Alternatives to 1st Party SNTs – Part 2
In my blog post last week I wrote about 1st party special needs trusts, which are helpful in maintaining Medicaid benefits for someone who may receive an unexpected inheritance or the proceeds of a personal injury settlement. 1st party SNTs, however, can only be funded when the beneficiary is under age 65. So what options are available if the beneficiary is over the age of 65?
As I mentioned last week, some Medicaid recipients are not receiving much in the way of benefits. It may be better for them to terminate those benefits. They can then preserve some of the assets thru the use of a Medicaid qualifying trust. This would trigger a 5 year look back but, again, if little to no Medicaid benefits are being received this could work fine. The funds are available to use as needed for 5 years after which reapplying for Medicaid would be possible.
For someone in a nursing home on Medicaid that obviously won’t work but there are other alternatives. Depending on the size of the inheritance or settlement to be received, purchases of exempt assets, such as a wheelchair accessible van or a home which could allow the individual to be cared for in a non institutional setting, may be possible. In this way the additional assets could enhance the recipient’s quality of life.
Another option is the Medicaid compliant annuity I wrote about a couple of weeks ago. Some of the funds received can be transferred out of the recipient’s name and the rest used to purchase the annuity which would – together with other income – cover the cost of long term care during the time frame of the penalty resulting from the transfer of assets.
As you can see, there is not a one size fits all alternative, but working with a knowledgeable elder law attorney will help in finding the best choice.