A special needs trust is a trust setup for a person with a disability to pay for things over and above what government benefits cover.
And a “trust” is just a legal arrangement where property is given to a trusted person (the trustee) with the understanding that they will use the property for another individual’s benefit.
Why is a Special Needs Trust Necessary?
People who have a disability often need to rely on government programs to meet their basic needs. These needs are primarily medical care, food, and shelter. Medical care tops the list because it’s so expensive and there’s usually no other way to pay for it.
How a Special Needs Trust Can Help You Keep Medicaid
Depending on the type of Medicaid you’re talking about, the eligibility requirements are different. However, the important point to make here is that whether you can receive Medicaid or not depends on your income and assets.
For example, an individual must have less than $2,000 dollars of countable assets to qualify. Otherwise, they will be kicked off of Medicaid and not be able to get the medical care they need. For more information on Medicaid and Medicaid eligibility for various states
How a Special Needs Trust Works
The solution to the problem and the best way to maximize your family’s financial resources is to create a special needs trust. Then, you can put any gifts and extra money you have in the trust, and when it comes time to qualify for Medicaid, the money will not disqualify your child.
Once money is inside the trust, it can be managed properly and used for your child’s needs over and above what government programs can provide. This is is the best way to give your child a full and satisfying life where they can reach their greatest potential.
The next lesson in the Special Needs Trusts 101 series will help you determine whether or not to setup a special needs trust for your child. Click here to read it now.
