We’ve talked recently about trusts and how they could be the best estate planning option for you and your family. Trusts provide secure and thorough protection for your hard work, but trusts aren’t a one-size-fits-all solution. There are several different types of trusts that have different requirements and applications depending on an estate’s specific circumstances.
A Special Needs Trust is exactly what it sounds like. These types of trusts secure assets in situations where there is a beneficiary with special needs. These trusts ensure the beneficiary remains eligible for government benefits like Medicaid and Supplemental Security Income (SSI). Simple trusts could prevent a beneficiary from being eligible for these programs because the assets are considered in their qualification for those programs. With a Special Needs Trust, the assets aren’t considered owned by the beneficiary and won’t impact eligibility.
Medicaid and SSI treat any influx of cash as income in the same calendar month it is received. This means if a beneficiary with special needs were to receive assets in a will or a non-special needs trust, the eligibility would be at risk. When a Special Needs Trust is established, the death of the loved one who holds the estate won’t automatically put those programs at risk. Instead, the Special Needs Trust assets would be used to pay for any additional needs and costs not covered by Medicaid or SSI.
On top of a Special Needs Trust, an ABLE Account (often referred to as a 529A Account) can help provide for people with special needs without risking eligibility for government programs. ABLE Accounts were established by the Stephen Beck Jr. Achieving a Better Life Experience Act of 2014 (ABLE Act). These accounts are limited to individuals whose disability onset occurred prior to turning 26 and who meet Social Security’s criteria for significant functional limitations. This provides less flexibility than a Special Needs Trust, but these accounts may be created and managed by the beneficiary themselves when capable. This provides greater autonomy for them but can also be managed by parents, guardians, or a power of attorney.
Special Needs Trusts and ABLE Accounts are both great tools for families and individuals with special needs. They provide means to pay for important expenses without risking eligibility for programs meant to improve quality of life. ABLE Accounts have funding limits while Special Needs Trusts do not, though, so if there are significant funds or assets involved, a Special Needs Trust may be the more sensible option.
The right elder law attorney can help you choose and set up the necessary trusts and accounts to keep your family on the right track. At Miller Law Firm, we know the ins and outs of estate planning for all types of families. Contact us today to get the right plan for your future.
