Many families are blessed with a child (or adult) who happens to have a disability. There is obviously some concern regarding that loved one’s care and standard of living once a parent or other caregiver is no longer able to provide for them.
SSI and Medicaid
Supplemental Security Income (SSI) and Medicaid can help, but they are limited and require the disabled person to have very depressed levels of assets and income to qualify. One tool which can work in tandem with Medicaid benefits and provide substantial increases in a person’s standard of living is the Special Needs Trust (SNT).
The Different Special Needs Trusts
The purpose of an SNT is to provide funds to pay for additional things without disqualifying an individual from receiving government benefits. An SNT can be created either with money owned by the person with disabilities (this is known as a “self-settled SNT”), or with money given by family members or friends (known as a “third-party SNT”). The biggest difference between the two types of trusts is that any money left over in the self-settled SNT after the death of the beneficiary must be paid to reimburse Medicaid for its services, while funds in a third-party SNT can be left to other family members.
SNT Rules to Follow
SNTs have to be created and funded for a person with a recognized disability under the age of 65. The trusts are subject to some strict rules regarding distributions, which cannot be used to provide for food, housing, or Medical care that would normally be provided by Medicaid. Breaking those rules could cause your loved one to lose his benefits. But done correctly, many distributions can be made to provide comforts and perks not otherwise available to your loved one.