If you wanted to leave an inheritance to a loved one who is suffering from a mental or physical disability there is an inherent challenge involved, especially if this individual is receiving long-term nursing care that is paid for by Medicaid. Medicaid is a government welfare program that is designed to pay the health care expenses of those who do not have adequate financial resources to meet their medical needs.
The cost of long-term care being what it is (in 2010 the national average for a year in a private room in a nursing home was over $83,000) it can be difficult for many people to lose that entitlement because they received an inheritance. The law states that a recipient must have assets of less than $2,000 to receive Medicaid.
One way that you could provide for a family member who is disabled and receiving Medicaid is through the creation of a third party supplemental needs trust. You fund the trust and appoint a trustee, and the choice of trustee is very important because this individual or entity will have to be very careful about following the letter of the trust agreement stipulations so as not to violate Medicaid regulations.
The trust can provide for the supplemental needs of the beneficiary but he she may not have direct access to the trust or place any personal assets into the trust without losing Medicaid benefits. The third-party grantor has a right to revoke the trust, and the trust agreement can stipulate exactly the type of supplemental needs that the trustee is empowered to finance. The trust agreement can contain a secondary beneficiary who would assume ownership of any remainder funds upon the death of the primary beneficiary.
A special needs trust can also be created with funds that belong to a disabled individual who is less than 65 years of age by his or her parent, grandparent, guardian, or by court order and the person can still receive Medicaid benefits. However the state must be reimbursed by the trust for the amount of the Medicaid benefits paid out in this person’s behalf after his or her death.
- Joint Tenancy Pros and Cons - May 9, 2020
- Whom Do You Want to Get Your Assets? - May 8, 2020
- Planning for theSECURE Act - May 7, 2020
