Medicaid and Supplemental Security Income (SSI) are need-based government programs. Medicaid is a health insurance program, and SSI is a program that provides limited income to qualified applicants. Many people with disabilities qualify for both Medicaid and Supplemental Security Income.

Depending on the disability, care and treatment can cost millions of dollars over the course of a lifetime. Clearly, these benefits are extremely important to many individuals with special needs.

Because of the fact that these are need-based programs, you must be very careful if you want to leave an inheritance to someone who is relying on Medicaid and Supplemental Security Income.

Eligibility is not necessarily permanent. A person with a disability may be deemed eligible at one point in time based on his or her financial profile. However, if his or her financial situation was to improve considerably, benefit eligibility could be lost.

Special Needs Trusts

There is an estate planning solution that applies to this type of situation. There is a type of trust called a special needs or supplemental needs trust. These trusts are carefully constructed in light of Medicaid and SSI guidelines.

They allow the trustee to use resources that have been conveyed into the trust to improve the quality of life of the beneficiary without impacting his or her government benefit eligibility.

The beneficiary does not directly control the actions of the trust. Because the government benefits don’t pay for every conceivable need, the trustee can use the trust’s resources to satisfy the supplemental needs of the beneficiary.

Assumptions Can Yield Negative Consequences

You should definitely do your homework when you are planning your estate. If you do not consider the life situation of each person on your inheritance list, you could ultimately wind up doing more harm than good.

Let’s say that you decide that you would like to leaves an inheritance to someone with a disability. You are a do-it-yourself enthusiast, and you download a generic last will document off the Internet. You leave this family member a generous direct inheritance in this DIY will.

The person in question may receive an inheritance, but he or she may lose access to much-needed government benefits as a result.

There are things that you can do effectively on your own without professional assistance, but you have to know where to draw the line.

Special Needs Planning Consultation

You should certainly discuss your intentions with a licensed estate planning attorney if you want to leave an inheritance to a person with special needs who is relying on Medicaid and Supplemental Security Income.

We offer free consultations to people here in the Quad Cities area. If you would like to set up an appointment, contact us through this website or call us at (563) 445-7400.

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Ryan M. Denman and Dennis D. Duffy

Duffy Law Office, PLLC