If you find yourself asking this question, that probably means your family is dealing with some bad news and some good news. Unfortunately, someone in your family will need special care. On the other hand, you may have some ability to pay for that care. A special needs trust is a way to provide care without harming eligibility for assistance.
Bad News – Money Required for Special Needs
It is somewhat obvious from the name, but a special needs trust is intended to help pay for somebody’s special needs. The beneficiary of a special needs trust is often an individual with physical or mental disabilities. The special needs will often limit or eliminate the individual’s ability to earn a living. In many cases, the special needs also create a lifetime of needed assistance.
The costs can be astronomical. The Christopher Reeve Foundation, for example, estimated that a severely paralyzed 25-year-old person will face lifetime costs of $4,724,181. A study found that Down syndrome costs an average of $4,287 per year. Assisted living facilities for Alzheimer’s care can cost $48,000 per year. Luckily, the government does help.
The reality of living in America is that many of our government programs are based on needs. Medicare is the most important benefit for many disabled people. It covers many types of medical care largely regardless of finances. Medicaid, on the other hand, comes with financial guidelines and is the primary source for many long-term support services. This includes everything from nursing home care to medical devices like wheelchairs and lifts. Federal Social Security disability benefits can also provide cash support, but it comes with income limits as well.
Good News – Assets Can Be Structured to Protect Benefits
Because of the way Medicaid and Social Security are structured, it can be self-defeating, and even financially devastating to simply give money to a disabled person. In fact, it is so self-defeating, that you should not give money directly to a disabled person without first consulting a qualified attorney.
Your kind support can be negated by the loss of government benefits that are a necessary lifeline. A trust holds these assets for a disabled person’s benefit without triggering income limits.
A trust is a three-part relationship. One person creates a trust, another person manages the trust, and a third person benefits from the trust. Assets in the trust are essentially suspended between the three people. No individual owns the trust assets. The trust is like a corporation or a charity. The assets are managed by the trustee, and the benefits all flow to the trust beneficiary. A trust also has the benefit of living on indefinitely, so it can be a way to provide for someone after you are gone.
Protect Your Family’s Future with a Trust Expert
Idaho Legal Estates and Probate provides affordable services with deep expertise in trust issues. A trust to care for a challenged family member is not something to leave with a lawyer that only occasionally works on this type of issue. Jesse Thomas has been focused on trust, estate, and probate issues and you can call his office anytime for a free consultation.