Many parents do not realize that:
A trust is a legal document that holds title to your assets, and lists where your hard earned assets go when you have passed on. Think of the trust as a “box” into which you deposit your assets.
On the “box” are instructions regarding what is to happen with the assets in the box:
After the “five year and a day” look back period, assets which have been transferred to a trust are not counted against the $2,000 limit to qualify for Medicaid. A Special Needs trust can pay for expenses that are not covered by Medicaid or SSI – for example, having a tooth capped instead of extracted. There are no attorney fees, conservator fees, or accounting fees.
The most common way to fund a Special Needs trust is with a life insurance policy. Other assets may also be put in the trust.
The trustee. During your lifetime, you can be the trustee and make these decisions. A successor trustee will take over when you have passed away.
The new caregiver may have expenses in the beginning (for example, making their house accessible). Also, the guardian or caregiver may need to pay for help in the house, and have occasional respite care. You may want to set up a second trust for a successor caregiver to pay for these needs.
Another choice that we have is a Safeguard Trust which allows the needs of the caregiver to be paid for without a special trust. In addition to providing for the needs of the Special Needs child, a Safeguard Trust will also shelter your assets so they are not lost if you need Long Term Care in the future, and will protect your wishes for other beneficiaries.