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Family Benefit Trusts

Elder law is a practice area that places an emphasis on the issues that affect our country’s aging population.  Therefore, elder law attorneys work with people as the age and with family members.  In addition, because of their experience with public benefits, elder law attorneys frequently work with people with disabilities.  Elder law is often described as a unique practice area because of the holistic approach that most elder law attorneys bring to their practices.

Staunton & Faglie, PL is proud to be counted among the ranks of elder law attorneys.  The services we provide are listed below, and we invite you to browse our site for more information about our unique services.

  • Medicaid Planning
  • Estate Planning
  • Special Needs Planning
  • Living Wills
  • Powers of Attorney
  • Wills and Trusts
  • Trust Administration

Family Benefit Trusts (Family Trust) can preserve the Medicaid and SSI eligibility of minor children when their parents receive proceeds from a settlement or other source.  By using the settlement proceeds to fund a Family Trust, the entire family can benefit.  The minor child benefits because his or her Medicaid and SSI eligibility is preserved, and the parents benefit because the Family Trust can be used to provide for the security and needs of the entire family.

For minor children who need to qualify for Medicaid and SSI, the assets and income of their parents are counted through to the child for purposes of determining the child’s financial eligibility.  The Social Security Administration calls this process “deeming,” and the parents are referred to as “deemors.”  A properly established Family Trust is based on the fact that deemors can make uncompensated transfers of their assets without causing any transfer penalties for their minor children who receive Medicaid and SSI.

While the basic rule for establishing a Family Trust is relatively straight-forward, it is critical that the trust document be properly written.  For example, to protect the minor child’s eligibility, a Family Trust still needs to contain certain special needs provisions as it relates to the child.  It is also critical that the Family Trust be administered properly so that trust disbursements are made in a manner that protects the minor child’s Medicaid and SSI.  These means that the trustee of a Family Trust must understand the trust document and be experienced with Medicaid and SSI rules so that the substance and form of trust disbursements will comply with the necessary rules.

Even though a Family Trust must have special needs provisions for the minor child, one important difference between special needs trusts and Family Trusts is that Family Trusts can have very liberal disbursement standards.  One other very important difference is that Family Trusts are not required to contain payback provisions, which means that parents are free to name other family members as remainder beneficiaries of the Family Trust.