Do you have a disabled son or daughter? Does he or she rely on social security income or other government benefits? Have you planned for your child’s future?
Precautions should be taken now to ensure your child's future needs are met and government benefits are protected. This is essential if your child is eligible for public benefits, Social Security Income (SSI), or Medicaid. A person cannot have more than $2,000 in assets and limited income to remain eligible for most public benefits. What would happen if you were to die and leave your child more than $2,000. In Massachusetts, if you die without a will and are a widow or widower, all of your property is divided equally among your children. This would make your child ineligible for Medicaid and SSI. Even if you have a will, but left an outright gift to your child over the allowable amount, he or she would lose eligibility for SSI and Medicaid. Your son or daughter would have to spend this money down to the $2,000 limit before they could become eligible for benefits.
What can you do if you want to make sure that your child is provided for and receives the care that he or she needs without losing public benefits? A “Special Needs Trust” can be established. A Special Needs Trust allows you to leave or give assets during your lifetime to a disabled individual without affecting his or her eligibility for governmental benefits such as SSI, Medicaid, subsidized housing or food stamps. The assets in the Special Needs Trust can be used to meet any needs other than those paid for by the public benefits without affecting eligibility. Specifically, food and shelter expenses cannot be paid out of the Trust funds without a penalty. However, money from the Trust can be used to pay for medical care and services, social services, transportation, recreation, appliances, furniture, legal services, household maintenance, travel and personal services.
You can include in your will a provision that a share of your estate should go to the Special Needs Trust or you may establish an Irrevocable Special Needs Trust during your life for the benefit of your disabled child. Even if you have a very small estate, you can still create a Special Needs Trust by purchasing a life insurance policy which can be established to vest into the Trust upon you death.
What should you do if you do not want to create a Special Needs Trust? Another option is to disinherit the disabled child, and leave the funds to your other children with the understanding that they will provide for their disabled brother or sister. Sometimes this plan works effectively. However, the siblings are not under any legal obligation to use the money for this purpose. Also, it is difficult to predict the future. This money could be subject to your children’s creditors, divorce, business failures, lawsuits. The money that you had intended to provide for your disabled child may not be used as you had wished. Sometimes siblings feel more secure knowing that there is an established plan defining their responsibilities.
Planning for the future can be difficult to think about. However, it is extremely important, and will give you the peace of mind knowing that your loved one’s future will be secure.
Senior Solutions is an Estate Planning and Elder Law Firm in the Greater Boston area ready to help you.