October Newsletter

Planning for the Disabled Grandchild and the Elderly Grandparent

Medicaid long-term care rules allow the transfer of assets to the applicant’s disabled child without penalty. Medicaid generally penalizes an individual who gives away assets and then requests coverage for long-term care under Medicaid. The penalty is a delay of Medicaid coverage equal to the size of the uncompensated gift.

One exception to this is gifting to the individual’s adult disabled child who is (1) under 65 years old at the time of the transfer and (2) blind or disabled as defined by Social Security or Medicaid. The gift can be made outright to the child.

If the disabled child has a mental disability however, it may not be prudent to not make the gift directly to that child, particularly if that child has difficulty managing assets. In addition, if the disabled child is receiving SSI and Medicaid, the gift may affect that child’s eligibility for these programs. Both of these public benefits have limits on what resources the disabled person can keep and still retain eligibility.

Under these circumstances, the transfer is made to a Special Needs Trust with the disabled child as the beneficiary. In order for the trust to qualify for Medicaid planning, it must state that it is for the sole benefit of the disabled child and upon his death, the state receives reimbursement, or payback, from the trust for any expenditure the state made for long term care coverage on behalf of the disabled child’s care.

Transferring assets to a Special Needs Trust for the purpose of Medicaid planning is not limited to setting up a Special Needs Trust for a child of a Medicaid applicant. As long as the Special Needs Trust is set up for the sole benefit of a disabled person who is under 65 at the time of the transfer and has a payback provision, the transfer will not invoke the transfer of asset penalty.

For example, a couple with a disabled child faces having a parent placed in a nursing home. Ordinarily, the parent would need to spend down assets before applying for Medicaid. In this case, we can set up a Special Needs Trust for their disabled child and fund it with the grandparent’s assets. The grandparent can still obtain Medicaid long-term care coverage provided the trust is for the sole benefit of the disabled grandchild and provides payment back to the state if the grandchild ever needs Medicaid long-term care coverage. In the meantime, trust assets can be used to assist the disabled grandchild for his lifetime.

In this way I can serve two both the elderly grandparent and the disabled grandchild.

Wake Up to Autism

The Autism Society of Northern Virginia (ASNV) is hosting ‘Wake Up to Autism’ events every other week at its Fairfax office location. The events serve as an introduction to ASNV. You will learn about its Advocacy, Services and Support. The events occur on Tuesday mornings from 8:00 a.m. to 9:00 a.m. Its hosted by staff and Board members.

We like to personally invite attendees. Please contact Edward Zetlin Law at 703-379-0442 or ed@zetlinlaw.com. As a Board member of ASNV I would be honored for you to attend at my invitation.

Contact us at (703)379-0442; ed@zetlinlaw.com

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