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Principled Advocacy For Families And Individuals With Disabilities And The Professionals Who Serve Them

Retaining government benefit eligibility when estate planning

On Behalf of | Dec 29, 2021 | Estate Planning

If you have an heir with special needs who qualifies for government benefits, you want to consider these benefits when doing your estate planning. If you’re not careful, you could remove their eligibility.

In fact, just leaving someone $2,000 may be enough to disqualify them in some cases. You don’t have to dramatically increase their assets for the government to say that they no longer qualify and that they have to spend down those assets before they can apply again. This is a waste of the assets that you’re leaving them, and it is a hassle for them as they have to apply a second time. It can cause a lot of issues.

How can you avoid this outcome?

There are a lot of ways to avoid this outcome, and one of the most popular is to set up a special needs trust. When you do this, you specify that the money from your estate is going to go into the trust at the time that you pass away, rather than leaving it directly to your heir.

At the same time, your heir is the beneficiary of that trust, and the money can be used for certain things. But, since they don’t directly control that money and they cannot make decisions without the approval of the trustee, it doesn’t count as a benefit when considering their own qualifications. This means that they can continue to get the benefits that they were getting before, but you can still leave them the money or other assets that you intended to leave them.

It is incredibly important to do all of this correctly so that the plan works, so you need to make sure you know exactly what steps to take to have your estate plans work the way that you intend.