Estate Planning and Supplemental Needs Trusts
Parents, grandparents, aunts, uncles, siblings, friends and others often wish to leave money to a loved one with a disability. While this is a common trait of a loving family, if the family does not plan properly, the money can cause the person with the disability to lose government benefits such as Supplemental Security Income (SSI) and Medicaid.
Government benefits, such as SSI and Medicaid, can be protected for children with disabilities that are receiving money from legal settlements, inheritance, or gifts.
Attorneys, parents, and guardians need to be careful to create the correct type of trust. A supplemental needs trust created with funds from someone other than the disabled individual should be a third-party trust. These trusts do not require a Medicaid pay-back at the death of the disabled person.
Alabama Family Trust does not provide legal advice. You should consult with an attorney that is knowledgeable about supplemental needs trusts. The following is provided only for general information purposes.
If a parent, grandparent, aunt, uncle, sibling, or friend wishes to give a disabled child money or an inheritance, a third-party supplemental needs trust should be created. The person creating the trust can leave directions in his or her Last Will and Testament of Living Trust to create a supplemental needs trust, or the person can create a stand-alone trust.
The trust proceeds can be used over the child’s lifetime to supplement his or her needs to improve the child’s life. However, at the child’s death, any remaining funds in the trust can be distributed to family members or charities as the creator of the trust designated.
Check into Estate Planning and Supplemental Needs Trusts
Contact your estate planning attorney to discuss your specific estate plan situation and supplemental needs trusts for your loved ones. Then have your attorney check with Alabama Family Trust about how we can help administer the trust.