Planning

Special Needs Planning in Chicago, IL

Life Planning for Special Needs Families

It is important for everyone to consider what will happen to them and their family obligations after they pass away. A large part of this planning is deciding how to distribute one’s assets. This process and these decisions become more difficult when one of the individuals you want to provide for is unable to care for themselves. Although it becomes difficult to make some of these life decisions, they are still vital to make.

Individuals Who Receive Government Benefits

Working With SSI Benefits

Individuals who receive Social Security Supplemental Security Income (SSI) benefits, Medicaid and other state benefits are very limited in what they can have in assets and income to maintain these government programs. A key objective for families in the long- term planning process is to ensure these public benefits are still provided to their loved one in addition to the supplemental support from a special needs trust.

Medicaid and other government benefit programs consider income and assets a resource to an individual for purposes of determining eligibility for public benefits (SSI/ Medicaid). SSI benefits are only available to individuals who are aged, blind or disabled. Individuals who receive SSI benefits are also limited in their total earned/unearned income and assets that cannot exceed $2000.

Individuals who become disabled and need to move into a nursing home or otherwise use Medicaid benefits will want to protect their assets to ensure that they have money available to provide for those extra costs of care.

Creating a trust for an elderly or disabled individual assures their eligibility for entitlements and provides a means for providing a higher quality life for them.

The first and most essential distinction to be made in deciding what kind of trust to create depends on where the money is coming from.

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Third Party Supplemental Needs Trust

Money that belongs to anyone other than the person with a disability should be placed in a Third Party Trust. This would include money from parents, grandparents, aunts, uncles, siblings, spouses and/or children who want to leave money to an individual with disabilities. However, when the providing individual passes, if they have a will that specifies for money to be given directly to a specific person with a disability named in the will or trust whereby it’s not directed to a Special Needs Trust, it is too late to use this Third Party Trust option. Money that is the result of a personal injury settlement or a back payment from Social Security cannot be placed in this Third Party type of trust either if the assets belong to the individual with disabilities.

Self Funded Payback Trust

Money that belongs to an individual with disabilities cannot be placed in a Third Party Trust. Instead, a Self Funded Payback Trust can be utilized as a great secondary option. This could include inheritances, a gift from family/friends, back payment from Social Security or a personal injury settlement/lawsuit settled naming the person with the disability as the beneficiary.

Mixing third party money with an individual’s own assets in a special needs trust will result in a determination that all of the money belongs to the individual and thus create payback provisions for the trust. This option is not as ideal, and it is essential that the two kinds of money never be mixed together.

There should be two special needs trusts, as well as a third party trust with third party money and a payback trust with the individual’s personal assets. The payback trust should be spent first with the payback provisions in the termination section of the trust document. The third party trust document does not have payback provision, so it should be preserved for use after the payback trust is spent. This will allow the individual to use it throughout their life while the remainder, upon the death of the beneficiary, can be distributed back to the family.

Contact Us Today

We understand that the process of life planning can be confusing- especially when there’s an individual with special needs in the family. Life’s Plan is here to make the process as seamless as possible so you can be confident you and your family are in good hands, both now and in the future. To learn more or get started with setting up a special needs trust in Chicago, contact our friendly staff today.

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Third Party Funded Trust Info

Self Funded Trust Info