"Being well-intentioned is not enough," said Michael Duckworth, a Merrill Lynch financial advisor who specializes in estate planning for clients with a disabled loved one. "There are a lot of stories of grandparents who accidentally knocked their grandchild out of a needs-based program by leaving money to him or her outright."
Children and adults with significant disabilities, either physical or mental, are eligible for essential long-term nursing care under Medicaid, along with cash assistance under Supplemental Social Income—but only if they own no more than $2,000 in countable assets or $3,000 for a married applicant—and a number of state programs, including special education classes and vocational training.
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"You may have a situation whereby Grandma writes a check out in her disabled grandson's name and he gets kicked out of the program that was giving him a better life experience," Duckworth said. To get back in, the beneficiary would have to spend down his assets and reapply for the program, which causes a lapse in service and disrupts continuity of care.
Unbeknownst to many, said Duckworth, many of the best state programs—including vocational training and those designed to service individuals with specific diagnoses, such as autism—are available only through Medicaid.