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Check Beneficiary Designations-Retirement accounts, life insurance policies, and other investment accounts all have beneficiary designations. Should an SSI or Medicaid recipient receive these assets, their benefit could be jeopardized. It is good practice to review employer provided benefits in addition to private accounts to verify that the beneficiary arrangements are updated.
Beware of Custodial Accounts- Placing assets in a custodial account for a child with a disability is, in effect, no different than an outright gift of the assets to the child; both actions may equally jeopardize the child’s government benefits.
Communication with Family – Other family members may intend to leave assets to a child with disabilities. It is very important to communicate with these family members to avoid potential disqualification for government benefits.
The Special Needs Trust- A properly drafted Special Needs Trust is the only available tool, other than disinheritance, that allows money to be put aside for a person with a disability without it being considered a ‘countable asset’ offsetting government benefits such as SSI, Medicaid, vocational rehabilitation and subsidized housing.
Funding a Trust- If the intent of a family is to assure that funds are available after the parents have died, it may be prudent to purchase permanent insurance on the life of the parents with the Special Needs Trust as the beneficiary. As long as the policy is not owned by the child, it cannot be deemed a “countable asset” that jeopardizes the benefits that the child is receiving.