Connecticut Trust FAQs
How can I protect my elderly parents’ assets?
Asset Preservation Planning is a term used to describe legal tools and strategies to shield elders from having to experience asset loss in the event a long-term care need arises. Let me explain more. The aging process may bring an onset of a disability or medical condition which is associated with increased costs for care-providers. These additional costs are linked with jeopardizing retirement assets which are needed for living expenses and the ability to be self-sufficient. Pre-planning allows most assets to be preserved for living expenses while receiving the long-term care which may be needed to enhance independence or maintain an active lifestyle.
What is the difference between a special needs trust and a supplemental needs trust?
The terms “special needs trust” and “supplemental needs trust” have the same meaning and are often used interchangeably. In general, there are three main types of special needs trusts.
A First Party Special Needs Trust holds funds that belong to an individual with a disability (i.e. settlement, wages, etc.). A Third Party Special Needs Trust holds funds that belong to anyone other than an individual with a disability (i.e. inheritance for person with a disability). A Pooled Trust holds funds that belong to an individual with a disability who is age 65 or older.
Does a living trust protect assets from nursing home?
There are many types of trusts. In general, a Revocable Living Trust will not protect assets for the purpose of Medicaid eligibility because the assets are still treated as if they are owned by the individual who created the Trust. To protect assets for future Medicaid eligibility, an individual may use an Irrevocable Asset Protection Trust with the advice of an elder law attorney.
Can a person have more than one special needs trust?
Yes, a person can have more than one special needs trusts, and in fact, a person with a disability should have more than one special needs trust. We distinguish different special needs trust by the person who is putting money in the trust. An easy example is this: If parents of a child with a disability are leaving inheritance assets to the child, whether the child is a minor or an adult, inheritance should be left in a Third-party Special Needs Trust. Money of the individual with the disability would be routed to a First Party Special Needs Trust, and no one else’s money should be in the First Party Special Needs Trust. Everyone else’s money or assets should pass to the individual in a Third-Party Special Needs Trust.
Is a special needs trust a living trust?
Yes, a special needs trust is a living trust for individuals with disabilities. The trust provisions are formal so that the assets within the trust do not count toward asset limits for benefit programs which provide support to individuals with disability. Think of the trust as you would think of Harry Potter’s invisibility cloak. The assets in the trust are virtually invisible so individuals with disabilities may qualify for benefit programs with low asset limits.