Question: I have a small estate to pass on to my children. I need to create a Will. However, my adult daughter is disabled and receives governmental benefits. If she inherits my estate, she will lose her benefit eligibility. How do I avoid this?
Answer: You are correct in stating you need a Will. Yet, if your daughter receives an inheritance directly, it will disqualify her from governmental benefit programs such as SSI and Mass Health. As a result, your daughter’s benefits will stop until she spends the inheritance down to a certain level. Fortunately, by creating a Supplemental Needs Trust to shelter the inheritance you can avoid your daughter’s loss of benefits. Supplemental Needs Trusts capitalize on federal and state exemptions in benefit eligibility rules. They exist upon the theory that governmental benefits are meant to supply recipients with basic needs, like food, shelter and clothing. However, the government allows money to be used for extra items like travel and entertainment. Essentially, your Will should pass your estate to a trustee, to manage the inheritance on behalf of your daughter and to distribute money where needed for her supplemental needs.
Another type of trust called a d(4)(a) trust will shelter your daughter’s future income. Should she acquire work related income, other inheritances, or lawsuit settlement funds, this type of trust will manage said funds independently and free from governmental benefit offset.
Of course, strict requirements apply to trust structure and language, contact an estate planning attorney to adapt such trusts to your situation.