Parents of special needs children want their children to be provided for, but they want more than just a basic existence. They want their child to look forward to something, even if it is as simple as a day at the park on weekends, a steady supply of new magazines and books, or going to a movie. These simple comforts, however, will be out of their reach if the parents failed to take the steps necessary to provide for them, given that the federal government makes sure a person has very few funds in order to qualify for most assistance programs.
There are steps parents can take to make sure that their child is taken care of after they are gone. More importantly, there are ways to do this without giving up control of their future to a total stranger, corporation or government bureaucracy.
The Benefits of a Medicaid Exemption Trust
One option that provides for your child without disqualifying them for government assistance is fairly simple to understand, with one variation or another being right for most special needs children. A Trust prepared by a qualified attorney is established to hold funds on the child’s behalf, and a life insurance policy of one kind or another is purchased on the life of a parent or the parents to place money into the trust after death. A trustee of the parent’s choosing is named to make financial decisions for the child, but the child has no right to the money—it is entirely within the trustee’s discretion whether or not funds can be used. This type of trust is sometimes called a Medicaid Exemption Trust.
The emphasis above is on the word “right.” If the child has any right to demand money, then most federal regulations state that all of those funds must be used to pay for assistance before the government will step in and provide for the basic maintenance of the special needs person. However, the trustee can spend money in a variety of ways that does not violate federal regulations. Money can be spent to take the special needs beneficiary to the movies, transport relatives to visit the child, pay for elective surgery or medications not covered by Medicaid, swimming lessons or lease equipment in the name of the trust that the beneficiary can use. These items do not currently disqualify a special needs person from federal assistance because it does not place any property in their name or make assets available to them for their unfettered use. A properly drafted Medicaid Exemption Trust clearly states that the beneficiary is not entitled to funds, and the trustee must make expenditures that do not disqualify the beneficiary from assistance.