Our elderly loved ones often need care and compassion in their golden years. Sometimes, caring for our loved ones can be financially stressful – and in some cases, impossible – without the right funds and support.
In Alabama and some other states, Special Needs Trusts exist to help the elderly in a way that not only maximizes their finances, but also enables them to continue receiving Medicaid benefits. For example, one popular belief is that elderly individuals entering a nursing facility cannot receive Medicaid benefits unless they “spend down” their assets. While this is true without planning, in the states that allow special needs trusts for those 65 and older, the assets can be placed into a pooled special needs trust and used to supplement the elderly person’s care while Medicaid pays for the long-term care. This can be an enormous blessing for the elderly person as it enables the person to have things that he or she would do without if the assets in trust did not exist.
Uses for Elderly Trust Funds
Within Medicaid regulations, funds can be used to purchase items that are needed for the elderly person, including but not limited to:
- Private rooms in facilities
- Durable medical equipment
- Magazines or televisions
- Lift chairs
- Funeral arrangements
While funds are used to fulfill these needs, Medicaid continues to pay for room and board for the elderly person while he or she is staying at a qualified nursing facility. In this way, benefits can continue even though the beneficiary has funds from another source. If the trust funds did not exist, the elderly person can have no more than $2,000 in total assets and a monthly allowance of $30, amounts that can only provide for severely limited needs.
Types of Special Needs Trusts for the Elderly
While trusts for a person 65 years of age and older must be administered by a pooled trust, there are two types of pooled special needs trusts for the elderly – first-party trusts and third-party trusts.
First-party special needs trusts exist to help elderly persons with assets that ordinarily would disqualify them from receiving Medicaid benefits. These assets can include savings or assets over $2,000, legal settlements or judgments from lawsuits, inheritance or monetary gifts, or other sources of value. In certain states, by placing these assets with Alabama Family Trust, the person can be eligible for Medicaid benefits.
A third-party trust is one in which a family member, friend, or donor gives the elderly person money either as a gift, a donation, or an inheritance. It confers the same benefits as a first-party trust, but any remaining assets at the elderly person’s death are distributed to family members, charities, or other designated individuals or entities.
Setting Up a Special Needs Trust for an Elderly Person
If you have an elderly loved one you would like to support, and think he or she is a good candidate for a trust, contact Alabama Family Trust. We exist to help Alabamians and their families support their elderly loved ones in a way that maximizes their benefits and helps care for them for the duration of their lives.
If you have any questions, talk to us or check out our FAQ page.