Testamentary Special Needs Trust

A way to provide for a spouse with Alzheimer’s in your will.

When one member of a couple is diagnosed with Alzheimer’s, the other spouse is often still healthy. The healthy spouse frequently becomes the care provider for the spouse with Alzheimer’s allowing him or her to remain in their home. Being a caregiver, however, can be an exhausting and stressful responsibility and can take its toll on the healthy spouse. Consequently, it is not unusual for the healthy spouse to predecease the spouse diagnosed with Alzheimer’s. This may create a problem if the estate of the healthy spouse goes to the spouse with Alzheimer’s, since it may disqualify the spouse with Alzheimer’s from receiving Medicaid.

Fortunately, federal law allows the healthy spouse to create a testamentary Special Need’s Trust (SNT) that prevents his or her estate from passing to the spouse. Since the assets of the SNT are not available to the spouse with Alzheimer’s, they are not counted toward Medicaid eligibility. The Trust can then be used to provide for the supplemental needs of the spouse with Alzheimer’s, that are not covered by Medicaid. Money from the trust can be used for many things including medical equipment, trips or other special events which increase the dignity and quality of life of the spouse.

The following case study gives an example of how this works. Ron and Sheri had been married for several years, when Sheri was diagnosed with Alzheimer’s. Ron told Sheri that he would care for her in their home for as long as he was able. After a year of providing care, Ron is diagnosed with inoperable lung cancer and will most likely predecease Sheri. Ron changes his estate plan and writes a new will setting up a testamentary SNT for Sheri. When Ron passes away and Sheri moves into an assisted-living facility, her children can file an application for Medicaid to pay for the cost of her care. The money in the SNT will not be counted towards her eligibility for Medicaid and can be used to provide for Sheri’s supplemental needs and enhance her quality of life.

A healthy spouse, concerned about the well-being of a spouse diagnosed with Alzheimer’s, can continue to provide for that spouse even after he or she passes away by establishing a testamentary SNT.

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.