There are Limitations on Special Needs Trusts

When someone receives a personal injury settlement and is also receiving much-needed public benefits, such as SSI and Medicaid, it is important to know how choices can affect the special needs trust.

Supplemental Security Income (SSI) is an ongoing source of funds meant to pay for food and shelter; Medicaid pays for medical expenses. Both are designed for an individual who has assets totaling no more than $2,000. So, if you or your loved one is receiving SSI and Medicaid and then also receives a personal injury settlement, you (or your loved one) will become ineligible for SSI and Medicaid.

Back in 1993, Congress authorized the establishment of special needs trusts, and assets transferred to one of these trusts is typically not counted when determining if there is asset eligibility for SSI or Medicaid. That is why a special needs trust is so attractive: funds can be placed in the trust to help with expenses, such as travel, education, and recreation, if structured that way. Special needs trusts can offer flexibility, which can be much needed financial support when the individual has only SSI and Medicaid for final support for the rest of his or her lifetime. But there are limits on what a special needs trust can and cannot be used for.

If you are interested in what a special needs trust can do to help protect assets, please contact me. Together we can design the trust that best fits your needs.

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