Estate Planning for Beneficiaries with Disabilities

If you plan to leave part or all of your estate to someone with disabilities, it’s important to consult with an experienced estate planning attorney. People with disabilities or special needs often have specific financial concerns, such as Medicaid eligibility. James Bart Leonardi, LLC can help you make provisions that will distribute your assets in the most beneficial way possible.

Special estate planning considerations for beneficiaries with disabilities

Many people with disabilities rely on government benefits to pay for their medical care and/or make up for their inability to earn income. Medicaid, for example, has an income and asset threshold. To receive benefits, the recipient must stay under that threshold. Therefore, leaving them a large lump sum of money or a valuable asset could jeopardize their ability to collect benefits.

Furthermore, Medicaid is required to seek reimbursement from the recipient’s estate after they die. Because Medicaid is needs-based, they are entitled to reimbursement when there is more than $2,000 in assets. If you directly bequeath assets to your beneficiary, Medicaid could be entitled to take them after your beneficiary passes.

Special needs trusts for beneficiaries with disabilities

Fortunately, special needs trusts can solve these problems. When an asset is held in trust, the beneficiary does not have direct access to it, nor is it in their name. Therefore, it is not part of the beneficiary’s estate. You can make provisions to distribute the funds in a manner which does not affect Medicaid eligibility.

Special needs trusts require assets to fund the trust, and a trustee to perform administrative duties. The trustee is in charge of doling out funds for approved uses, including additional medical and dental expenses, living expenses, mobility devices, educational expenses, household furniture or goods and more. This allows the beneficiary a better standard of living, while ensuring that they are still eligible to receive government benefits.

While you can name yourself the trustee, if it’s part of your estate plan, you won’t be around to administer the trust. Choose someone else who is trustworthy, capable and willing to perform their duties. If you don’t know anyone appropriate, our firm performs trust administration duties.

Taking the time to create a special needs trust pays off in the long run. Your loved one can continue receiving necessary benefits, and you’ll rest assured your assets are distributed the way you prefer. For assistance with your special needs trust and estate plan, contact James Bart Leonardi, LLC today.

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