If someone living in Colorado has a family member with special needs or a disability, they may want to leave assets for them that can help cover the cost of their care. It is actually a bad idea in some cases to leave these individuals money or property in a will, as it can put Supplemental Social Security Income and Medicaid benefits at risk. Those benefits are based on income and assets. If they are left money in a will, they can apply for benefits again once their property is diminished, but this can be a time-consuming and trying process.
For people receiving these types of benefits, trusts are usually advisable. A trust can ensure that someone is able to take advantage of assets left to them without the property being directly in their name.
There are certain trusts that can be set up to comply with SSI and Medicaid, and they must follow specific guidelines. Some of the requirements are that a trust must be set up with a sole beneficiary and it cannot be changed, and the trust must have a trustee that is not the settlor. Additionally, funds can not be used for basic life needs, such as food.
Trusts can do a variety of things that wills cannot, but they must be set up correctly to work as intended. If a trust is not set up appropriately or does not meet legal standards, it could end up being invalidated or the cause of costly and time consuming probate. An estate planning attorney may be able to advise a client as how certain types of trusts may be an effective way of supplementing a will.
Source: News and Observer, “Money Matters: Special Needs Trust can help niece best in long-term “, Holly Nicholson , December 28, 2013
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