Estate planning looks different to everyone. While the collective process is important, an experienced estate planning attorney will be able to discern what’s not needed as easily as what should be included. For some a supplemental needs trust, or special needs trust, as it’s sometimes referred to, plays an important role for those with family members who have long term needs or who are disabled. This legal document is sometimes part of a client’s last will and testament; other times, it’s treated as a confined event or need outside of estate planning. Only in the past two decades have they been recognized by Congress, though they’ve been used for many years. These trusts enable a person with a mental or physical disability, or with someone with a chronic illness, to have resources protected for his or her current and future care. In most instances, when they’re properly prepared, these resources aren’t considered assets for the purpose of qualifying for any type of government assistance. This is one reason why a qualified estate planning or Medicaid attorney is so important. Special needs trusts can include – though they’re not limited to:
- Supplemental Security Income, or SSI
- Medicaid
- Housing subsidies, and more
In order to qualify for a supplemental or special needs trust, the person must be deemed impoverished. This happens provided his personal assets do not exceed $2,000. It’s important to understand that the assets in the trust do not apply to the $2,000 limit. The trust is designed to cover those needs that any government subsidies do not provide. Many assume these trusts are designed to cover only the necessities; in fact, they’re used to better the lives of those who rely on them. The assets can be used for travel, dinners, movies and much more.
There are Medicaid rules that say these trusts can be used for very narrow purposes, it’s important each person understands what that means. There are no restrictions for those wishing to modify their home or buy a home with easier access for things such as wheelchairs. The trusts certainly cover those expenses. Similarly, there are certain “food purchases” that are not allowed; however, dinner parties, vacations and entertainments are permitted. As mentioned, these have been recognized by Congress for just twenty years.
When Congress put the law into place, it did so through an exception for Omnibus Budget and Reconciliation Act, or OBRA. Through this avenue, the approved use of these trusts widened to include anyone – even those under the age of 65. It’s also important to note that Supplemental Needs Trusts, even if they’re part of an estate plan, are distanced via its own Federal Identification Number (Employer Identification Number) issued by the IRS. That FIN can be either the beneficiary or grantor’s social security number. They’re designed to be irrevocable, which is yet one more reason why an attorney is strongly recommended. Amendments to the trust are sometimes allowed, but it depends on each case, state laws and any changes to federal laws. To learn more about these important trusts, contact our office. We’ll explain their uses, any potential “roadblocks” and will answer all of your questions.
Ellen LaPlante
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