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Estate Planning and Family Members with Disabilities


The purpose of estate planning is generally two-fold: one, to bring clarity to the distribution of one’s estate after death, and two, to safeguard the financial security of one’s family for as long as possible. This often entails determining if some family members will need more support due to unique issues, and a family member with a disability is certainly one situation in which special consideration should be given to how they will be cared for and financially supported once others are gone. One of the main concerns that an experienced estate planning attorney will address is how to leave the disabled individual financially secure without jeopardizing the government assistance most need to pay for necessities and obtain the medical care they need to manage their condition. Most of these programs are based upon need and have strict income and asset requirements that must be met at all times to retain benefits. Thus, making an outright gift to a disabled family member through an inheritance has a legitimate possibility of disqualifying them for the benefits he/she needs. Making arrangements for a disabled family member as part of an estate plan is one of those complicated situations that calls for the advice and guidance of an estate planning attorney to ensure one’s wishes and intentions are followed without triggering negative consequences for the recipient.

Special Needs Trust Generally

By far, the most common arrangement used to pass money and other assets to a disabled family member is a special needs trust. This type of trust places all the assets available for the disabled individual’s needs into the name of the trust, putting it out of the direct control of the disabled individual. Thus, these assets would not be considered for purposes of qualifying for government benefits, and thus, would not threaten his/her SSI or Medicaid support. The resources in the special needs trust are there to provide a reasonable standard living and non-essential comforts that would not be available on government benefits alone. A special needs trust can be established as either first- or third- party trusts.

First- and Third- Party Special Needs Trusts

Third party trusts are established by family members for the benefit of disabled relatives and are funded solely by others. They may be created as a testamentary trust and go into effect upon the death of the person creating and funding it, or they can be created during the creator’s lifetime and funded once or periodically. This arrangement should be planned for and executed sooner rather than later. There is no way to predict what life holds, and waiting until later in life to establish an estate plan could put the disabled relative at risk if something unexpected happens.

The other option is a first-party special needs trust, and this arrangement is funded directly by the disabled beneficiary, usually following a gift, inheritance, or accident/medical malpractice settlements. However, while these trusts will not disqualify a disabled individual from government benefits, they are subject to Medicaid liens by the state and will be seized to pay back monies the state paid for his/her medical care. Consequently, the better option, if available, is for a family member to establish a trust, as this is not subject to state liens, and any remaining assets left after the death of the disabled relative can be passed onto others for their benefit.

Get Help Today

Providing for your disabled spouse, child, or other loved one is a serious situation that should be addressed as soon as possible. The expenses associated with living with a disability are very high and all the support they can get is crucial. Clearwater estate planning attorney William Rambaum has decades of experience helping clients in Florida put together estate plans that protect their families in the long-term. Learn how this Oldsmar estate planning firm can help you by calling for an appointment today.


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