02/27/2023
Special Needs Planning
I recently consulted with an individual that was a beneficiary of their parents' trust and was about to receive a significant inheritance. Under most circumstances, most people would be happy to learn that their parents left them an inheritance. However, in this particular case, the beneficiary was receiving disability payments and enrolled in a Medicaid program, both of which were essential benefits that the person needed to maintain independence.
In these circumstances, there are tools available that would allow the beneficiary to receive the inheritance, but to hold them in a separate trust known as a "special needs trust", however, under these circumstances, there would be a good likelihood that upon their death the funds remaining in the trust would be paid to any state(s) that provided Medicaid services to the individual, instead of their descendants. Furthermore, the use of the money held in the trust would be very limited and would have to be controlled by someone other than the beneficiary throughout their lifetime.
Had the person's parents taken their child's disability into account during the planning process, there would have been more tools available to provide for the beneficiary and avoid a clawback from the state(s) that provided Medicaid services.
Oftentimes we overlook important factors in planning and just assume that our goals and intentions are simple and will be carried out. However, the reality is even simple plans can have complications and a failure to address these issues can have devastating effects on the loved ones we are trying to provide for.
If you or anyone you know has questions about preparing an estate plan, or even having an existing estate plan reviewed and explained, we encourage you to give the Law Office of Anthony L. Perez, PLLC a call at (480) 500-6990 to schedule a free consultation.
