Illinois Estate Planning Disability Trust
Clients who suffer from a disability that prevents them from caring for themselves, including Alzheimer's patients, can benefit from Carol Nolan's experience with establishing special needs trusts. There are two types of disability trusts that allow a person to transfer their own assets to the disability trust and thus qualify immediately for Medicaid. They are:
- OBRA '93 Disability Pay Back Trust
This an irrevocable trust containing the assets of a person under age 65 who is disabled, as determined by the Social Security Administration. The trust is exempt if it is created for the benefit of the Medicaid client by a parent, grandparent, legal guardian or the court. The trust provides that any amount remaining in the trust will be paid to the Department of Public Aid upon the death of the trust beneficiary. The trust remains exempt after the beneficiary attains age 65, but any additions to the trust after the person reaches age 65 are treated as transfers of assets.
This is an irrevocable trust containing assets of a person of any age who is disabled under the same criteria as a disability pay back trust. This trust is created and managed by a nonprofit organization; a separate account is maintained for each person, but for management purposes of the trust pooled funds. An account is set up for the client's benefit by the client (or agent under power of attorney), parent, grandparent, legal guardian or a court. The state is paid back upon the death of the client, and the remainder may go to family.
Both trusts allow for the funds to supplement any state and federal benefits that the client is receiving. No money shall be used for ordinary care, comfort and health, including as a means of illustration, basic food, clothing and shelter, so long as there are sufficient monies available for those purposes from federal, state and local governmental programs, or from private agencies, or a combination thereof.
The trustee of these trusts may not distribute assets from the trust to the client at any time, and neither the client nor the guardian of his person or estate, if any, shall have any right or power to demand distribution from the trust at any time. The trustee must exercise vigilance in discerning special needs, comforts or luxuries suitable for the client which are not provided by local, state or federal government agencies, or from private agencies or any combination thereof, and for the purpose of satisfying such special needs, luxuries or comforts, the trustee shall use so much of the income and principal of the trust as it in its sole discretion believes will enhance the quality of the client's life without disqualifying the client for any state, federal or local benefits or programs then providing for his needs.
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POWERS OF ATTORNEY AND PLANNING FOR POTENTIAL DISABILITY
