Does a Trust Impact My Ability to Receive Government Benefits?

Trusts are a valuable tool in estate planning. A trust can accomplish goals that other approaches cannot. However, if you receive government benefits or contemplate applying for benefits in the future, a trust can impact your eligibility for those benefits. An experienced estate planning attorney can help you determine whether a trust is suitable for your goals, and, if so, what kind of trust will accomplish those goals without jeopardizing your eligibility for government benefits.

What Is a Trust?

A trust is a legal arrangement created by a specialized document that designates a trustee to hold and manage assets on behalf of another party, who is the beneficiary of the trust. A trust can have one or multiple beneficiaries. There are many types of trusts, each of which is designed to accomplish specific purposes. A trust can be revocable or irrevocable.

A well-structured trust can often improve your financial security and your loved ones’ future security. However, a trust created without professional guidance can also affect your eligibility to receive needs-based government benefits like Medicaid and Supplemental Security Income (SSI). When you consult with an attorney experienced in creating trusts for individuals who receive government benefits, you can be certain that your trust will not affect your benefits. In some cases, a trust can even help you become eligible for benefits when you otherwise would not be.

Revocable and Irrevocable Trusts

A revocable trust is one that can be changed (or even terminated) by the grantor (person creating the trust) during their lifetime. A revocable living trust is often part of a complete estate plan, because it can accomplish important goals that a will alone cannot. But a revocable trust is not appropriate for everyone. For individuals who receive government benefits, assets in a revocable trust or income from a revocable trust may affect eligibility for benefits.

When eligibility for benefits depends on an individual’s assets and income, as Medicaid and SSI both do, the government may count assets and income from revocable trusts in determining eligibility. However, in both cases, the programs provide for specific types of irrevocable trusts that can protect assets and income and avoid having them counted for eligibility purposes. These trusts must be established in accordance with specific government rules and regulations. Getting assistance from a knowledgeable attorney is essential to ensuring that a trust you create does not jeopardize your government benefits. You should never attempt to create a trust without assistance from an experienced estate planning attorney. Doing so can put your eligibility for government benefits at risk and have other negative ramifications.

Medicaid Eligibility

Medicaid is a federal-state administered program that provides many benefits for eligible individuals, including long-term care benefits for elders. To receive the benefits, individuals must apply and qualify. Assets and income are key elements of the eligibility rules. Medicaid planning with an experienced attorney can help an individual become eligible for benefits in some circumstances where they otherwise might not be able to receive benefits. Specific types of trusts can protect both assets and income, but the trusts must comply with complex rules that apply to the program.

Consulting with an attorney is the best approach to ensure that you comply with all requirements in creating a Medicaid trust. Complex rules, like the Medicaid look-back rule, can cause significant problems if you attempt to create a trust on your own. In addition, compliance with complicated Medicaid spend-down rules is essential. It is critical to initiate Medicaid planning at the earliest possible time, because of the detailed rules that apply to determining eligibility.

Special Needs Trusts

A specific type of irrevocable trust, called a special needs or supplemental needs trust, can protect income and assets for an individual with a disability without affecting the individual’s government benefit eligibility. However, a special needs trust must be established in full compliance with specific rules and regulations to avoid risking loss of benefits.

A family may use a special needs trust to protect a child or adult with a disability. An adult who develops special needs may also be able to use this type of trust to qualify for government benefits, but there are limitations on creating special needs trusts for adults over the age of 65. In that case, Medicaid planning may help an elder qualify for Medicaid coverage of nursing home costs.

If you have a family member with special needs, or you develop a disability due to an accident, medical condition, or other reason, a special needs trust may be appropriate for your estate plan. Working with an experienced estate planning attorney is essential to determine whether your circumstances meet the requirements for creating a special needs trust and also to create the trust itself.

Talk With an Experienced Georgia Estate Planning Attorney

Our Cartersville estate planning practice at Asset Protection & Elder Law of Georgia focuses on helping clients find the right solutions for all their concerns involving their assets, families, and estates, including protecting eligibility for government benefits. We serve clients throughout the communities northwest of Atlanta, including in Bartow County, Cobb County, Cherokee County, Gordon County, Floyd County and Paulding County. To schedule a consultation, call us at (770) 382-0984 or contact us through our online form.