Yes, an irrevocable trust can be a profoundly beneficial tool for supporting a disabled child, often utilized through what’s known as a Special Needs Trust (SNT). These trusts are specifically designed to hold assets for the benefit of a person with disabilities without disqualifying them from crucial government assistance programs like Supplemental Security Income (SSI) and Medicaid. Approximately 1 in 4 Americans live with a disability, and maintaining access to these vital programs is paramount for their well-being; an improperly structured trust could jeopardize those benefits. The key lies in structuring the trust so that the disabled beneficiary does not have direct control over the assets and the funds are used to *supplement*, not replace, government aid.
What are the different types of Special Needs Trusts?
There are two primary types of SNTs: first-party or self-settled trusts, and third-party trusts. A first-party SNT is funded with the disabled individual’s *own* assets—perhaps from a personal injury settlement or inheritance received directly—and is subject to Medicaid payback provisions upon the beneficiary’s death. Around 61 million adults in the United States live with a disability, and many may receive settlements or inheritances that require careful planning. Third-party SNTs, funded with assets from someone *other* than the beneficiary – like parents or grandparents – generally do not have this payback requirement, allowing the remaining assets to pass to other designated beneficiaries. This distinction is critical and hinges on the source of the funds.
How does an irrevocable trust protect government benefits?
SSI and Medicaid have strict income and asset limits. If a disabled individual directly receives funds or owns assets above those limits, they risk losing their benefits. An irrevocable trust, however, is considered a separate legal entity. Assets held within the trust do *not* count towards the beneficiary’s individual resource limits, safeguarding their eligibility. Imagine a scenario: Old Man Tiberius, a gruff but loving father, accumulated a small fortune during his years as a shipbuilder. He wanted to ensure his daughter, Elsie, who had cerebral palsy, would be cared for long after he was gone. He initially tried to gift her funds directly, but quickly learned this would disqualify her from Medicaid.
What happened when things went wrong for the Andersons?
The Andersons, a well-meaning couple, attempted to set up a trust for their son, Leo, who has Down syndrome, using a generic template they found online. They believed they were providing for his future, but the trust language was vague and didn’t clearly define permissible expenses. After Mr. Anderson’s passing, the trustee, unfamiliar with SNT regulations, began using trust funds to pay for Leo’s rent and groceries, inadvertently causing him to be deemed ineligible for SSI. This resulted in a significant reduction in his care and a frantic scramble to correct the error, costing them considerable time and legal fees. They had not anticipated the intricate rules governing SNTs and the importance of precise language.
How did the Millers get it right with proper planning?
The Millers, recognizing the complexities, consulted with Steve Bliss, an experienced estate planning attorney specializing in SNTs. Steve carefully crafted a third-party SNT that outlined specific permissible expenses – recreational activities, specialized therapies, travel, and non-covered medical expenses – ensuring Leo remained eligible for SSI and Medicaid. The trust also included a provision for a successor trustee to manage the funds after the original trustee’s passing. This proactive approach not only secured Leo’s financial future but also provided the Millers with peace of mind, knowing he would continue to receive the care he deserved. They’d learned from the Andersons’ mistake and prioritized professional guidance. “It’s not just about the money,” Steve often says, “it’s about protecting their dignity and ensuring they have the resources to live a full and meaningful life.”
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About Steve Bliss at Escondido Probate Law:
Escondido Probate Law is an experienced probate attorney. The probate process has many steps in in probate proceedings. Beside Probate, estate planning and trust administration is offered at Escondido Probate Law. Our probate attorney will probate the estate. Attorney probate at Escondido Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Escondido Probate law will petition to open probate for you. Don’t go through a costly probate call Escondido Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Escondido Probate Law is a great estate lawyer. Affordable Legal Services.
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Estate Planning Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
● Compassionate & client-focused. We explain things clearly.
● Free consultation.
Services Offered:
- living trust
- revocable living trust
- irrevocable trust
- family trust
- wills and trusts
- wills
- estate planning
Map To Steve Bliss Law in Temecula:
https://maps.app.goo.gl/oKQi5hQwZ26gkzpe9
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Address:
Escondido Probate Law720 N Broadway #107, Escondido, CA 92025
(760)884-4044
Feel free to ask Attorney Steve Bliss about: “Are handwritten wills legally valid?” Or “How does the probate process work?” or “What is the difference between a revocable and irrevocable living trust? and even: “What happens to my retirement accounts if I file for bankruptcy?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.