Boulder Estate Planning Legal Blog
For those who live in Colorado with a disability, or have a family member living with a disability, it will come as no surprise to hear that there are many hidden costs associated with disabilities. For example, an individual with a serious disability will likely have higher medical expenses, and may need assistance taking care of routine tasks. They may also need to pay for assistive devices or plan for modified transportation.
Medicaid helps many individuals living with disabilities to cover some of these costs. In addition, Supplemental Security Income (SSI) benefits provide individuals with monthly assistance. However, once a person is receiving Medicaid/SSI benefits, they must remain below specific asset and income levels. If a loved one provides cash to someone receiving SSI or Medicaid benefits, it can reduce the level of benefits and may result in benefit ineligibility. In practice, this makes it difficult for loved ones to provide any meaningful support, because doing so could jeopardize these benefits.
A Colorado special needs trust (SNT), also referred to as a supplemental needs trust, is an excellent way to provide support to someone with a disability without jeopardizing their benefits. An SNT can either be “self-funded” or opened by a third party. A third-party special needs trust is one opened by anyone other than the person who is named as the beneficiary. Funds that are transferred into an SNT do not count as “assets” for Medicaid eligibility purposes. The same goes for income that is assigned to the trust. Thus, family members can open a trust in the name of a loved one living with a disability, and can transfer money into the account for their loved one to use.
Funds in an SNT can be used for a variety of nonsupport items. For example, a beneficiary can use the trust funds to pay for any of the following things:
- an automobile,
- academic or recreational classes,
- fitness equipment,
- public transportation costs,
- home improvements or furnishings,
- over-the-counter medication,
- a cellular phone (as well as the monthly service bill),
- vacations, and
- pets and related expenses
However, a beneficiary cannot use funds in the trust to pay for the basic necessities, including food and shelter. This includes paying for rent or a mortgage, property taxes, and most necessary bills. Trustees overseeing an SNT should keep in mind that it is essential not to pay for something with trust funds that have already been paid for by another source.
Are You Considering a Colorado Special Needs Trust?
If you have a loved one living with a disability, and have been told that you cannot provide support to them without jeopardizing their public benefits, contact a dedicated Colorado special needs planning attorney at the Braverman Law Group for immediate assistance. At the Braverman Law Group, we work with individuals and families to come up with solutions to the common – and less common – issues that surround special needs planning. To learn more, and to schedule a free consultation with one of our knowledgeable estate planning lawyers, call 303-800-1588 today.
