TANNER PITTMAN, LLC
 |
 |
 |
 |
 |
 |
 |
| TANNER PITTMAN, LLC |
ESTATE PLANNING FOR SPECIAL-NEEDS DEPENDENTS
My client loved her child with severe Down’s Syndrome, so she left him nothing in her will.
Public benefits for the handicapped.
Understanding of the law of public benefits means knowing the above was the most loving
thing my client could have done. To see why, we must first understand that there are two kinds
of severely handicapped individuals who don’t have to worry about their living expenses: the
independently wealthy and the destitute. The former, of course, will have enough money to pay
for a lifetime of medical treatments even if they are uninsurable (and most are) plus living
expenses. The latter, on the other hand, qualify for Medicaid (and perhaps supplemental
security income).
Where does this leave the majority of special-needs individuals – those who are neither rich
nor dirt-poor? Because such individuals are both (1) uninsurable in most cases and (2)
unlikely to become wealthy, it leaves them with an incentive to try to qualify for public benefits.
But all such benefits are means-tested. Medicaid, for example, is only available to those with
assets of $2,000 or less.
The problem.
Leaving money in a will or other transfer-on-death instrument to a special-needs individual will
disqualify him or her from most public benefits. It will do so until such time as the inheritance is
spent, which it tragically usually is – on medical expenses. Given the fact that Medicaid would
have paid these expenses had the person never inherited, it is easy to see why leaving a large
inheritance to a special-needs person is operationally no different from willing your money to
the State of Georgia.
A solution.
Enter the special-needs trust, often referred to as a “Medicaid trust.” A well trained estate
planner can draft a testamentary trust that does two things. First, it technically leaves no money
to the special needs beneficiary. This way, he or she will not be disqualified from public
assistance for medical needs and certain living expenses. Second, the trust grants to a trustee
(usually a professional fiduciary skilled in handling such a trust) the discretion to use the funds
for the benefit of the special-needs individual.
Benefits.
Funds in a special needs trust can be used for a wide array of the beneficiary’s needs, which
may go to enhance his lifestyle in ways a mere testamentary gift would not. While SSI and
Medicaid take care of basic needs such as food, clothing, shelter, and medical care, trust funds
can be used for, among other things, private schooling, recreation, ball games, camping trips,
rehabilitation assistance, or behavioral coaching to relate better to others. Though it cannot
match the care of the deceased parent-provider, a special needs trust can ensure a quality of
life for its beneficiary long after that provider’s death.
Application.
You do your clients a disservice if you are aware they have special-needs dependents and do
not refer them to an attorney who can help them plan. Up-front costs of a special needs trust
are not great when your client considers that an entire inheritance could vanish if planning is
not done.
My client loved her child with severe Down’s Syndrome, so she left him nothing in her will.
Public benefits for the handicapped.
Understanding of the law of public benefits means knowing the above was the most loving
thing my client could have done. To see why, we must first understand that there are two kinds
of severely handicapped individuals who don’t have to worry about their living expenses: the
independently wealthy and the destitute. The former, of course, will have enough money to pay
for a lifetime of medical treatments even if they are uninsurable (and most are) plus living
expenses. The latter, on the other hand, qualify for Medicaid (and perhaps supplemental
security income).
Where does this leave the majority of special-needs individuals – those who are neither rich
nor dirt-poor? Because such individuals are both (1) uninsurable in most cases and (2)
unlikely to become wealthy, it leaves them with an incentive to try to qualify for public benefits.
But all such benefits are means-tested. Medicaid, for example, is only available to those with
assets of $2,000 or less.
The problem.
Leaving money in a will or other transfer-on-death instrument to a special-needs individual will
disqualify him or her from most public benefits. It will do so until such time as the inheritance is
spent, which it tragically usually is – on medical expenses. Given the fact that Medicaid would
have paid these expenses had the person never inherited, it is easy to see why leaving a large
inheritance to a special-needs person is operationally no different from willing your money to
the State of Georgia.
A solution.
Enter the special-needs trust, often referred to as a “Medicaid trust.” A well trained estate
planner can draft a testamentary trust that does two things. First, it technically leaves no money
to the special needs beneficiary. This way, he or she will not be disqualified from public
assistance for medical needs and certain living expenses. Second, the trust grants to a trustee
(usually a professional fiduciary skilled in handling such a trust) the discretion to use the funds
for the benefit of the special-needs individual.
Benefits.
Funds in a special needs trust can be used for a wide array of the beneficiary’s needs, which
may go to enhance his lifestyle in ways a mere testamentary gift would not. While SSI and
Medicaid take care of basic needs such as food, clothing, shelter, and medical care, trust funds
can be used for, among other things, private schooling, recreation, ball games, camping trips,
rehabilitation assistance, or behavioral coaching to relate better to others. Though it cannot
match the care of the deceased parent-provider, a special needs trust can ensure a quality of
life for its beneficiary long after that provider’s death.
Application.
You do your clients a disservice if you are aware they have special-needs dependents and do
not refer them to an attorney who can help them plan. Up-front costs of a special needs trust
are not great when your client considers that an entire inheritance could vanish if planning is
not done.