How can I protect my disabled grandchild’s benefits as part of my estate planning?

Grandfather and grandson learning about naturePlanning for a disabled child or grandchild requires thoughtful consideration. Assets that a disabled beneficiary receives directly can disqualify the beneficiary from any means tested benefits she/he may be receiving, like Supplemental Security Income (SSI) or Medicaid for long term care coverage purposes.

To ensure maintaining eligibility for means tested benefits, you should have a Special Needs Trust (SNT) for your grandchild’s benefit contained in a new Will. Any share of your estate for your grandchild’s benefit should be directed to this SNT. Assets owned by the SNT are not an available resource to the trust beneficiary for means tested programs. The SNT also has the benefit of having someone you trust act as Trustee to help you grandchild manage the assets.

This type of SNT is sometimes referred to as a third party SNT. An individual of any age can be the beneficiary of this third party SNT. A third party SNT is created by someone, other than the beneficiary, who wants to provide for the special needs beneficiary without having the assets disqualify the beneficiary receiving public benefits. The SNT assets may supplement public benefits but must not be intended to replace these benefits. The trustee of the trust must have the sole discretion as to the use or distribution of the trust assets. The beneficiary cannot direct the distribution of the principal or income of the assets. The trustee’s discretion to make payments for the benefit of the beneficiary must be complete.

The SNT cannot be used for the basic support of the beneficiary. Trust assets must only be available for the special needs of the beneficiary. Special needs are defined as items not provided for by public benefits. These items are quality of life types of goods or services that supplement the public benefits the beneficiary is receiving.

It is extremely important that you seek professional assistance in the preparation of an SNT. Everyone’s situation is unique and the SNT needs to be prepared to reflect your grandchild’s specific circumstances.

An experienced Estate Planning attorney can assist you in understanding Special Needs Trusts (SNTs), means tested benefits like SSI and Medicaid, and help you to include planning for a special needs child or grandchild in your estate planning. Contact the Estate Planning attorneys with the Law Offices of Nay & Friedenberg in Portland, Oregon at (503) 245-0894 to set an appointment.

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