There’s more than one way to provide for a grandchild with disabilities
Grandparents who are interested in providing an inheritance for grandchildren with disabilities should be careful how this is accomplished.
Depending on the severity of a grandchild’s medical condition, the grandchild may be eligible for government benefits now or may be eligible in the future.
Most government-based benefits provided to persons who have disabilities are means tested. That means, particularly for Medicaid programs, that the beneficiary’s countable resources must remain below a $2,000 limit, which is determined at 12:01 a.m. as of the first day of each month. If the beneficiary is over the resource limit at the time of determination, the person loses the Medicaid benefit until the resources are properly dealt with. Income limitations are also tested and will vary depending on the program involved.
Maybe your grandchild receives Supplemental Security Income (SSI), which is a program administered by the Social Security Administration that provides cash assistance for individuals who meet eligibility requirements. The funds are meant to provide for food and housing. Texas is an SSI/Medicaid linked state, meaning that if you qualify for SSI, then you automatically qualify for Medicaid. Medicaid, in general, provides for medical assistance to those who qualify.
For many children who have disabilities, Medicaid benefits are an absolute life saver, considering that if the child requires frequent and /or lengthy hospital stays, the costs can be staggering, and few people are able to pay on their own.
It is imperative then that grandparents be wise about how money is given for a grandchild’s use in light of Medicaid limitations.
Grandparents should beware of giving money directly to a grandchild in these circumstances. If the grandparent wishes to leave an inheritance to the grandchild, the grandparent should prepare a Will that includes a supplemental care trust. This type of trust is not set up or funded until the grandparent, in this case, passes away. It must be written in conformity with the laws pertinent to the state where the grandchild resides. Supplemental care trusts allow assets to be sheltered and protect the grandchild from losing benefits.
Another type of trust that may help in these circumstances is referred to as an intervivos supplemental care trust. For example, parents might be approached by other family members such as grandparents, siblings, aunts or uncles indicating a desire to leave money upon their death for the benefit of the child who has a disability, but they would prefer to avoid the cost of having a supplemental care trust drafted in their own wills.
The parents could accommodate these requests by creating an inter vivos supplemental care trust, which is a trust that comes into being during the life of the grantor, parent or parents, in this case. It has to be funded with at least a small amount of money and does not have to be fully funded during the grantor’s life.
The other family members then may give the inheritance in their Will by naming the inter vivos trust already in existence. The trust also may be written to allow insurance proceeds and gifts by people while the donor is still living.
These types of trusts are used in conjunction with very complicated laws and rules. It is important then to seek the advice of an attorney who is very experienced in this type of law.
You may visit our website at www.wrightabshire.com. Thank you to Wright Abshire associate attorney Theresa A. Clarke who contributed to the article. Wesley E. Wright and Molly Dear Abshire are attorneys with the firm Wright Abshire, Attorneys, P.C., with offices in Bellaire, and Carmine. Both are Board Certified by the Texas Board of Legal Specialization in Estate Planning and Probate Law and are certified as Elder Law Attorneys by the National Elder Law Foundation. Nothing contained in this publication should be considered as the rendering of legal advice to any person’s specific case but should be considered general information.