Estate Planning For Those Receiving Government Assistance

Estate planning for those who have family members already receiving government help is complicated. Beneficiaries who are receiving government support are typically comprised of people with disabilities or special needs.  

An appropriate estate plan can save a family member from losing crucial government benefits. In the case of having a family member who has a disability, he or she may lose benefits, pay more for rehabilitative services, or get funds or property but later on be declared legally incapacitated.

If your relative or family member cannot handle finances and he or she is at risk of losing these benefits, then you need to consider specialized estate planning.

An estate plan can be changed anytime as long as it is not an irrevocable trust. At times, you may want to revisit and modify your estate plan if your lawyer has heard of some changes in the law that can be helpful to you and to your family member who is receiving a government assistance.

Inasmuch as parents may want to create an estate plan to ensure that their child  with disability or special needs receiving government assistance-- they may have difficulty finding a way to provide the support for them without losing their government funding. To solve this problem, we have a few options.

Option 1

First, the parents may simply not inherit the child with special needs or disability with anything. Without any potential income that can help fund the child's needs, it will not jeopardize his or her eligibility to continue receiving government support after the parents' death. However, as parents, they would feel that are leaving nothing to provide resources for their child who needs it most.

Option 2

The second option is, to provide more to other siblings who are more capable and responsible enough to provide his or her government-supported sibling the help that they need. However, without a specific writing for this, it may end in failure because we never know what happens next. The designated sibling may change their priorities as time passes; when he or she gets married and has a family of their own, things might change rendering him or her unable to provide what is due to his or her sibling.

Option 3

The third option would be to create a Supplemental Needs Trust to legally establish the benefits for the person with special needs or disability or someone who is already receiving government financial assistance. You will likely need a trust or special needs lawyer for a matter like this. Once the trust has been created, any third party is allowed to contribute assets for the benefit of the individual. Since the funds are not directly set for the beneficiary, the individual keeps his or her eligibility for Medicaid, SSI and other government support.

The Supplemental Needs Trust is a reserve account where the trustees can use the funds to pay for their other needs beyond their shelter and food. It will ensure proper money management for the one who is unable to manage the finances by themselves.

There are many things to discuss here and it is best to always consult an elder law attorney for matters like this as this article shouldn't serve as the ultimate basis of your decision.