A common question that we get from settlement clients and their attorneys is, “Can a client own a home and still receive Medicaid and SSI? And can a special needs trust own a home, or does the client have to own the home in his or her name?”
The answer is generally, yes. A client can own a home and be eligible for Medicaid and SSI because a home is considered an exempt asset. A home can be owned either inside of a special needs trust, or the client can own it in his or her name. It is important to note, however, that each state has certain equity limits that they place on the amount or the value of the home. If the equity in the home exceeds the equity limit established by the state, then the excess equity is counted as an asset.
Can a Special Needs Trust Make a Mortgage Payment?
A follow-up question we often get is: “The client just put a down payment on a home. Can the trust make a mortgage payment or a rent payment?” The answer to that is also yes, but in that situation, the trust is considered a third party that is making a rent or mortgage payment on behalf of the special needs trust beneficiary — and Medicaid and SSI consider that “in-kind income” to the beneficiary.
As a result, the Social Security Administration will reduce the amount of SSI the client receives by some formula (up to a maximum of about $250 per month). Depending on the client’s situation, it still may make sense to have a special needs trust pay a client’s rent or mortgage payment, even knowing that it will reduce their SSI benefit each month.
In conclusion, a client can own a home inside a special needs trust, and a client can own a home and still be eligible for Medicaid and SSI (given certain value limits that each state imposes).
Do you have any questions about how a special needs trust interacts with someone that wants to own a home? Give us a call or reach out to us. We’d be happy to talk to you about it.