Can I Transfer Assets Using Medicaid's Disability Transfer Exception?

I know that transfers made to a trust for the sole benefit of anyone under age 65 who is permanently disabled are exempt from the Medicaid penalty period. What is considered a "disability" in regard to gift transfers? 

The Medicaid exception refers to a transfer to a special needs trust (also called supplemental needs trust). Even after moving to a nursing home, if you have a child, other relative, or even a friend who is under age 65 and disabled, you can transfer assets into a trust for his or her benefit without incurring a period of Medicaid ineligibility. If these trusts are properly structured, the funds in them will not be considered to belong to the beneficiary in determining his or her own Medicaid eligibility. In order to be the beneficiary of a special needs trust, you need to have a disability as defined by Social Security law. For information on what is considered a disability, click here.

Special needs trusts must be structured in a very particular way and should not be done without an attorney.  For more information about these trusts, click here, and also visit our SpecialNeedsAnswers Web site at www.specialneedsanswers.com. There you will find a directory of attorneys who focus on special needs law. For a directory of elder law attorneys, click here.