If you have a child or another loved one in your family with special needs, it is paramount to take their future needs into concern when you are estate planning. Particularly if your loved one receives Supplemental Security Insurance (SSI) from the Social Security Administration, improper management of your estate can result in your loved one losing precious Medicaid benefits.
The remedy is a special needs trust. With a special needs trust, you can ensure your loved one has necessary funds after your death without putting their SSI benefits at risk.
What does SSI have to do with it?
Unlike disability benefits, SSI is not an entitlement program. This program is for individuals who have spent the majority or their entire lives too disabled to work. As a result, SSI benefits tend to be very skeletal in terms of monetary amount, but it does provide access to Medicaid. These Medicaid benefits are often very critical for the person in question.
If an individual receives too much money from any Source, including and inheritance, that individual may become ineligible for SSI. They will not only lose the money, but also the Medicaid benefits.
How does a special needs trust help?
Funds in a special needs trust become exempt from SSI calculations. Many people liken a special needs trust to a “parent’s pocket.” Generally, the funds in a special needs trust are for recreation, counseling, education and additional medical attention.
However, the rules attached to special needs trusts are often very complex. This is why working with a financial planner to ensure that your estate planning meets the government’s requirements for SSI exemption is very important.