You may plan on using Medicaid or other public assistance benefits to pay for your care needs during your senior years. However, these benefits are generally only available to those with a low income and few assets. Does this mean you have to impoverish yourself in order to qualify for public assistance benefits? Not necessarily. A special needs trust can be used to protect your assets and preserve your eligibility for benefits.
What is a special needs trust?
A special needs trust is a legal arrangement that establishes a fiduciary relationship wherein a disabled or chronically ill person can receive income from the trust without affecting their eligibility for public assistance benefits. The funds placed in a special needs trust do not count towards the qualification of public benefits.
How do special needs trusts work?
When a person places assets in a special needs trust, they are granted a percentage of the income derived from the trust to pay for medical expenses, in-home care, transportation expenses and other certain expenses. When you create a special needs trust you designate a person to serve as trustee. The trustee has control over the trust and manages the disbursement of trust funds. The disabled individual’s assets may be subject to Medicaid’s repayment rules, but assets placed in the trust by a third party are not. Special needs trusts are irrevocable. This means that funds in them cannot be accessed by creditors or those who prevail in a lawsuit against the disabled individual.
Learn more about elder law
Special needs trusts can be a valuable part of your estate plan, especially if you plan on relying on government benefits during your senior years. However, a special needs trust is a complicated legal document that should be executed by a professional. Our firm’s elder law webpage may be a useful resource for those considering a special needs trust.