Picture this:
You live with your adult child, and you’ve taken care of each other for years.
It’s been you two against the world ever since your spouse passed away.
You’ve worked hard to pay off your home.
You want to ensure you leave it to your child when you’re gone so they can continue to live there.
What do you do?
Your neighbor tells you that she filled out a Transfer on Death Deed to grant her home to her daughter.
It’s easy, efficient, and no probate is needed when you pass.
The property is titled under your child’s name after you pass away.
It sounds great!
But wait…
A Transfer on Death Deed was a good choice for your neighbor’s family.
What if your situation is a little more complicated?
What if…
What if your child’s depression prevents them from working and they can’t afford the bills?
What if they need additional medical care for their diabetes?
They currently receive Medical Assistance.
Without it, they’d have to pay thousands of dollars in medical expenses and insurance premiums, or worse, go without the care they need.
With a Transfer on Death Deed, your child would suddenly inherit an available asset upon your passing. This could unexpectedly make them ineligible for Medical Assistance.
Suddenly, they’re responsible for all their medical expenses when they previously only had $2200 in their bank account.
They need their therapy appointments and insulin in order to stay healthy.
What are they supposed to do?
Now, take a breath. There are other options.
A better option might be to have your home placed in a Supplemental Needs Trust.
A Supplemental Needs Trust (SNT) is a legal tool for people with disabilities.
Assets that would otherwise make them ineligible for Medicare or Supplemental Security Income can be placed within the trust and used for their benefit as the beneficiary.
Since the beneficiary of the trust doesn’t own the trust’s assets, they won’t be counted as available assets when determining means-tested benefits (benefits where there is an asset limit).
You can be the trustee of the trust while you are still alive, then appoint a guardian or even the court to be the secondary Trustee upon your passing.
This way, your child can benefit from your estate after you pass away, while still receiving the benefits on which they rely.
It’s important to note that a Supplemental Needs Trust is irrevocable – so once something goes into the trust, it can only be used to benefit the beneficiary and cannot be “taken back out”.
This is just one example of a family navigating Estate Planning and Medical Assistance.
Every family is unique with different assets and needs. It’s important to have a good Estate Planner who knows your situation and your options, and who will help guide you through the regulations associated with those options.
