If Someone Is Not Concerned with Government Benefits, Do They Still Need to Set Up Supplemental Needs Trust?
A supplemental needs trust is a trust fund that is designed to help those with disabilities while retaining their eligibility to remain on benefits programs, such as Medicaid. However, some families are not concerned about government benefits. If someone is not concerned with government benefits, do they still need to set up a supplemental needs trust? It can depend on the person, but it can be advantageous.
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Questions And Answers
A supplemental needs trust is a trust that allows funds to be given to a child with a severe disability or chronic illness who has already turned eighteen years old. The amount of money that is given from the fund will never exceed the amount necessary to retain eligible for government benefits, such as Medicaid and Supplemental Security Income (SSI).
Yes, it is the same type of trust as a special needs trust. They are two names for the same thing.
A supplemental needs trust will not affect government benefits so long as the regulations are followed. There are instances where using the money for prohibited purposes will negatively affect the person’s eligibility for government benefits.
Yes, a supplemental needs trust is considered irrevocable. This means that once it is drafted and put forward into practice, it cannot be changed.
If Someone Is Not Concerned with Government Benefits, Do They Still Need to Set Up a Supplemental Needs Trust?
It is advantageous to consider a supplemental needs trust even if you are not concerned with government benefits. Supplemental needs trusts are funds that directly benefit the disabled person. The funds will always be available to help them with their affliction. It is always a good idea to have a supplemental needs trust in place to protect against unforeseen circumstances.
While it is not required to have a supplemental needs trust, it is advisable to have one. Unforeseen circumstances happen all the time, and it is good to plan for any scenario. By having a supplemental needs trust put in place for your child, you are ensuring they have the funds necessary to take care of them. Moreover, having the supplemental needs trust will help quality for certain government benefits that will also help aid in the overall quality of life of your child.
Programs such as Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI), and Medicaid are examples of government benefits that help aid a disabled person. SSI, for example, provides benefits based on the financial situation of the individual.
Having a supplemental needs trust can greatly increase the quality of life for the person with a severe disability or chronic illness. The supplemental needs trust provides money that can be used to directly affect the disability and the comfort of the person.
The money in a supplemental needs trust can be used for supplemental items pertaining to the disabled individual. This can include physical therapy, education, entertainment, and more.
The best way to know what you can and cannot use the money in the supplemental needs trust for is to talk with an attorney. Each person’s situation is different and having an attorney with experience and knowledge of supplemental needs trusts is crucial.
Can an Attorney Determine If You Need a Supplemental Needs Trust Even If You Don’t Care About Government Benefits?
Yes. An attorney will be able to advise you properly as to whether your specific situation warrants establishing a supplemental needs trust.
A supplemental needs trust will end when it is not needed any longer. This can occur because the disability or illness has improved. It can also happen when the beneficiary dies, or the funds run out.
There are three types of supplemental needs trusts. They are third-party supplemental needs trusts, self-settled supplemental needs trusts, and pooled supplemental needs trusts. Which one you use is based on your situation.
A third-party supplemental needs trust is one in which a third party, such as a parent, family member, or friend, manages the trust for the disabled individual.
A self-settled supplemental needs trust is a trust that is signed in the beneficiary’s name and uses the beneficiary’s own money to supply the fund.
A pooled supplemental needs trust is a trust that is managed by a non-profit organization that handles multiple trusts.
You will use a pooled supplemental needs trust if you want someone else to handle the trust for the individual. Non-profit organizations will have extensive knowledge about how to efficiently handle the trust’s money.
Using a supplemental needs trust inappropriately can negatively impact government benefits. For example, if you were to use the funds in the supplemental needs trust to buy food, then the money would be considered “income,” and would reduce your SSI by up to one third.
In New York, the parents are free to use a supplemental needs trust to provide for their child for life. In addition, they have the right to decide where the funds are to be allocated upon the child’s death.
Unlike other benefit programs, you do not need to have a supplemental needs trust to qualify for Medicare or SSDI. This is because these programs do not have an asset or income provision for eligibility.