What can you do if your special needs child has too much money in his or her name to qualify for SSI and Medicaid? Last week, we talked about spending the money down. Let’s now take a look at other alternatives.
My special needs child is under age 18 and received an unexpected inheritance of $25,000. We would prefer not to spend the money down to make her eligible for SSI/Medicaid at age 18. Is there an alternative?
Yes. You can create a first-party Supplemental Needs Trust (SNT), also known as a Payback SNT. The trust would have a payback clause entitling Medicaid to be reimbursed for their expenditures from any remaining assets in the trust pursuant to your child’s death.
Can I avoid leaving money to Medicaid in the Payback trust after my child’s death?
One strategy would be for the trustee(s) to spend the money in the trust for your child’s benefit prior to spending family resources, thereby depleting the trust funds. An attorney qualified in special needs planning can advise you further regarding trustee limitations and trust expenditures.
Can I still use the Payback trust if my child is 18 or older?
In most cases, yes, but the parents will probably need to obtain guardianship of the property in order to transfer the assets.
Can I, as the custodian of my child’s UGMA/UTMA account, transfer the assets to a Payback SNT if my child is under the age of 18?
Since the age of majority in New York is 18, the answer is yes. Social Security has taken the position that UTMA provides the custodian with the authority to transfer the custodial property to an SNT prior to the minor’s attainment of the age of majority.
Can I transfer my child’s money into my account in order to make him eligible for government benefits?
Your child’s property is not your property, and you do not have the legal right to transfer your child’s money to your name. This can be a complex issue, depending on the age of your child and other factors. It is best to seek the advice of an attorney well-versed in special needs who can review your personal situation.
My child has $20,000 in his account. If we, as the parents, transferred that money into our name, how would that affect his eligibility for SSI/Medicaid?
Using 2014 rates, your child would be ineligible for SSI for approximately 31 months ($25,000 divided by $808 benefit amount) from the date of the transfer. Therefore, if your child was 15-1/2 years old when the assets were transferred, he would still be eligible for SSI when he turned 18.