Jane called to tell me that her 30 year old daughter, Sally, is now totally and permanently disabled. Sally never married and has no children. Jane wants to know how she might provide for Sally now or after Jane deceases.

It is certain that Sally will need long term care now and well into the future. Sally's assets are currently being spent on her care and at some point she will have spent those assets down to where she will be eligible for long term care benefits under the Medicaid program.

I suggested that Sally may want to ask Jane to set up a Supplemental Needs Trust for herself, using Sally's own funds. She could transfer all of her countable assets into the trust and then qualify for long term care benefits under the Medicaid Program. As a "Self Settled" Trust, the trust would have to require that whatever assets remain in the trust at the time of Sally's death be paid back to the government.

I also advised Jane to set up another Supplemental Needs Trust for Sally---one that does not require a payback. Jane can either transfer some of Jane's own assets into the trust now or can leave a portion of her estate through her will to the Supplemental Needs Trust. The assets in the trust for Sally's benefit are not countable and will not disqualify her from Medicaid. In addition, as a "third party" settled trust, there will be no pay back requirement on the part of Sally or Sally's estate when she dies.

The concept of a Supplemental Needs Trust is that the assets within the trust are to be used solely to supplement and not supplant or replace those benefits provided by the government. Sally had been a frequent visitor to the various art museums around town and also liked to attend the opera. She also liked to go to the beach in the summer. The costs of transportation and tickets, as well as food and souvenirs can be paid by the Supplemental Needs Trust. These benefits would not have been paid for by the Medicaid program.

Care must be taken to ensure that the assets in the trust are not used to replace government benefits such as housing. If used for that purpose, all of the assets in the trust will be deemed to be countable for Medicaid purposes and the applicant will be disqualified for long term care benefits.

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