When to put money into Special Needs Trust?

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I am the trustee of my brothers trust. Which I haven't set up a bank account for yet. Mom will need some of her money to pay taxes on the money she will get for selling property. There is also a legal suit against her. I don't think they will win. But you never know. I think it is for $10,000. Not sure. Taxes to be paid on selling property for $200,000. To be paid over a year. Also she has large expenses for day to day living. For her and my brother. And she might need to pay for a nursing home one day. She is 89 years old. So how do I figure how much money to put in the trust to keep nursing home or others from getting most of her money. And when to put the money in. I don't want to have to do the paperwork and manage the trust anytime before I really need to do it. My brother is 52 years old and has a personality disorder. Can't keep a job. Is on SSI, and food stamps. He recently moved back with mom full-time.

Barbara

Answers 1 to 2 of 2
Talk to the attorney handling the sale, because a lawsuit can really foul up a closing on the property. Last I checked most states were collecting an estimated Capital Gains tax at the closing too.
Expert Answer
117 helpful answers
You are asking a series of important questions that affect the lives and finances of two people:
1) your mother. Consider her care needs and ways you can use her resources to avoid a nursing home admission.
2) your brother. Consider his needs, and ways supplemental funds could improve his life.

You explained how both people need to comply with the regulations the govern public benefits. You are in the position of responsibility for understanding the rules that affect both people.

The terms of your brother's Special Needs Trust are the key to understanding whether the Trust is a useful way of managing your mother's precious financial resources. Here are some questions you could ask an elder law - special needs attorney who can help you:

Does my brother's Special Needs Trust have the language that is needed to make any transfers my mother makes to fund the Trust "not countable" if she needs Medicaid?

What are the fraudulent transfer laws in my mom's state? Will a transfer to a disabled child's trust be exempt from "claw back" by her creditors?

Is the Supplemental Needs Trust written properly, so any funds in it won't be considered "available resources" to my brother?

You mentioned that your mother has limited resources to contribute to the Trust, and you are reluctant to get involved in dealing with distributions. Have you considered establishing an account with pooled trust in your state? These are known as (d)(4)(C) trusts. The pooled trust administrators are professionals, and can handle the details of distributing your brother's funds at standard rates.

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