By Molly Murphy Berry, Esq., Community Fund Ohio
A financial gift can be a meaningful way to show care and support. But when the recipient is a person with a disability, even the best-intentioned gift may create unexpected obstacles.
Many individuals with disabilities rely on government benefits, such as Supplemental Security Income (SSI) and Medicaid. These programs have strict financial limits. Receiving cash, an inheritance, or even certain types of in-kind support can push someone over those limits, potentially causing a loss of benefits. In most cases, restoring eligibility can be time-consuming and stressful.
Common pitfalls include naming the individual directly in a will, giving cash gifts, or adding them as a joint owner on a bank account. While these actions are generous in spirit, they can unintentionally disrupt critical support systems.
One of the most effective ways to avoid these issues is through a special needs trust. Instead of giving assets directly to the individual, funds are placed in the trust and managed by a trustee for the person’s benefit. Properly structured, a special needs trust allows the individual to maintain eligibility for essential benefits while still enjoying an enhanced quality of life.
For families seeking a simpler option, a pooled special needs trust may be worth considering. These trusts are managed by nonprofit organizations, such as Community Fund Ohio, and combine the resources of many beneficiaries for investment purposes, while maintaining separate sub-accounts for each individual. This allows for expert-level, cost-effective administration.
Before making a gift, it is wise to consult with an attorney familiar with special needs planning. A little planning can ensure your generosity truly helps, without unintended consequences.
https://www.communityfundohio.org/