Gifts to Trust For Disabled Beneficiary. By: Douglas L. Kaune, Esq.
As we have outlined on this site and on the Unruh, Turner, Burke & Frees, P.C. Trusts & Estates Blog, a gift of assets will cause an ineligibility period for Medicaid application. This makes gifting on the eve of entering a nursing home much more difficult and complex. It is also a great reason for entering into Elder Law asset protection planning well in advance of needing nursing home care. As we all know, not everyone plans ahead. Those people who do not have proper planning are left with fewer options for protecting the family assets from long term nursing care spending. One of the exceptions to the general Medicaid ineligibility rules is the gift to a disabled child.
Douglas L. Kaune
Parents with a disabled child have an additional option available to them when considering gifts to protect assets from nursing home spending. They can transfer assets to a special needs trust without causing the standard Medical Assistance (Medicaid) ineligibility period. This allows for successful last minute planning to protect assets regardless of the timing of the transfer to this type of trust. Click here to read another recent article with some interesting links on the Unruh, Turner Burke & Frees Estate Planning Blog that further reviews this Medicaid Asset Protection opportunity.
The special needs trust for the disabled child allows the parent to not only protect the assets from his or her nursing home spending, but also to shelter the assets from unnecessary spending for the disabled child. The special needs trust is written in a way that allows the disabled child to continue to receive government and public subsidies and payments. The trust assets are available for the care and needs of the disabled child for the rest of his or her lifetime at the sole discretion of the appointed trustee.
Meanwhile, the parent transferring assets to the special needs trust can more quickly and easily apply for and qualify for Medicaid because the assets transferred to the trust are not counted for application purposes. Be careful to document all aspects of this transaction. Also be prepared to show all of the documentation to prove that the child is in fact disabled. It is likely that PA, through the Department of Public Welfare, will scrutinize each particular case to make sure that the facts fit withing the scope of the legal exception.
Doug is a Partner with Unruh, Turner, Burke & Frees, P.C. which is a full service law firm with offices located in Malvern, Phoenixville and West Chester, PA. Member: NAELA – National Academy of Elder Law Attorneys
