Did you ever consider that you
might want to do “special needs” planning even if you
don’t have any special needs children or grandchildren?
Can you imagine how one of your children could come to
have special needs after you’re gone? Read about what
happened to John and Elizabeth.
John and Elizabeth had
three children, and their estate planning attorney prepared
a living trust that passed their estate in equal
shares to these children. At John and Elizabeth's death,
the estate was estimated to be $2,400,000, and
after taxes and expenses, the children will be left with
$1,800,000 ($600,000 each) that will be kept in trust for
All three of John and Elizabeth's
children had children of their own.
A short time later, John and
Elizabeth's son Jerry was involved in a terrible accident.
Jerry was injured so badly that he was unable to care for
The person named as guardian immediately sought help for
Jerry's medical expenses
from Medicaid or other means-based government programs.
They were shocked to learn that the entire $600,000
set aside for Jerry must be spent on medical expenses before
Medicaid would assist him.
As an alternative, the guardian learns that the assets
could be placed in a
special kind of trust to be used for Jerry's benefit. But at
Jerry's death, the trust must reimburse Medicaid
for what was spent for care during his life.
This result could have been avoided by
creating a special needs trust.
A special needs trust is specially designed to hold
the inheritance of a beneficiary, and to be used for needs
above and beyond those covered by government programs.
These trusts contain instructions that allow the
Trustee to meet the needs of the beneficiary, but prohibit
the Trustee from providing for those needs if already covered
by Medicaid or other programs. It also prohibits the
Trustee from using the assets to reimburse any government
program after the beneficiary’s death.
As a result, the inheritance can be
used at the discretion of the
Trustee, and anything left over at the time of Jerry's
death could be passed on to his children.
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