Where Do I Begin?
It is important for everyone to consider what will happen to them and their family obligations as they age and after they die. Part of this planning is to decide what will happen with their assets. This process and these decisions become more difficult when one of the individuals you want to provide for is unable to care for him/herself. Although it becomes more difficult to make some of these decisions, it also becomes more important.
Individuals who receive Social Security Supplemental Security Income (SSI) benefits, Medicaid and other state benefits are very limited in what they can have in assets and income while maintaining their benefits. A key objective for families in long term planning is insuring that these benefits will continue to be available to the individual while providing the individual with opportunities to supplement their life.
Medicaid and other government benefit programs consider the resources and income of an individual for purposes of determining eligibility for assistance and the amount of assistance the person will receive. Social Security SSI benefits are only available to individuals who are indigent. Individuals who receive SSI benefits are also limited in their earned and unearned income.
Individuals who become disabled and need to move into a nursing home or otherwise use Medicaid benefits will want to protect their assets to insure that they have money available to provide for extras.
Creating a trust for an individual with a disability and the elderly assures their eligibility for entitlements and provides a means for providing a higher quality of life for the individual.
The first and most essential distinction to be made in deciding what kind of trust to create is where the money is coming from.
Money which belongs to anyone, other than the person with a disability and the elderly, should be placed in a Third Party Funded Trust. This would include money that parents, grandparents, aunts, uncles, siblings, spouses and children want to give to the individual. However, once a person has died with a will that provides for money to be given to a specific person (or without a will where the state laws provide for that person to inherit) it is too late to use this Trust option. Money that is the result of a personal injury settlement cannot be placed in this type of trust either. It belongs to the individual.
Money that belongs to an individual should be placed in a Self Funded Payback Trust. This would include an inheritance (which is specifically left to the individual or which comes to the individual through the laws of intestacy), a personal injury settlement, a Social Security back payment, stocks and bonds received as gifts, and their savings.
Mixing money that belongs to an individual with money that belongs to anyone else will result in a determination that all of the money belongs to the individual. This will result in a payback requirement for all of the money. Therefore, it is essential that the two kinds of money never be mixed.
Get more information about:
Third Party Funded Trust Info
Self Funded Trust Info
Tandem Trust Info
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