A special needs trust (SNT) *can* purchase a home for a beneficiary, but it’s a complex area requiring careful navigation of Supplemental Security Income (SSI) and Medicaid rules. The goal is to provide housing without disqualifying the beneficiary from crucial government benefits. SSI, in 2024, has a federal payment standard of $943 per month, and losing eligibility due to exceeding asset limits would be devastating. A properly structured SNT allows the trust to own the home while the beneficiary resides there, essentially providing a supported living situation without impacting their public assistance. The trust must be the legal owner of the property, and the beneficiary cannot have direct ownership or control, as that would jeopardize their benefits.
What are the biggest risks when using trust funds for housing?
One of the most significant risks is exceeding the asset limits for SSI and Medicaid. As of 2024, the resource limit for SSI is $2,000 for an individual and $3,000 for a couple. If the value of the home, even though owned by the trust, is deemed to contribute to the beneficiary’s resources, it could lead to benefit ineligibility. Furthermore, the trust must be careful about how it handles property taxes, insurance, and maintenance. These costs must be paid *from* the trust funds and not by the beneficiary, as any contribution from the beneficiary could be considered unearned income, also impacting benefits. Approximately 65% of individuals with disabilities rely on SSI as a primary source of income, making benefit preservation paramount.
How does a special needs trust differ from other types of trusts?
A special needs trust is specifically designed to hold assets for the benefit of a person with disabilities without impacting their eligibility for needs-based public benefits like SSI and Medicaid. Unlike a typical trust where the beneficiary receives distributions directly, an SNT funds supplemental needs – those not covered by government programs. This could include things like therapy, recreation, travel, or, as we’re discussing, housing. There are two primary types of SNTs: first-party or self-settled trusts, funded with the beneficiary’s own assets (often from a legal settlement), and third-party trusts, funded by someone other than the beneficiary. The rules governing each type differ, particularly regarding Medicaid payback provisions. A properly drafted third-party SNT avoids Medicaid recovery, ensuring any remaining assets can pass to other beneficiaries after the individual’s passing.
What happened when a family tried to handle this on their own?
I remember working with a family, the Millers, who were incredibly loving but inexperienced with special needs trusts. Their son, David, had cerebral palsy, and they wanted to use funds from a settlement to buy him a small bungalow. They purchased the property *in David’s name* intending to manage it for him. Within months, they received a notice from Social Security stating David’s SSI benefits were being suspended due to exceeding the asset limit. They were devastated. They hadn’t understood the implications of direct ownership. Thankfully, they came to us. We worked with them to establish a third-party SNT, transfer the property title to the trust, and petition Social Security for reinstatement of benefits. It was a stressful and costly process, but ultimately successful. It highlighted the importance of proactive legal counsel.
How can you ensure a smooth home purchase with a special needs trust?
Fortunately, the Johnson family came to us *before* making any purchase decisions. Their daughter, Sarah, had Down syndrome, and they were considering using funds from a life insurance policy to buy a condo. We guided them through the process, emphasizing the need for a carefully drafted trust agreement, clear guidelines for property management, and ongoing communication with Social Security. We structured the trust to own the property and appointed a trustee responsible for handling all expenses and maintenance. The process was seamless. Sarah now enjoys a comfortable and stable home, and her benefits remain intact. The key was planning *before* acting. It’s about ensuring the beneficiary’s long-term security and quality of life while complying with complex regulations. It’s a rewarding process to see families achieve this peace of mind knowing their loved one is well cared for and their benefits protected.
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About Steve Bliss at Escondido Probate Law:
Escondido Probate Law is an experienced probate attorney. The probate process has many steps in in probate proceedings. Beside Probate, estate planning and trust administration is offered at Escondido Probate Law. Our probate attorney will probate the estate. Attorney probate at Escondido Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Escondido Probate law will petition to open probate for you. Don’t go through a costly probate call Escondido Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Escondido Probate Law is a great estate lawyer. Affordable Legal Services.
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Estate Planning Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
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| estate planning | revocable living trust | wills |
| living trust | family trust | irrevocable trust |
Map To Steve Bliss Law in Temecula:
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Address:
Escondido Probate Law720 N Broadway #107, Escondido, CA 92025
(760)884-4044
Feel free to ask Attorney Steve Bliss about: “How can I plan for long-term care or disability?” Or “What happens if the will names multiple executors?” or “Do I need a lawyer to create a living trust? and even: “Can bankruptcy stop foreclosure on my home?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.