58 million Americans are at least five years of age or older and have some type of disability or special need. These Americans are the largest single minority in the country. Most public benefits (like Medicaid, Social Security Income (“SSI”), or food and housing assistance) available to help disabled people are needs-based, meaning income and assets are strictly limited in order to qualify. Incorrectly assessing income or assets when attempting to qualify for public benefits can result in costly delay, or a complete disqualification for the benefit.
One Common Mistake People Make is Disinheriting a Relative or Loved One Who has Special Needs
Sometimes people assume that siblings or other family members will step in and take care of the disabled family member, but this I not always the case. Issues may arise when depending on a certain family member or loved one to inherit and then use the inheritance to care for an individual with special needs. Among other issues, an inheritor may get sued and the inheritance may be available to satisfy a legal judgement. Also, an inheritor may get divorced, and the inheritance may be subject to division with the former spouse. Any number of issues may arise, and the inheritance intended to be used to care for the special needs individual may not be available to fulfill that intention.
Another Common Mistake
Is not crafting an estate plan that can enable the special needs beneficiary to inherit, but still qualify for the public benefit. Regulations for certain public benefits dictate that the special needs individual has no more than $2,000 in countable assets. Typically, if a special needs loved one owns countable assets above the $2,000 threshold, the assets must be “spent down” to the threshold amount in order to qualify the individual for the public benefit. If a special needs individual is in the process of qualifying, or if the individual already receives a needs-based public benefit, receiving an inheritance may show an increase in countable assets and result in the individual being disqualified for the benefit until the countable assets are again spent down to the threshold. Even gifts to individuals receiving public benefits may result in disqualification. A properly crafted estate plan may enable the special needs individual to inherit, while still permitting them to qualify or remain qualified for the public benefit.
Another way of assisting individuals with special needs that should be approached with caution is crowdfunding, such as GoFundMe pages. Without specific planning place, the crowdfunded donations may disqualify the special needs individual from receiving the public benefits they need, or the donations can reduce the amount they may receive.
What Can be Done?
As always, planning ahead is key. There are several ways to provide for a special needs individual, but still keep them within the requirements to receive public benefits. One of the best ways is to establish a “special needs trust.” Special needs trusts, by design, supplement the public benefit by paying for things that the benefit does not cover. Therefore, the special needs individual may remain qualified for the public benefit, but still benefit from the special needs trust. Special needs trusts have very strict requirements by the government, many of which are restrictions on what the money in the trust can be used for.
Wilson+Miller PLLC can help you decide what type of planning is necessary to accomplish your goals, including protecting your special needs loved ones. Please give us a call to set up a consultation or request additional information. 501.221.7776.