It is a gift that comes with the best of intentions. A well-meaning individual, driven by love and concern, wishes to leave a substantial inheritance to a special needs child, hoping to secure their future and provide for their needs. However, this generous gesture, while heartfelt, could inadvertently jeopardize the child’s eligibility for essential government benefits, such as Medicaid or Supplemental Security Income (SSI).
These programs often have strict asset limits, and a direct inheritance might exceed these thresholds, leading to a loss of support. To avoid this unintended consequence, it is important for the benefactor to consider using legal tools to pass the gift without the headache. One option: setting up a special needs trust. This legal arrangement can manage the assets in a way that supplements the child’s benefits without disqualifying them, helping to better ensure that their financial security and access to necessary services are both preserved.
What should I know about asset limits?
Individuals with special needs often rely on programs such as Medicaid and SSI for healthcare and financial assistance. These programs impose asset limits to determine eligibility. Exceeding these limits can lead to loss of benefits, which can be detrimental to the individual’s well-being.
It is important for families to understand these limits when planning their estates. Proper planning can prevent unintended consequences that may arise from inheritance.
How can I use my estate plan to provide for an individual with special needs?
To protect access to benefits, families should consider specific estate planning strategies. These strategies can help manage assets effectively while maintaining eligibility for social services.
- Special needs trusts: As noted above, establishing a special needs trust allows the creator of the trust to have assets available for the benefit of an individual with special needs without affecting their eligibility for Medicaid or SSI. The trust can cover expenses not provided by these programs.
- Discretionary trusts: These trusts allow a loved one to fund a trust to benefit the special needs individual as well as other beneficiaries in a way that does not disqualify the special needs individual from participation in these services because it is not considered an asset of any individual beneficiary.
These are just a few estate planning strategies to consider using when putting together an estate plan to benefit an individual with special needs. The language used to create the trust matters, so it is important to seek legal counsel with experience in this niche area of estate planning to help better ensure that the trust is properly structured to comply with Ohio law and federal regulations.