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Medicaid and the special needs trust

On Behalf of | Aug 3, 2018 | Trusts |

Estate planning is often viewed as the process through which a plan is devised to address property distribution upon one’s death. While this certainly makes up a large portion of estate planning, dealing with assets is not the only matter that needs to be addressed. As part of their estate plan, California residents should also think about what they need to do in order to ensure that they can afford long-term care costs, should the need arise.

Long-term care planning often involves piecing together long-term care insurance, Medicaid and other investments and benefits programs to cover projected costs. Unfortunately, many California residents find that they don’t qualify for government benefits, such as Medicaid or Supplemental Security Insurance, which puts them at risk of financial hardship. However, there are certain steps that can be taken to better ensure that people qualify to receive benefits.

One step is to consider the creation of a special needs trust. These trusts, when properly restricted, can allow for certain assets to avoid being counted for benefits determination purposes. Therefore, if an individual is disqualified from recovering Medicaid because his or her income is too great, then that individual may want to consider placing some assets into a special needs trust so that the income is lowered to the point where the individual would qualify. These restrictions include only allowing the trustee to determine how and when funds will be distributed to the beneficiary and disallowing the beneficiary from having control over the assets.

This is an extremely brief overview of what is oftentimes a powerful estate planning tool. The special needs trust, in its various forms, can better ensure that California residents have the resources that they need should unexpected events arise, while at the same time protecting estate assets.

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