A Simple Clause Can Protect Your Heirs’ Eligibility for Assistance Programs

 Posted on December 28, 2016 in Estate Planning

If you have ever helped a loved one apply for government assistance programs, you probably know that many such programs have qualification requirements that include income and asset limits. While such restrictions were originally put in place to reserve the benefits of such programs for those with the greatest need, they are also the source of intended consequences for many unsuspecting individuals. This is frequently the case when a person who relies on Medicaid, Social Security, or other government programs is named as a beneficiary in another’s will or estate plan. A sudden increase influx of assets or property, as often happens with an inheritance can affect the heir’s eligibility for the assistance on which he or she depends.

Government Assistance Programs

Many governmental assistance programs have been in existence for decades, with a number of them tracing their roots to the Great Depression recovery measures of the “New Deal” of the 1930s. Of course, such programs are often the subject of controversy as lawmakers debate the programs’ future and how they are to be funded. Few, however, debate their usefulness for individuals truly in need of financial assistance and medical care.

When such programs maintain income and asset limitations, an inheritance can temporarily make a person’s financial situation appear much more positive that it really is. Therefore, in 1993, the United States Code was amended to create the option of special needs trusts—financial instruments that allow a person to receive an inheritance without jeopardizing his or her eligibility for government assistance programs. Rather than giving the heir an inheritance in the form of a check or a physical asset, assets can be placed in a trust for the person’s benefit to be managed by a trustee.

Protecting Your Beneficiaries

As you put together your estate plan, you may be aware that one or more of your intended heirs are disabled and therefore eligible for government assistance programs. But, what if a beneficiary becomes disabled between the time that your will was executed and your death? If your will does not take his or her disability into account, his or her eligibility for assistance could be compromised. Your will, however, can include a simple clause or paragraph that could prevent such problems.

In just a few words, your will can direct your executor to determine if any of your named beneficiaries have become disabled since your will was signed and executed. If your beneficiary finds that an heir has become disabled, that heir’s portion of your estate can be directed into a special needs trust.

We Can Help

If you have questions about how to include a special needs trust clause in your will, contact an experienced Lombard estate planning attorney. Call 630-426-0196 for a confidential consultation at A. Traub & Associates today.

Sources:

http://legaldictionary.net/special-needs-trust/

https://www.isba.org/sections/elderlaw/newsletter/2013/04/everywillneedsaparagraphallowingfor