Can I Put a Rental Property Into a Supplemental Needs Trust and Not Lose Benefits?

[Lion Heart 550]

Jurisdiction

California

Dear Elder Law, Medicaid & Disability Forum,

I am currently receiving Medicaid, Medicare, and Social Security Disability Insurance. I want to purchase a rental property and put it into a supplemental needs trust so that I will not lose my benefits. The rental property cash flow would be directed back into the trust. Will doing this put me at risk of having to pay back any benefits received? Can the government seek to take assets from the trust?

Sincerely,

Lion Heart 550

 

[ElleMD]

No, you can not put funds into a trust for yourself.

 

[army judge]

Dear Elder Law, Medicaid & Disability Forum,

I am currently receiving Medicaid, Medicare, and Social Security Disability Insurance. I want to purchase a rental property and put it into a supplemental needs trust so that I will not lose my benefits. The rental property cash flow would be directed back into the trust. Will doing this put me at risk of having to pay back any benefits received? Can the government seek to take assets from the trust?

Sincerely,

Lion Heart 550

I suggest you visit two major, national banks, or large regional banks.
Ask to speak with a trust officer.
Some are lawyers, some are CPAs, all are knowledgeable.
You can ask about creating "certain" trusts for free.
I mean the session will be free.
Creating a trust has costs.
You can find out those costs, too.
After you've done your homework, you can study the information received, and then determine what might work best for you.

A large regional bank managed the "special needs trust" for our son.
He was incapacitated and eventually suffered a noxious brain trauma and lapsed into a coma.

I sued the offender and two of his insurers. I won a rather large judgement for my wife, had her appointed his conservator, and another award for his two mine daughters. The bank was appointed the trustee, managing the funds. My wife oversaw his care, and our daughter was backup conservator.

Upon his death, the remainder of the trust will be paid out to his daughters upon their respective 25th birthdays. Their trust funded their college educations.

Good luck.

 

[Michael Wechsler]

I am currently receiving Medicaid, Medicare, and Social Security Disability Insurance. I want to purchase a rental property and put it into a supplemental needs trust so that I will not lose my benefits. The rental property cash flow would be directed back into the trust. Will doing this put me at risk of having to pay back any benefits received? Can the government seek to take assets from the trust?

It's not entirely clear what you plan to do and how this would benefit you or someone else. A supplemental needs trust has specific rules. If you're going to benefit from a trust, which is usually created to benefit someone else, you're likely going to see a reduction in your SSI benefits unless you qualify for certain execptions. Here is a good post from the Social Security Administration on SSI and trusts.

SPOTLIGHT ON TRUSTS - 2016 Edition

A trust is a legal arrangement regulated by State law in which one party holds property for the benefit of another. In certain situations, a trust can be set up for an SSI recipient. If you use your assets to establish a trust on or after January 1, 2000, generally, the trust will count as your resource for SSI.... In the case of a revocable trust, the whole trust is your resource. In the case of an irrevocable trust, if there are any circumstances under which payment could be made to you or for your benefit, the portion of the trust from which payment could be made is your resource.

The IRS and government takes a common sense approach. If you're in control of the trust and can receive benefits, chances are it's little different than if you didn't have the trust. They aren't going to allow loopholes that are no different than putting money in a different pocket in your own pants. Exceptions are mentioned by the SSA pertaining to Section 1917(d)(4)(A) of the Social Security Act, often called "special needs trusts."

These are complicated and not to be taken lightly. One would assume that taxpayers and the government wouldn't want people with a high net worth to take money from the system by pretending they are not well off through shielding their assets. The information is above and an estate planner or trusts and estates attorney would probably be of more assistance regarding your specific situation.