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Supplemental Needs Trusts

Setting Up Supplemental Needs Trusts

Wright Abshire, Attorneys
Houston, Texas
(713) 660-9595 ∙ (800) 280-4759
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Caring for the ongoing and extensive medical and mental health needs of elderly or family members who are disabled is costly — too costly for most families to shoulder on their own.

Medicaid may be available to most families to assist with the care of persons who are vulnerable but Medicaid is means-tested. In order to qualify for financial assistance, the person receiving aid must have limited financial means.

Supplemental Needs Trusts Versus Spend-Down Plans

If the person who needs permanent medical care has more money or assets than allowed by Medicaid, the person may choose to "spend down" their assets in order to qualify. Spending down one's assets in order to qualify for Medicaid presents several problems, however.

  • There may be a healthy family member who relies on those assets to pay daily living expenses. Once the money is gone, he or she will be living in poverty.
  • Medicaid does not pay for every type of daily need, medical treatment or therapy that might be beneficial to the elder or ill family member. If all the private assets are gone, there will be no way to pay for these services.

In many instances, an estate plan that includes supplemental needs trusts may be more useful than a spend-down plan, in terms of planning for ongoing medical care and eligibility for Medicaid assistance.

The Value of Supplemental Needs Trusts

There are two basic types of trusts: a testamentary trust that goes into effect when a person dies (a parent may die and leave money in a trust for a child), and an inter vivos trust, which becomes active during the lifetime of the trust's creator (for example, a family may establish a special needs trust in order to fund medical care for a relative who is disabled).

Because the beneficiary of the trust does not have control over the trust, the beneficiary may still be eligible to receive public benefits for medical care. A trust is one way to address the problems posed by Medicaid income-based eligibility.

Timing Is Important When Considering Supplemental Needs Trusts

Timing — when and how you establish the trust — will be important. The laws relating to trusts and funding eligibility are complex. A self-settled special needs trust may be a possibility for you if you are under 65 years of age. It is best to work with a law firm with extensive experience in special needs planning and the use of trusts.

Certified Elder Law Attorneys

Our attorneys are uniquely qualified to provide legal advice and representation in all legal matters relating to Medicaid eligibility and estate planning. Both partners, Wesley Wright and Molly Abshire, are certified elder law attorneys (CELAs) by the National Elder Law Foundation. Mr. Wright is also Board Certified in Estate Planning and Probate Law by the Texas Board of Legal Specialization and is a member of the Special Needs Alliance (SNA), an invitation-only national organization committed to helping people who have family members with special needs.

Contact Wright Abshire, Attorneys, for a Consultation

Our lawyers are always available to consult with new clients — either regarding Medicaid planning for the future or an emergency Medicaid situation. To schedule a confidential appointment, send us an e-mail or call us toll-free at (800) 280-4759.

From our offices in Bellaire, Texas (a city within Houston), we represent clients throughout the Houston area as well as statewide. We also represent clients from other states with elderly family members in Texas. Our attorneys can make home, hospital or nursing home visits outside of the Houston area when necessary. And in some cases, many of our legal services can be provided over the telephone for our clients' convenience.

A Few Special Needs Planning Scenarios

Joe, 63, resides in assisted living. He became disabled as a young adult, but he does not qualify for Social Security disability or early-age retirement benefits because he does not have the requisite number of quarters of covered employment. His parents, now deceased, had set up a testamentary trust to provide for his needs, but the trust assets are nearly exhausted. The elder law attorney helped Joe qualify for both Supplemental Security Income ("SSI") cash assistance and Medicaid.

Mae, 56, is disabled and needs a liver transplant. She lost SSI and Medicaid because she began receiving Social Security benefits on her deceased ex-husband's work record. The elder law attorney was able to get Mae re-qualified for Medicaid, which paid for her liver transplant.

Marge, 52, lost her SSI cash assistance and Medicaid because she received an inheritance of $75,000. The elder law attorney helped Marge divert the $75,000 to a special type of trust that allowed her to re-qualify for SSI and Medicaid beginning the following month.