What is a Living Trust?

Leaving an inheritance is meant to provide security. But when the person receiving it depends on Supplemental Security Income, Medicaid, or another needs-based program, a direct gift can create an unexpected problem.Cash, investments, real estate, and other inherited property may be treated as income or countable resources. This can reduce benefits or make the recipient temporarily ineligible.The good news is that seniors can plan ahead. A properly drafted special needs trust for inheritance may allow money to support a loved one without giving that person direct ownership or unrestricted access to the assets.Why Can a Direct Inheritance Affect Benefits?Supplemental Security Income is a needs-based program. In 2026, an individual generally cannot have more than $2,000 in countable resources, while the limit for a couple is $3,000. Cash, bank accounts, investments, and certain property can count toward those limits.An inheritance generally becomes income for SSI purposes when it has value and is available for the recipient to use. If the inherited property remains available into the following month, it may then be treated as a resource. The timing can depend on estate administration and state law.For example, directly leaving $50,000 to a person receiving SSI could put that person above the programs resource limit. That does not necessarily mean benefits are lost permanently, but eligibility and payments may be interrupted until the situation is properly resolved.Medicaid rules are administered by the states and may differ from SSI rules. Some trusts or trust payments that do not count for SSI can still affect Medicaid eligibility.Which Benefits Are Most Likely to Be Affected?The greatest concern usually involves programs that consider income or assets, including: Supplemental Security Income Certain Medicaid programs Medicaid-funded long-term services and supports Some housing assistance programs Certain state and local benefit programs Social Security Disability Insurance is different from SSI. SSDI is generally based on the persons work record rather than financial need, while SSI has income and resource limits. A person may receive both programs, so families should confirm every benefit before changing an estate plan.What Is a Special Needs Trust?A special needs trustsometimes called a supplemental needs trustis a legal arrangement that holds and manages property for a person with a disability.A trustee controls the assets and uses them according to the trusts instructions. The beneficiary does not receive unrestricted ownership of the money.Social Security describes a special or supplemental needs trust as one that may provide for needs beyond assistance available through public benefit programs. Whether the trust is excluded as a resource depends on its terms, funding, control, state law, and applicable benefit rules.The trust does not replace public benefits. It is generally intended to supplement them.The Best Option for Many Seniors: A Third-Party TrustFor parents and grandparents planning an inheritance, the most relevant option is usually a third-party special needs trust.What does third-party mean?A third-party trust is funded with property belonging to someone other than the beneficiary or the beneficiarys spouse.For example, a senior may create a trust using personal savings for an adult child with a disability. A grandparent may also direct an inheritance into a trust for a grandchild receiving SSI.Social Security specifically recognizes a trust funded by a parent, grandparent, or another person as a third-party trust when the property did not belong to the beneficiary.Why can this protect eligibility?A properly written third-party trust may not count as the beneficiarys resource when the beneficiary cannot: Revoke or terminate the trust Take ownership of the trust assets Direct the trustee to distribute money Use the property without the trustees approval The wording must comply with applicable federal and state rules. Simply calling an account a special needs trust does not make it effective.How Is a First-Party Trust Different?A first-party special needs trust contains money that already belongs to the person with a disability.This may include: A direct inheritance already received A personal injury settlement Back payments Savings belonging to the beneficiary Property placed in the beneficiarys name Qualifying first-party special needs trusts are subject to different federal requirements. The beneficiary generally must have been under age 65 when the trust was established, and the trust must include a provision reimbursing state Medicaid programs after the beneficiarys death, up to the amount of qualifying medical assistance paid.This is why planning before an inheritance is distributed is usually easier than trying to correct a direct gift afterward.How Can Seniors Fund the Trust?A third-party special needs trust can receive assets during the seniors lifetime or after death.Possible funding sources include: Cash and investment accounts Real estate Life insurance proceeds Property transferred through a will Assets from a revocable living trust Retirement accounts, when permitted and properly coordinated Gifts from parents, grandparents, siblings, or other relatives Funding through a willA will can direct the beneficiarys share into the special needs trust rather than giving the property directly to the beneficiary.The will should clearly identify the trust. Naming only the individual in the will and expecting the family to move the money later may expose the inheritance to benefit rules.Funding through life insuranceThe special needs trustnot the individual beneficiarymay be named on the life insurance beneficiary form.Beneficiary forms should be coordinated with the estate plan. A will does not normally override a valid beneficiary designation on an insurance policy or financial account.Funding through a living trustA seniors revocable living trust can direct the beneficiarys share into a special needs trust after the seniors death.An attorney should ensure that the living trust, will, account titles, and beneficiary forms all use consistent instructions.How Trust Payments Can Affect SSIEven when the trust itself is not counted as a resource, the way it distributes money can affect the beneficiarys monthly SSI payment.Cash paid directly to the beneficiaryMoney paid directly from the trust to the beneficiary generally reduces SSI.The trustee should normally pay a store, service provider, landlord, medical office, or other vendor directly rather than handing cash to the beneficiary.Payments for non-shelter expensesWhen the trust pays someone else for items or services other than shelter, those payments generally do not reduce SSI. Examples provided by Social Security include medical care, education, entertainment, and telephone bills.Payments for shelterWhen a trust pays rent, a mortgage, property taxes, heating fuel, electricity, water, or certain other shelter expenses, the beneficiarys SSI payment may be reduced.For 2026, the maximum reduction related to this type of support is generally $351.33 per month, although the actual effect depends on the persons living arrangement and other circumstances.Since September 30, 2024, food provided by others is no longer included in Social Securitys in-kind support and maintenance calculations. Cash or gift cards given directly to the beneficiary can still be treated differently.Choosing the Right TrusteeThe trustee is responsible for managing the inheritance and protecting the beneficiarys interests.Choose someone who: Understands the beneficiarys needs Keeps accurate financial records Can follow trust and benefit rules Communicates clearly with family members Can make objective spending decisions Is willing to serve for many years Knows when to seek legal or benefits advice A sibling or trusted relative may be a good choice, but family relationships alone do not guarantee that someone is prepared for the administrative work.Other options may include: A professional fiduciary A bank or trust company A nonprofit organization Co-trustees A family trustee working with a professional adviser The estate plan should also name at least one successor trustee.Consider an ABLE Account as a ComplementAn Achieving a Better Life Experience account is another tool that may work alongside a special needs trust.An ABLE account is owned by the person with a disability and can be used for qualified disability expenses. Beginning January 1, 2026, eligibility expanded to people whose blindness or disability began before age 46.Up to $100,000 in an ABLE account is generally excluded from the SSI resource calculation. Different rules apply when the account exceeds that amount, and state Medicaid recovery rules may apply after the beneficiarys death.An ABLE account may provide the beneficiary with more flexibility for everyday qualified expenses, while a special needs trust may be better suited for managing a larger inheritance. The two tools should be coordinated by professionals familiar with public benefits.A Practical Planning ChecklistSeniors preparing an inheritance can begin with these steps: Identify every benefit the loved one receives. Confirm whether each program has income or resource limits. Meet with an attorney experienced in special needs planning. Decide whether a third-party special needs trust is appropriate. Choose a trustee and successor trustee. Coordinate the will, living trust, life insurance, and account beneficiaries. Create a written summary of the beneficiarys needs and preferences. Tell relatives not to make direct gifts without reviewing the plan. Consider whether an ABLE account would be useful. Review the plan regularly. Frequently Asked QuestionsCan a person receiving SSI inherit money?Yes, but the inheritance may be counted as income and later as a resource. This can reduce SSI or create temporary ineligibility when countable resources exceed the program limit.Does every inheritance require a special needs trust?No. The answer depends on the beneficiarys benefits, finances, health, age, and long-term needs. A trust may be unnecessary when the person does not receive means-tested assistance.Can a grandparent create a special needs trust?Yes. A grandparent can establish or fund a third-party trust for a grandchild using the grandparents own property.Can the beneficiary control the trust?The beneficiary generally should not have unrestricted control over trust property when benefit protection is the goal. An independent trustee normally decides when and how distributions are made.Does a third-party trust have to repay Medicaid?Third-party trusts funded entirely with someone elses assets are different from first-party trusts funded with the beneficiarys property. Federal Medicaid repayment requirements commonly associated with qualifying first-party trusts do not automatically apply in the same way, but state law and the trust document must be reviewed.Can a trust pay rent?It may, but shelter payments can reduce monthly SSI. The trustee should compare the benefit reduction with the value the housing provides before making the payment.Should other family members name the trust in their wills?They may do so after an attorney confirms the correct trust name and language. Coordinated gifts can help prevent another relative from accidentally leaving assets directly to the beneficiary.Seniors Blue Book helps older adults, families, and caregivers locate trusted legal, financial, housing, healthcare, and aging-related resources in their communities. Organizations serving seniors and people with disabilities can also contact us to learn about a free business listing and enhanced opportunities to reach families searching for support.Contact Seniors Blue Book at [email protected] or call 800-201-9989. This article provides general educational information and is not a substitute for individualized legal, tax, financial, Medicaid, or public-benefits advice.

A Will or Trust: Which is Best for You?When it comes to deciding whether a will or trust is best for you, it is important to understand your options and which one is most appropriate for your situation.WillA testamentary will (simply referred to as a will) is a legal document used to transfer an estate to beneficiaries after the death of the testator (the person making the will). Within the will, the testator usually names a personal representative (same as executor) for the estate. A will is revocable (it can be cancelled by the testator) or it can amended by the testator. For a will to be valid in Idaho, it must meet specific requirements under Idaho law. Living TrustsA person, during his or her lifetime, may create a living trust whereby the settlor (the person making the trust), trustee (the person who has legal authority to manage the trust assets) and beneficiary (the person who makes use of the trust assets) are all the same person. After the settlor dies, depending on the trust instructions, the trust assets may be distributed outright, or held within the trust and distributed over time or upon the happening of a specific event. Living Trusts may be appropriate for persons who own real property in more than one state or have a blended family where spouses have children from prior relationships.Testamentary Trusts A testamentary trust is created upon the death of a person as specified in his or her will and holds assets within the trust instead of outright distribution such as when minor beneficiaries reach a specified age or graduate from college, or when a beneficiary is a person with special needs or disability who receives government benefits.A New or Updated Estate PlanWhether a will or trust is appropriate for you depends on your circumstances. If you already have a will or trust, it should be reviewed occasionally to make sure it reflects your current wishes and needs, or if you have relocated from another state, or upon any significant change in your life such as divorce or death of a spouse or beneficiary. This article was written by Donna A. Schuyler, Attorney, who practices in the areas of estate planning, elder law, guardianship and probate. Donna Schuyler Law, PLLC; elderlawboise.com; Phone 208-344-1947

When people hear the word legacy, they often think about money. Who gets what? How much is passed down? Whether assets are divided fairly. While financial planning matters, many families eventually realize something deeper. What they remember most is not the dollar amount they inherited but the values, stories, and guidance that came with it, or the absence of them.  Leaving a legacy is about far more than an inheritance. It is about how you are remembered, what you stood for, and how your life continues to shape the people you love. With thoughtful planning, you can pass on more than money. You can pass on meaning.  Why Legacy Planning Matters More Than Ever We are living through one of the largest transfers of wealth in history. Trillions of dollars will move from one generation to the next over the coming decades. Yet experience shows that money alone does not always create clarity or connection. In some families, it creates confusion, resentment, or distance when intentions are not clearly communicated.  Legacy planning helps bridge that gap. It allows families to align financial decisions with personal values, reduce misunderstandings, and create purpose around what is being passed on. When done thoughtfully, legacy planning strengthens relationships rather than straining them.  At Bellomo & Associates, we often remind families that a clear plan is one of the greatest gifts you can leave behind. It removes guesswork and gives loved ones confidence that they are honoring your wishes.  Values, Not Just Valuables A true legacy includes the principles you lived by, the lessons you learned, and the example you set. It shows up in how you treated others, how you handled challenges, and what you believed mattered most.  Financial assets are only one piece of the picture. Emotional inheritance often leaves a longer-lasting impact. Families tend to remember stories, traditions, and shared experiences far more vividly than account balances. Passing on values gives context to financial decisions and helps future generations understand the meaning behind the plan.  When children and grandchildren understand why decisions were made, they are more likely to respect them and carry those values forward.  The Power of Sharing Your Story and Values One of the most meaningful ways to leave a personal legacy is through a legacy letter, sometimes called an ethical will. This is not a legal document. It is a written message to your loved ones that shares what you want them to know.  A legacy letter might include: Family history and traditions Life lessons learned through success or hardship Personal values and beliefs Hopes for children and grandchildren These letters often become treasured keepsakes. Many families say they return to them again and again, finding comfort, perspective, and guidance long after legal matters are settled.  If you are unsure where to begin, start simply. Reflect on the experiences that shaped you most. Think about what you hope your family carries forward. Consider what you want them to remember about how you lived.  Legacy Through Family Communication and Clarity A meaningful legacy is rarely created in silence. When families do not talk about intentions, loved ones are left to draw their own conclusions. This can lead to misunderstandings, hurt feelings, or conflict that might have been avoided.  Open conversations about values and goals help everyone understand the bigger picture. These conversations do not need to include every financial detail. They are about explaining the reasoning behind decisions and setting expectations with care and respect.  Families who communicate clearly often experience smoother transitions and stronger relationships. Legacy planning becomes a shared understanding rather than a source of surprise.  Creating Impact Through Charitable and Community Giving For many people, legacy extends beyond family. It includes giving back to causes or communities that reflect deeply held values.  Charitable giving can be built into an estate plan in many ways, including: Leaving a gift to a charity through a will or trust Naming a nonprofit as a beneficiary of a retirement account Creating a donor-advised fund Establishing scholarships or endowments Involving family members in charitable decisions can be especially powerful. It teaches generosity, responsibility, and shared purpose. In some families, giving becomes a tradition that continues long after the original gift is made.  Passing Down Responsibility Alongside Wealth Many parents worry about whether their children will be prepared to handle an inheritance responsibly. Wealth passed down without guidance can feel overwhelming or even burdensome.  Legacy planning creates opportunities to teach financial responsibility and intentional decision-making. This might include family meetings, shared charitable projects, or structured inheritances tied to life milestones.  When responsibility is passed down alongside assets, an inheritance becomes a tool for growth rather than a source of stress.  The Modern Legacy Includes Digital Life Today, legacy also includes digital life. Photos stored in the cloud, emails, social media accounts, online subscriptions, and digital wallets often hold both emotional and practical value.  Without planning, families may lose access to irreplaceable memories or struggle to manage digital accounts. Taking the time to document digital assets, provide instructions, and name trusted individuals to handle them helps preserve this part of your story.  Digital legacy planning ensures that your memories are protected along with your finances.  Real Life Stories Show the Difference Planning Makes Some families remember a handwritten letter that guided them through difficult decisions years later. Others recall a tradition of giving that shaped how they view responsibility and community. Some families wish they had clearer communication after learning that silence left room for painful assumptions.  These stories point to the same truth. Legacy is created intentionally. It is shaped by actions, conversations, and planning that happen while you are alive.  When and How to Start Thinking About Your Legacy Legacy planning is not about age or net worth. It is about reflection and intention. The best time to start is when you can think clearly about what matters most to you.  You do not need to do everything at once. Small steps can have a lasting impact. Write a letter. Start a conversation. Identify the values you want to pass on. Legal documents support your legacy, but they are not the starting point.  The Legacy You Leave Starts Today Leaving a legacy is about more than money. It is about meaning, connection, and the influence you have on the people and causes you care about. Financial planning provides structure, but values give it purpose.  The legacy you leave is shaped by how you live, what you communicate, and the choices you make today.  If you want to create a legacy that reflects your values and protects your family, thoughtful planning is the first step.