Payback Trust

The Payback Trust is a second type of trust that can be established for a disabled family member. This type of trust is different from the Third-party funded trust discussed in the prior post.

The Payback Trust as the name implies is a trust created from the funds of a disabled beneficiary and requires payback, at death, to the state for medical assistance benefits. However, during ones lifetime, funds may be accessed within designated limitations. Generally, these trusts are created to hold the proceeds from personal injury or medical malpractice settlements to allow the disabled beneficiary to continue to receive medical assistance. The trust must be created as an irrevocable trust for the sole benefit of the disabled individual under the age of 65. Such trust can be created by the disabled individual, his/her parent, guardian or order of the court.

Tomorrow we will discuss a thrid type of trust used for those with disabilities. Contact us at http://www.ythlaw.com/ for expert estate planning advice.

Should A Person on Disability Inherit?

Medicaid and SSI both have very stringent resource (and income) thresholds that could be implicated by a bequest or gift. The result is that the disabled individual could loose their SSI and Medicaid benefits. Therefore, they could be forced to pay for or even forego nursing care or other healthcare benefits.

What exactly is meant by "resource"? A resource is defined as cash or other liquid assets or any real or personal property that an individual owns and could convert to cash to be used for support and maintenance. So even if one who is disabled inherits a small interest is a house (real estate), it is considered a resource because everyone with an interest in the property has the right to seek their financial (share) interest in the real estate. That means they can force a sale or be brought out by the other owners.

So, how can a disabled person obtain and inheritance and still maintain their Medicaid and/or SSI benefits? The legislature and courts in Pennsylvania have recognized special needs trusts or supplemental needs trusts that when properly executed can reduce the costs to famiies and provide additional resources for the disabled person on Medicaid or receiving SSI.

We will continue this week to discuss the different types of special needs trusts. Contact our offices at http://www.ythlaw.com/ for expert estate planning advice.

Estate Planning for Family Members with Disabilities

Over the next few days, I will discuss the issues pertaining to estate planning for families with disabled family members. Generally, family members desire to leave money to a disabled loved one in order to maintain or improve the quality of life. However, if this is done with a bequeath in a Will or an outright gift, more harm than good could result.

Medicaid and SSI both have very stringent resource (and income) thresholds that could be implicated by any significant bequest or gift. The result is that the disabled individual could loose their SSI and Medicaid benefits. Therefore, they could be forced to pay for or even forego nursing care or other healthcare benefits.

Let's discuss what can be done over the next few days. Feel free to contact us at http://www.ythlaw.com/ to discuss all your estate planning needs.

Updating Your Will

Life if funny you know. It has a way of bringing you such great joy and at other times such overwhelming pain. But, through it all we keep on doing what we need to do. I had clients who came in to have their estate planning done when there was much to celebrate in their life; successful job, great kids. Within two years they were back to update their documents because the husband, not yet 60,was diagnosed with Alzheimer's. Changing life circumstances represent a time to review and possibly update your will and other estate planning documents. Other considerations for updating your will and other estate planning documents include:
(1) Moving to another state
(2) Marriage
(3) Birth of a child
(4) Divorce
(5) Death of a loved one
(6) Disability
(7) An Inheritance

We are here to assist you. Leave your comments or contact us at www.ythlaw.com

How should I plan for my special needs son?

Question:
How should I plan for my 22 year old son who has been disabled since birth?

Answer:
A “special needs trust” may be the best alternative.
The special needs trust is intended to supplement, rather than supplant, public assistance benefits that the disabled child may be entitled to receive under various programs such as Supplemental Security Income (“SSI”) and Medical Assistance. The purpose of the special needs trust, therefore, is to make sure that monies available to a disabled child does not result in the loss of public benefits if that is an important issue for you and your son. A special needs trust may be set up by a third party such as a parent, grandparent or guardian or it may be set up with the funds of the disabled child. The latter situation generally involves a personal injury settlement where the accident was the cause of the disability and a settlement is made for the benefit of the child.

Critical Note:
Even though most trustees named under a special needs trust are corporate trustees, such as a financial institutions, if the trust is a modest size, typically less than $75,000 or only holds a home, a non-corporate trustee can be named. This includes a family member who may then seek the advice of a financial planner if they do not currently have that expertise.

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THIRD of TEN Hot Estate Planning Topics

THIRD, a Trust is an important document to have. A Trust serves many purposes. First, you can avoid probate since it is an alternative way of transferring property at death. Second, if you are concerned about privacy, a Trust works well. Unlike a will, it is not required to be filed when a person dies. Third, if you have property in multiple states, you can avoid probating in all the states where property is located if your property has been placed in a Trust. Fourth, it is an excellent vehicle for disability planning. You place your business in a Trust and if you become incapacitated your business trustee can continue to operate your business until you regain capacity.

Across the country, the topic of whether to have a Trust or not is discussed at length. Those who want to protect and preserve the assets they have acquired during their lifetime see a Trust as the most effective estate planning document. Share you thoughts here!!