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Special Needs Trusts Help Protect Medicaid Benefits

If you have any type of physical or mental disability, you may have some additional concerns to cover in your estate planning process. If, for example, you receive Medicaid benefits because of your disability, you may wonder how you can protect those benefits if, for example, you were to suddenly inherit a significant sum of money.

Your best option is likely to be a special needs trust. Since the Fairness in Medical Special Needs Trust Act of 2016 was signed into law, you no longer need a parent, guardian or grandparent to establish a special needs trust on your behalf. If you are deemed mentally competent, you can establish the trust for yourself.

How to set up a special needs trust

You may use a special needs trust to hold as much money or property as you want. Keep in mind, however, that you are not allowed to be the trustee — someone else must manage the trust assets. When that property is transferred into the trust, the money will not count toward the assets considered in the Medicaid eligibility determination process.

It’s worth noting that you can still take out trust funds to pay for certain qualified expenses related to your disability. However, because it is a first-party special needs trust (unlike a trust funded with assets from someone not the beneficiary), any funds that remain in the trust upon your passing must be used to pay any outstanding medical bills.

The creation and maintenance of such a trust are subject to very strict state and federal rules, but an attorney can provide you with the aid you need. For more information, meet with an experienced Florida estate planning lawyer at The Charles Law Offices.

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