The Law Office of Keith R. Miles, LLC is highly experienced in special needs planning for families with special needs children and disabled adults, including those attempting to qualify for Medicaid or Veterans Pension – Aid and Attendance to pay for long-term care.
Special needs trusts (or supplemental needs trusts) are designed to set aside funds for the benefit of a disabled person. Parents often protect special needs children who receive benefits due to a mental or physical disability or payments from a personal injury settlement.
A special needs trust holds assets that may jeopardize qualification for Medicaid or Supplemental Security Income (SSI). Once transferred, they are no longer countable. Complex federal and state rules are involved in establishing a special needs trust. Understanding them is crucial to ensuring a trust is successful in meeting its goals.
First Party Self-Settled Trusts
Special needs trusts can also manage and preserve funds belonging to a disabled person. Often these funds are from a personal injury award, an inheritance, or life insurance. When the disabled person dies, any remaining funds must first be used to reimburse the state of Georgia or North Carolina for Medicaid benefits they received.
For many years, a disabled individual under age 65 could only fund a special needs trust after being established by their parent, grandparent, legal guardian, or court. In 2016, Section 5007 of the 21st Century Cures Act, “Fairness in Medicaid Supplemental Needs Trusts,” allowed disabled individuals to create their own special needs trusts.
Qualified Income Trusts (QIT)
In “income cap” states,” like Georgia, qualified income trusts (Miller Trusts) are created to shelter excess income and assets when applying for Medicaid. They are another type of first-party special needs trust requiring Georgia Medicaid to be paid back after the beneficiary dies. It is typically established by a person entering a nursing home and qualifying for Medicaid.
Special Needs Pooled Trusts for those over the age of 65
For individuals over 65, the only way to preserve their assets to supplement Medicaid or SSI benefits is to place the funds into a pooled trust to be managed for many disabled beneficiaries by not-for-profit associations. Unlike the individual disability trusts described above, these trusts may be for beneficiaries of any age and created by the beneficiary. In addition, federal law does not require the state of Georgia or North Carolina to be repaid for Medicaid expenses on the beneficiary’s behalf upon their death if the funds are retained in the trust for the benefit of other disabled beneficiaries.
Special Needs Trusts to leave funds for others while trying to qualify for Medicaid
In addition to creating safe harbors for certain disabled Medicaid applicants to shelter their funds, a Medicaid applicant can also avoid transfer penalties by putting assets into a trust solely for the benefit of a permanently disabled individual under age 65. The beneficiary doesn’t have to be a child or a relative.
The Law Office of Keith R. Miles, LLC was founded in 2008 and serves clients throughout Georgia and North Carolina. The firm focuses on holistic legacy planning and elder law for individuals and families – both traditional and “blended.”
Because our clients may have minor children while also caring for aging parents, we handle complex elder law issues such as long-term care planning, Medicaid planning, and special needs planning.
Contact us for a consultation on special needs planning and which trust would be recommended for your situation!