If you have a child with special needs, you want to secure their future and their long-term care. It’s critical that parents do not accidentally jeopardize their children’s eligibility for government benefits such as Supplemental Security Income (SSI), Medicaid and other public assistance benefits because of an inheritance. A Special Needs Trust provides funds but also allows disabled individuals to qualify for Medicaid but still have some funds for personal use.
Parents who want to provide for the future of their special needs child need to take special care to not accidentally jeopardize their children’s eligibility for government benefits including Supplemental Security Income (SSI), Medicaid and other public assistance because of an inheritance.
Illinois State and federal laws allow three different types of special needs trusts, depending on the circumstances.
A first-party trust is funded with assets owned by the disabled individual who is the beneficiary of the trust and is only for someone under the age of 65. These assets could be from an inheritance, a personal injury lawsuit or a divorce Every state has specific guidelines for a first-party special needs trust. When the beneficiary dies, the state’s Medicaid agency must be reimbursed.
A third-party special needs trust is funded by the assets of another person, typically the parents of the beneficiary, who leave them assets in their estate plan. A third-party person, the trustee. is named to manage the funds and to support the person with special needs. Because the third-party special needs trust owns the assets, and not the child, a properly special needs trust is not liable to the beneficiary’s creditors. When the beneficiary dies, the remaining funds do not need to be reimbursed to the state.
In a pooled trust a nonprofit organization serves as the trustee. Pooled trusts are federally regulated trusts where funds are pooled for investment, but beneficiaries retain individual accounts. A pooled trust can be less expensive to establish and manage versus a first-party or third-party trust but are not as flexible. The trust will pay the state any money remaining in the trust after the death of the disabled individual, up to the amount paid on behalf of the individual under the state’s Medicaid plan.
A trust and estates lawyer in Lombard can assist you to create the right special needs trust for your situation, and protect your family member now and in the future.
Learn More:
• Can I Have an ABLE Account for My Disabled Adult Child?
Do you want to protect your special needs child with a Special Needs Trust? Our experienced trust attorneys understand applicable laws and advise you on the best options to protect a disabled person. Contact the Estate & Probate Legal Group at 630-864-5835.
