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Mistakes to Avoid- Special Needs Beneficiary

Beneficiary designations, account titling (ownership arrangements), and traditional estate planning tools (trusts and last wills) work together to create a fully functioning estate plan. Another common mistake made with beneficiary designations and ownership arrangements includes adding a special needs individual as a direct beneficiary of an asset.

Naming “special needs” individual (i.e., a person who receives governmental benefits such as Medicaid or Supplemental Security Income) as a beneficiary, can disqualify that individual from receiving his or her benefits. The special needs individual will be forced to “spend down” the inheritance and, only after all the inheritance has been spent, apply for benefits again.

Creating a “special needs trust” or “supplemental needs trust,” within your will or living trust to receive and hold the inheritance for the benefit of that special needs individual for his or her lifetime will provide for the individual without jeopardizing his or her benefits.

Over the next several posts we will explore these common mistakes in more detail.

To be continued….
Aaron E. Futterman, CPA, Esq. is a partner in the law firm of Futterman & Lanza, LLP with offices in Smithtown, NY and clients throughout Suffolk, Nassau, Queens, Brooklyn, Bronx, Richmond, New York, Westchester and Rockland Counties. He concentrates his practice to Elder Law, Medicaid Planning, Medicaid Applications, Estate Planning, Probate, Estate Taxes, and Estate Administration.

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