Navigating the complexities of government assistance programs like Medicaid while ensuring the long-term care and financial security of a loved one with special needs can feel overwhelming; a properly structured special needs trust is often the key to achieving both goals. These trusts, also known as Supplemental Needs Trusts (SNTs), are specifically designed to hold assets for the benefit of an individual with disabilities without disqualifying them from crucial needs-based public benefits, including Medicaid and Supplemental Security Income (SSI). Without such a trust, an inheritance or other assets could render a person ineligible for these vital programs, leaving families scrambling to provide support. Approximately 1 in 4 Americans live with a disability, highlighting the importance of understanding these protective measures; a well-crafted SNT allows individuals to maintain access to necessary government assistance while also enjoying assets that can enhance their quality of life.
What happens if I leave assets directly to my disabled child?
Direct inheritance can create significant problems; if an individual with a disability receives an inheritance of more than $2,000 in countable assets, they risk losing their Medicaid and SSI eligibility. This is because these programs have strict asset limits designed for those with limited financial resources. Consider the story of old Mr. Abernathy, a kind man whose son, Thomas, had Down syndrome; upon Mr. Abernathy’s passing, Thomas directly inherited $75,000. This instantly disqualified him from Medicaid, forcing his daughter, Sarah, to bear the full financial burden of his care, which included expensive therapies and specialized medical equipment. Sarah, already juggling a full-time job and raising her own children, found herself stretched incredibly thin, illustrating the devastating consequences of failing to plan appropriately. “It’s not about the money,” Sarah confided to Steve Bliss, “it’s about ensuring Thomas has the care he needs without sacrificing his independence.”
How does a special needs trust actually work?
A special needs trust operates by holding assets for the benefit of the individual with disabilities without those assets being considered “available” to them for the purposes of Medicaid and SSI eligibility. The trust document outlines how and when the trustee can use the funds to supplement, *not replace*, the government benefits the beneficiary receives. These supplemental funds can cover expenses like specialized therapies, recreation, travel, educational opportunities, and personal care items that aren’t covered by public assistance. According to the National Disability Rights Network, approximately 6.5 million individuals with disabilities rely on SSI, making the protection of these benefits paramount. A trustee—who can be a family member, friend, or professional—is legally obligated to manage the trust assets prudently and in accordance with the beneficiary’s best interests and the terms of the trust. The key is the trustee doesn’t simply hand money over, they *pay for things* on the beneficiary’s behalf.
What types of special needs trusts are available?
There are primarily two types of special needs trusts: first-party (or self-settled) and third-party. A first-party trust is funded with the beneficiary’s own assets—often from a settlement or inheritance received *after* the onset of disability. These trusts require Medicaid payback provisions, meaning any remaining funds in the trust upon the beneficiary’s death must be used to reimburse Medicaid for benefits paid during their lifetime. Third-party trusts, on the other hand, are funded with assets belonging to someone *other* than the beneficiary—like a parent or grandparent. These trusts do *not* have Medicaid payback requirements, allowing the remaining funds to pass to other designated beneficiaries. As Steve Bliss often explains, “Choosing the right type of trust depends entirely on the source of the funds and your long-term estate planning goals.” It’s critical to consult with an experienced estate planning attorney to determine the best approach.
How did planning with a trust turn things around for the Wilson family?
The Wilson family faced a similar challenge as Mr. Abernathy, but they took proactive steps; their son, David, had cerebral palsy, and they wanted to ensure his financial security without jeopardizing his Medicaid benefits. They worked with Steve Bliss to create a third-party special needs trust, funding it with a portion of their estate. Years later, after the passing of both parents, the trust funds allowed David to pursue his passion for art therapy, providing him with specialized equipment and lessons that enhanced his quality of life. Unlike Mr. Abernathy’s situation, David’s Medicaid eligibility remained intact, relieving his sister, Emily, of the overwhelming financial burden of his care. Emily shared, “Knowing that David’s future is secure and that he can pursue his dreams is a tremendous weight off our shoulders. Steve’s guidance was invaluable.” This illustrates how careful estate planning with a special needs trust can not only protect assets but also empower individuals with disabilities to live fulfilling lives.”
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About Steve Bliss at Wildomar Probate Law:
“Wildomar 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 Wildomar Probate Law. Our probate attorney will probate the estate. Attorney probate at Wildomar Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Wildomar Probate law will petition to open probate for you. Don’t go through a costly probate call Wildomar Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Wildomar Probate Law is a great estate lawyer. Probate Attorney to probate an estate. Wildomar Probate law probate lawyer
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:
estate planning
living trust
revocable living trust
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Map To Steve Bliss Law in Temecula:
https://maps.app.goo.gl/RdhPJGDcMru5uP7K7
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Address:
Wildomar Probate Law36330 Hidden Springs Rd Suite E, Wildomar, CA 92595
(951)412-2800/address>
Feel free to ask Attorney Steve Bliss about: “How can I plan for long-term care or disability?” Or “What is an executor and what do they do during probate?” or “Can I include special instructions in my living trust? and even: “Can I transfer assets before filing for bankruptcy?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.