Testamentary Special Needs Trust

By setting up a Special Needs Trust for your spouse in your Will, you can improve their quality of life.

If your spouse is disabled and receiving Medicaid or if there is a concern that your spouse may become disabled and need to apply for Medicaid to help pay for care, you may want to set up a Testamentary Special Needs Trust (a Trust created in your Will) to supplement your spouse’s needs beyond what is paid for by Medicaid.

Assets transferred into a Testamentary Special Needs Trust do not trigger the Medicaid asset transfer penalty, nor are they counted for eligibility purposes.The Trust is used to supplement the needs of your spouse over and above his or her care, support and maintenance.

A Special Needs Trust provides for material goods, services and experiences that will make your spouse’s life as pleasant and comfortable as possible. For example, expenditures for travel, companionship, cultural experiences, recreational activities and sporting activities may be paid for out of the Trust. The Trustee may use the income and principal of the Trust to pay for medical or dental treatments for which there are no private or public funds available. Supplemental care (nursing care, for example) rehabilitative services or assistance programs that are not otherwise provided for, may also be considered by the Trustee. In addition, Trust funds may be used to pay for the difference in cost of a private room, rather than a shared room, in institutional settings. All these things can greatly enhance your spouse’s life.

If you pass away before your spouse, and you don’t have a Special Needs Trust, the assets in your estate will go directly to your spouse and he or she would lose eligibility for public assistance programs. Your spouse would have to spend down the assets they received to $2,000 and then reapply for Medicaid. In that case, there would be no funds available to provide for the additional needs of your spouse, as mentioned above.

Supplemental Needs Trusts are legal, appropriate and encouraged by state law and statutes. These Trusts are set up by caring family members to provide for the extra needs of a disabled spouse, beyond what is provided by public benefit programs.

Tom Packer is an Elder Law Attorney serving all of Southeast Idaho. As part of his law practice, Tom offers Life Care Planning to deal with the challenges created by long-term illness, disability and incapacity. If you have a question about a Senior’s legal, financial or healthcare needs, please call us.

February 2019