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Trusts

Why Should You Use Trusts in Your Estate Plan?

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Estate planning is all about controlling your assets. It offers control of your assets during your life as well as control of your assets after your death. The most basic way to establish this control is through a will, but for most people, the will needs to be followed by additional estate planning documents and tools. One of the most common is the trust. The trust can be very handy for individuals who want to control their assets. The need for a trust is driven by the level of control you would like to maintain over your estate. The trust offers...

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How Much Income Goes Into a Miller Trust?

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To qualify for Medicaid, an applicant must have income that falls below specific limits. Some states allow applicants with income above the threshold set by eligibility requirements to spend down their income, covering the costs of their care. But Florida is an income cap state. As an income-cap state, Florida requires applicants with incomes exceeding the allowable limit to deposit excess income in a Qualified Income Trust or Miller Trust to qualify for Medicaid. A Miller trust can distribute a personal needs allowance to the applicant, funds can be used to pay the applicant’s spouse an allowance, and other funds can...

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How to Use a Trust in Medicaid Planning

Effective Medicaid planning can allow individuals and families to preserve some of their estates for descendants while also fulfilling the Medicaid asset limitation requirements. Some use “gifts” in their Medicaid planning, but this leaves the potential for loss. When assets are transferred to another individual, you no longer control them. Most feel that an irrevocable trust is a safer approach. The trust is a legal entity with the “trustee” holding legal title to property in the trust for the benefit of the “beneficiaries.” Trustees are required to follow the rules of the trust. Whether or not the trust assets are...

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The Pros and Cons of a Special Needs Trust

Parents of special needs children often worry about protecting the financial future of their child. Numerous options can be used to meet the challenge. One option is the special needs trust. If you are the parent or guardian of a special needs child and you are worried about safeguarding their financial future in case something happens to you, a special needs trust is probably a good idea. Special needs trusts provide a financial provision for someone with special needs. Many individuals with special needs receive federal government benefits. These benefits are accessible through adherence to strict qualification rules regarding the allowable...

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Planning Techniques to Help Gain Medicaid Eligibility

For older Americans seeking assistance with the costs of long-term care through Medicaid, income and assets must fit within the established guidelines. One of the most basic of the Medicaid guidelines is that you must spend down your assets before qualifying for state or federal assistance. Strict Medicaid rules are in place to prevent people from getting around the rules. However, numerous strategies are used to circumvent the rules. 5 Common Strategies Used to Qualify for Medicaid Without Spending Down Assets:   Irrevocable Trust: An irrevocable trust allows loves ones to receive the financial benefits of your assets. In the simplest...

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The Duties of a SNT Trustee

Are you considering taking on the duties and responsibilities of a trustee of a special needs trust? If so, you probably have questions about exactly what those duties and responsibilities are and what it means to be a SNT trustee. While there are many potential duties, these five responsibilities will constitute the majority of what a SNT trustee will need to manage. Duties of a Special Needs Trust Trustee: Make Distributions from the Trust: The trustee is legally required to abide by the terms of the trust when making distributions. Before the SNT trustee can make a distribution, they must...

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The Two Types of Special Needs Trust

Special Needs Trusts (SNTs) fall into one of two categories: first-party SNTs and third-party SNTs. The first step in creating a special needs trust is determining which type you need, which will depend on whose property funds the trust. If the property funding the trust originates with the beneficiary of the SNT, it is a first-party SNT. If the property funding the trust belongs to someone other than the beneficiary, it is a third-party SNT. The Third-Party Special Needs Trust: Commonly used by individuals planning in advance for a loved one with special needs, parents of special needs or disabled individuals...

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Qualified Income Trusts: Qualifying for Medicaid Benefits with a High Income

Eligible applicants for Medicaid’s long term care benefits must have income and assets that fall under the allowable limits. Individuals who do not qualify for Medicaid due to income higher than the permissible limits of the Medicaid process who don’t have enough income to pay for long term care should consider a Qualified Income Trust (QIT). Using Qualified Income Trusts (QITs), excess income is directly deposited monthly into a restricted funds account. The money in the restricted funds account is limited to use for one specific reason. Restricted funds accounts associated with QITs are reserved explicitly for paying nursing home bills...

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Assigning a Trustee to a Special Needs Trust

If you are interested in creating a Special Needs Trust (SNT), one of the first decisions you will need to make is who to designate as the trustee. The rules do not allow for the trustee to be the beneficiary (the individual with a disability) or their spouse. If the beneficiary of a special needs trust or their spouse is the designated trustee, the funds held in the trust would automatically be considered a resource, or asset of the beneficiary under Supplemental Security Income (SSI) and Medicaid rules. Since trust assets would then be regarded as countable assets, the beneficiary...

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What is a Supplemental Needs Trust or Special Needs Trust?

A special needs trust or supplemental needs trust as they are sometimes called, allows individuals to designate special needs individuals to receive gifts, legal settlements, or other funds without losing their eligibility for government benefits programs. This type of trust is drafted so that the funds are not considered as “belonging” to the beneficiary when their eligibility for public benefits is being determined. Special needs trusts (as the name implies) are designed to pay for comforts and luxuries that could not be paid for by public assistance funds. They are not intended to cover basic support costs. Instead they are designed...

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