Anyone who has a disability or has a family member, particularly a child, with a disability should know about Special Needs Trusts. These Trusts, which are sometimes referred to as Supplemental Needs Trusts or Supplemental Care Trusts, provide a disabled individual and his/her family members with a way to receive money without risking the loss of important needs-based government benefits. The most common needs-based government benefit that disabled individuals rely on is health insurance.
Disabled individuals often have extraordinary medical expenses. Frequently, disabled individuals rely on Medicaid (or other related waiver programs) to help pay for these expenses. Medicaid is a needs-based program of health insurance. If the assets that the disabled individual owns or gains access to are greater than a certain amount, the disabled individual could suffer the catastrophic loss of his or her health insurance.
A common situation we see at our office is when a disabled child, who receives Medicaid to cover medical expenses, obtains a personal injury settlement. If the amount of the settlement places the disabled child in a situation where the child has too much money to still qualify for health insurance (oftentimes this amount can be as low as $2,000.00), then the disabled child may lose his or her health insurance.
To avoid this disastrous situation and to best protect the well-being of the child and his/her future, a Special Needs Trust is available as a helpful option. By consulting with an attorney who practices in the area of special needs planning, a family can have a Special Needs Trust created to take ownership of settlement funds. If the trust is drafted according to law and is administered correctly, the money from the settlement can then be used for the benefit of the child while still allowing the child to receive health insurance benefits. A “Trustee” must be named in the Trust to manage the assets, which can be virtually anyone other than the disabled individual. The disabled individual’s parent(s) are of ten the most appropriate Trustees.
Special Needs Trusts are also valuable options in the Estate Planning context. Sometimes parents of a disabled individual would like to leave assets for the continuing care and maintenance of their child. This typeof Special Needs Trust, often called a Third-Party Special Needs Trust, allows parents, relatives, or friends who wish to provide for a disabled individual with a way to do so in their estate planning without jeopardizing the disabled individual’s health insurance coverage.
These are only a few of the many situations in whichSpecial NeedsTrusts are a valuable tool for disabled individuals.If you, a family member, or a friend are disabled and rely on government programs to help cover medical expenses, it is very important to consult an attorney before the disabled individual receives assets above the amount allowed by law. With proper planning, important benefits can be protected. Please call the Clark, Cornett and Smith at (859) 219-1280 to protect your rights and those of your family members with disabilities.
