Protecting Special Needs Children and Grandchildren with Trusts

Protecting Special Needs Children and Grandchildren with Trusts

If I had a dollar for every parent or grandparent who thinks that leaving a disabled child’s inheritance to a sibling or other loved one who will “take care of” the disabled child is a good idea, I’d be wealthy. That’s actually the worst thing to do.

What if the loved one dies or becomes disabled? What if they get sued or divorced? Now that Americans are living longer than they did in years past, including those with disabilities, this is an especially important subject.

Planning by parents and grandparents can make all the difference in the life of an adult child with a disability, as well as that of his or her siblings who may be left with the responsibility for caretaking (on top of their own careers and caring for their own families).

Supplemental needs trusts (also known as “special needs” trusts) are an important component of planning for a disabled child, even when the child is an adult. These trusts allow a disabled beneficiary to receive inheritances, gifts, lawsuit settlements, or other funds and yet not lose her eligibility for certain government programs like Medicaid.

As their name implies, supplemental needs trusts are designed not to provide basic support, but instead to pay for comforts and luxuries that could not be paid for by public assistance funds. These trusts typically pay for things like education, recreation, counseling, and medical attention beyond the simple necessities of life.

So do your loved ones a favor, speak with an Elder Law Attorney about creating a Supplemental Needs Trust. Contact our office with any questions you may have.

Can You Change Your “Revocable” Trust to an “Irrevocable” Trust

Can You Change Your “Revocable” Trust to an “Irrevocable” Trust

Such a simple question begs for a simple answer. Problem is that there is no simple answer, but I’ll give it a try.

First, you need to understand the difference between a revocable and irrevocable trust. The difference is that every word of a revocable trust can be changed, but in an irrevocable trust, there is AT LEAST one word that can’t be changed.

Nowadays, the reason elderly wants an irrevocable trust is to protect their assets from the prohibitive cost of care they need to receive at home, in an assisted living community, or a nursing home.

Most facing that challenge have heard that if your “stuff” – that’s what I call assets – is owned by an irrevocable trust, then they might qualify for Medicaid or other benefits. That’s true, but ONLY if the stuff was in there for 5 years. I don’t have enough space to explain the “5-year” rule this time, so you’ll just have to take my word for it.

So, here’s the answer to the question. Yes, you can change a revocable trust to an irrevocable trust by doing a “restatement” that is structured correctly to provide asset protection AND with a method for accessing your stuff if you need it. But if you need government assistance before the 5 years is up, the trust won’t work for its intended purpose.

The moral of the story is that if you are worried that you may want to protect your assets from long-term care costs, get an irrevocable trust NOW! Contact our firm with any questions you may have.