Planning to provide for family members with physical or mental disabilities can include housing issues, accessibility issues, transportation issues, and many others. It is common for parents and other family members to provide physical, emotional, and financial support for relatives in need. A common desire is to leave assets for a disabled child or other family member, to provide for that person when the parent or other family member can no longer provide support. But leaving assets to that child may interrupt his/her Supplemental Security Income, Medicaid, or other benefits.
A traditional way of addressing this issue is to “disinherit” the disabled child, leaving everything to his/her other relatives with the understanding that they will provide for his/her needs. This is a fine approach—if it works out. But there is a legal risk in having someone else legally own assets intended for someone else. Of course, that risk includes the “black sheep” who takes the assets and runs away. But more often, the risk involves unexpected events which may well affect the assets being held. These could include legal liabilities arising from an automobile accident, creditor difficulties, or death.
In 1993 Congress authorized the use of two types of trusts for families with disabled children. In Ohio, most people call these “Special Needs Trusts” and “Pooled Trusts.” Disabled children were the primary intended beneficiaries; however these trusts may sometimes be used for other disabled family members. Both allow a disabled person to have use of assets, without those assets counting for SSI or Medicaid. Normally the assets can be used for anything for the disabled beneficiary. (Complications arise if the assets are used for certain types of food or shelter.) The assets do not count for SSI or Medicaid for the rest of the beneficiary’s life. At his death, the trust must require that any remaining funds be available to reimburse Medicaid. Pooled trusts may give other options.
Be sure to accurately define the benefits actually being received or which may be needed in the future, and consider all available options. It should be noted that Ohio law provides few other options for leaving assets to disabled children.