In Alabama, there are countless families with disabled family members – loved ones who need help leading a healthy and fulfilling life.
To provide help and support in a cost-effective manner, the state of Alabama has established the means to create a disabled persons trust. A disabled persons trust is created for the purpose of providing care for a loved one with a disability, by not only providing funds for care, but also offering additional benefits when it comes to taxes and protection for beneficiaries.
WHAT ARE THE REQUIREMENTS FOR A DISABLED PERSONS TRUST?
The first requirement for a disabled persons trust is that the beneficiary must be qualified as disabled. If the beneficiary receives assistance from Social Security or Medicaid to help provide for medical and living expenses, he or she qualifies for a trust.
The second requirement is that the disabled persons trust be irrevocable, meaning that the trustor never has the power to revoke or cancel the trust or remove assets placed into the trust. Income tax must also be paid on assets that are deposited into the fund. Additionally, a trustee is placed in charge of all distributions and supervision of the trust.
The third requirement is that only the beneficiary can receive benefits from the trust. In other words, the funds deposited into and accrued by the trust can only be used for the benefit of the beneficiary. In this manner, we can ensure that the beneficiary receives full benefits from his or her trust.
The fourth requirement is that payments from the trust are only used for things that government benefits will not pay (for supplemental needs).
In addition to these legal requirements, the Alabama Family Trust has criteria that must be met in order to establish a disabled persons trust account for an individual.
CAN A PERSON HAVE A DISABILITY TRUST AND STILL GET SSI OR MEDICAID?
Yes. Disabled persons trusts are designed to allow a beneficiary to receive full benefits from the government in the form of Social Security or Medicaid while also benefiting from the funds invested in the fund through the trust.
Furthermore, these benefits do not count toward the individual resource limits imposed by the Social Security Administration.
WHAT ARE THE LIMITATIONS ON A DISABILITY TRUST?
One commonly-faced limitation is that funds placed in a family-type disabled persons trust cannot be used for food or housing. Under the law, these are considered basic needs. Providing for basic needs elsewhere could reduce the amount of government benefits received by the beneficiary.
LEARN MORE ABOUT DISABILITY TRUST FUNDS
Contact Alabama Family Trust via the contact form below to learn more about special needs trust funds.