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Lombard estate planning attorneysHave you ever sat down with a member of your family and helped him or her apply for government-funded assistance programs? If so, you have probably seen firsthand that many of these programs have eligibility criteria that often include limits on income and owned assets. These requirements, in most cases, were established in order to ensure that those with the greatest need were served by these programs. However, the limits have also created unintended consequences for many people.

Such is often the case when an individual who receives benefits through Social Security, Medicaid, or other income-based programs is named as an heir in someone else’s will. It turns out that even a one-time transfer of property—which is generally what happens in inheritance situations—could have an effect on the heir’s eligibility to continue receiving benefits on which he or she may rely.

Understanding Government Aid Programs

Government assistance programs are virtually everywhere in today’s world, but many of them have been around for decades. Some even trace back to the “New Deal” measures of the 1930s, which were originally designed to help Americans who were most devastated by the Great Depression. As anyone who pays attention to politics can attest, government benefit programs are topics of constant debate and controversy, as legislators rarely agree on the future or the funding of such programs. Very few people, however, deny that these benefit sources are useful for those who are truly in need of medical care and financial help.

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Lombard estate planning attorneysWhen you consider what life will be like for your loved ones when you are not around to care for them, you may have serious concerns about family members who rely on you for the most care. You may have a child, a sibling, or even a cousin with a disability or other special needs. These needs may leave the person unable to adequately look after themselves. If you have been caring for a person with special needs, your death could lead to serious challenges for him or her, and your best option may be to create a special needs trust in the name of your loved one.

A Powerful Tool

Also known as a supplemental needs trust, a special needs trust is an instrument that places assets under the care of trustee to be utilized to help provide for a person with special needs. The most unique aspect of a special needs trust is that the funds contained in the trust are not considered to be “available assets” for the disabled individual, which means they cannot impact the person’s eligibility for Medicaid, Supplemental Security Income (SSI) and other income-based government programs.

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Lombard estate planning lawyersFor the more vulnerable members of society, especially the disabled and the elderly, life can become a complex dance of government forms and applications. Social Security (SSI/SSDI) is a prime example of this, with lengthy proofs required as to why disability is necessary and how to show you are not ‘gaming the system.’ However, the strictures of being on disability mean that a person is not entitled to possess assets above a certain amount, which can be prohibitive. Special or supplemental needs trusts (SNTs) have been used for years to help address this disparity.

What Is the Purpose of an SNT?

The primary purpose of an SNT is to help a disabled or elderly person afford better care than that to which they would otherwise be entitled. While Social Security disability (SSDI) has no asset limit, many people do not qualify for it, and instead apply to receive SSI (the program for low-income workers). However, when one is ruled eligible to receive SSI, one is entitled to retain only a certain amount of assets - for most people, no more than $2,000 in value. This is tenable for some, but for many others it amounts to enforced poverty. For those who are physically disabled, having such minimal assets and no ability to work (because a bank account and a paycheck are resources) can result in privation.

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