People With Disabilities
There is another need-based government program called Supplemental Security Income. The purpose of SSI is rather self-explanatory: it provides a source of modest income for people that do not have much personal earning power. Once again, an improvement in financial status could trigger a forfeiture of eligibility.
Supplemental Needs Trusts
If you establish and fund a supplemental needs trust for the benefit of a loved one, you would name a trustee to act as the administrator. The beneficiary would not be able to directly access assets that have been conveyed into the trust. However, the trustee would be able to use the assets to satisfy approved supplemental needs that are not being met by the government benefits.The list of approved expenditures is quite broad. It would include one motor vehicle, classes and school tuition, elective surgery, dental work not covered by Medicaid, vacations, household furnishings, etc. You can definitely make a person with a disability much more comfortable through the creation of a supplemental needs trust.
A trust that is established and funded by someone other than the beneficiary would be looked upon as a third-party special needs trust. If you create such a trust, you would name a successor beneficiary in the trust agreement. After the passing of the first beneficiary, the secondary beneficiary would assume ownership of the remainder.Medicaid would not be able to attach the assets, because they were the property of the trust, not the beneficiary.It is possible for a parent, a grandparent, a legal guardian, or a court to establish a supplemental needs trust with assets that are the property of the beneficiary. To avoid confusion, we did not touch upon this previously. When a person with special needs is the grantor of the trust and the beneficiary, it is considered to be a first party or self-settled special needs trust.
Everything would be the same with regard to the ability of the trustee to use assets in the trust to satisfy the supplemental needs of the grantor/beneficiary. However, there is one major difference. Assets that remain in the trust would be available to Medicaid after the passing of the beneficiary. This is why you would not want to give a direct gift or inheritance to a loved one and then establish a first party special needs trust on their behalf.