits that may be available to the disabled individual. If no benefits are available, the trust assets stand ready to help. If the available benefits do not provide adequately for the beneficiary’s needs, the trust assets will fill in that gap.
Even if the available benefits adequately cover material needs, the trust assets may be used to enrich the beneficiary’s quality of life without jeopardizing the much-needed benefits. Finally, to the extent that the assets are not used during the beneficiary’s lifetime, they may pass to other family members.
If the disabled child is receiving benefits such as Supplemental Security Income or Medicaid, the trust will need to be submitted for approval to ensure that the trust meets the many rules that apply. After all, the goal is to maintain benefit eligibility without having the trust assets “count”.
A parent may set up such a trust one of two ways. First, a trust may be established at anytime while the parent is alive. The drawback, of course, is that the parent may be tying up assets that he may want to keep available for his own support acomplia online in case he needs them. Also, the parent may not want to contend with submitting the trust for approval and may not want to deal with people like me (lawyers). For a parent about to go into a nursing home and on to Medicaid himself, however, such a trust can be a great planning technique.
Second, a parent can insert such a trust into the terms of his last will and testament. He can avoid the hassles listed above and let the executor, named trustee and his child’s guardian worry about the details later. These trusts can be tricky. Make sure you get expert help.
Drop in next month to read about a similar type of trust a disabled person can set up directly with her own funds.
