There are various different estate planning approaches that can be taken. The ideal choice will depend on the circumstances, and this is why you would do well to work with an attorney when you are putting your plan in place.
As a layperson, why would you know all the options that are available to you? We certainly do not have in-depth knowledge of other fields, so this is understandable. There is nothing wrong with seeking professional guidance when you are dealing with important matters.
With this in mind, we will look at the value of supplemental needs trusts in this post.
People With Disabilities
If you have someone with a disability in your family, and they are on your inheritance list, there’s a good chance that they are relying on need-based government benefits. Medicaid is a source of health insurance, and the Supplemental Security Income program provides a bit of monthly cash.
These benefits are only available to people with very limited financial resources. Since a significant percentage of folks with special needs cannot work, they do in fact have financial need. As a result, they can gain eligibility for these benefits.
Once eligibility has been granted, it is not inherently permanent. An improvement in financial status could change everything, and a recipient could lose their benefits. This is something to think about if you are going to include a person with a disability in your estate plan.
Widely Embraced Solution
Fortunately, there is a solution in the form of a supplemental needs trust. These devices are alternately called special needs trusts.
To implement this strategy, you establish and fund the trust, and the loved one that you want to help out would be the beneficiary. In the trust declaration, you would name a trustee to act as the administrator.
Any adult that is willing to assume the role can technically act as the trustee, but rules must be carefully followed, and the trustee should have a high level of financial acumen. With this in mind, you may want to engage a trust company or the trust department of a bank.
The government benefits do not provide everything that the recipient may want or need. The unmet needs are called “supplemental needs,” and this is why the trust that is used in these situations is called a supplemental needs trust.
Under the program guidelines, the trustee can use assets in the trust to purchase goods and services that enhance the life of the beneficiary in many different ways. There are actually very few limitations, and if everything is done properly, benefit eligibility would not be affected.
Medicaid Estate Recovery
When the beneficiary passes away, Medicaid would be compelled to seek reimbursement from the individual’s estate. If you create a trust for the benefit of someone else, it would be a third-party supplemental needs trust. The beneficiary never owned the assets directly, so they would be protected during Medicaid recovery efforts.
It is possible for the beneficiary or a legal representative of the beneficiary to establish this type of trust with funds that are the property of the disabled person. This would be a self-settled or first party special needs trust. Medicaid could go after funds that remain in a first party trust after the death of the grantor/beneficiary.
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While he was in law school, he worked as an aide to the late John Sparkman, Senior Senator from Alabama. This gave him the opportunity to gain intimate knowledge of the workings of government, and this background has served him well.
He started his private practice in New York in 1974, the first Sikh to be admitted to the bar in the state of New York.And in 1995, when he narrowed his legal focus to the areas of estate planning and elder law, the prestigious American Academy of Estate Planning Attorneys accepted him into their membership.
Special needs planning is an important aspect of the field, and Mr. Khalsa has intertwined his empathy with his expertise to become a leading advocate in this area. Shortly after the Education for All Handicapped Children Act was enacted in 1975, he won the first case in New York that was adjudicated under this law.
S.J. Khalsa has a penchant for philanthropy, and he has raised well over $20 million for charities nationwide. He is a deeply spiritual man who represents the Sikh religion at religious and interfaith gatherings all over the globe.
He believes that successful professionals should contribute to the fabric of their communities, and to this end, he works with law enforcement in New York.
Mr. Khalsa is a graduate of the FBI Citizens Academy program, and he is active in their Alumni Association. He is a member of the FBI/New York Police Department Joint Task Forces on Civil Rights and Hate Crimes, and he sits on the Community Engagement Council that advises the FBI Assistant Director for New York.
He is the author of the highly acclaimed book, Estate Planning Essentials: A Guidebook for Modern Families. Lawyers of Distinction recognized him for his excellence in 2020, naming him a 2020 Power Lawyer, and he is a member of the prestigious American Academy of Estate Planning Attorneys.
Mr. Khalsa lives in Manhattan with his wife, and he has two grown children and four grandchildren. He likes to travel, and he is an avid golfer. As the co-owner of Kundalini Yoga East in New York along with his wife, he instructs practitioners and aspiring yoga teachers.
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