Should You Consider a Special Needs Trust for Your Loved One?
If you have a family member or loved one with a disability, you understand how difficult it can be to get by as a person with special physical or developmental needs. Public benefits are often insufficient to cover living expenses, but additional assistance aside from those benefits could make that person ineligible to receive necessary government help. In these situations, many Alabama families have turned to experienced trust and estate attorneys for help creating a first-party supplemental needs trust or third-party special needs trust.
An individual who is unable to work due to a disability may be eligible to receive Supplemental Security Income (SSI) and Medicare. However, both these benefits are generally available only to those who have $2,000 or less in assets available to them. Since SSI payments tend to be a very modest amount of money, it can be difficult to survive on that amount alone, but taking large sums of money from family members could disqualify that individual from receiving necessary medical care. This is where a special needs trust can prove useful, either in the form of a first-party supplemental needs trust, or a third-party special needs trust.
First-party supplemental needs trust
A first-party supplemental needs trust can be created by the parent, grandparent, or legal guardian of a person with a disability, and is funded with the disabled person’s own money. These funds can be used to pay for needs that aren’t provided for by Medicaid or SSI, including the costs of a home, or medical or rehabilitation costs that go beyond Medicare’s provisions. These trusts are irrevocable, and if there are any funds remaining in the trust at the time of the trust beneficiary’s death, those funds will be paid to the government as reimbursement for benefits received by the beneficiary during their lifetime.
Third-party special needs trust
Third-party special needs trusts, on the other hand, are set up and funded by someone other than the person with a disability. These trusts can also provide necessary funds for recipients of government benefits for a broad array of living expenses, including the costs of having a car, medical care not covered by Medicaid, home wares, and even vacations. A trust can be an excellent way to support your loved one and know that a trustee of your choosing is managing your family member’s money, ensuring that they are not spending it irresponsibly. Speak with an attorney today to determine if a special needs trust or supplemental needs trust could work for your family.