Common Mistakes When Planning for a Disabled Family Member

There are 58 million Americans five years of age or older that are identified as special needs making them the largest single minority in this country. The majority of federal and state benefits available to help persons with disabilities are needs based, meaning income and assets are strictly limited and can often by misinterpreted, resulting in costly mistakes.

One of the most common mistakes a parent or loved one makes is disinheriting their family member with special needs. The reason is often because the family believes other siblings will step in and take care of the disabled family member. However, this can lead to numerous problems, especially if the non-disabled sibling gets sued, divorced, or otherwise loses the money left to them.
Another common mistake is failing to create a properly drafted trust to qualify the disabled family member for government benefits than can help pay for costly medical and/or living expenses. Qualifications for government benefits like Supplemental Security Income (SSI) or Medicaid dictate that the disabled individual has no more than $2,000 in assets. If your disabled loved one has assets above this threshold, they will have to be “spent down” to qualify for government assistance or otherwise protected in a properly drafted trust.

Well-meaning friends and extended family may not understand the complexity of disability benefits and give a disabled loved one money or assets that would disqualify them for state and federal benefits. It is especially difficult if the disabled person already has benefits and becomes disqualified because the “needs based” review discovered additional funding putting them over the $2,000 asset limit. It is best to avoid this situation as it is a big hassle to re-qualify your dependent for government assistance.

Be wary of crowdfunding sites like GoFundMe to benefit your loved one with special needs. In the absence of qualified legal planning, these donations can disqualify SSI, Medicaid, food stamps and section 8 housing. A well-meaning fund campaign could cut the benefits of a disabled person and make their living circumstances worse than before.

What to do? Plan ahead! There are several ways to provide for your special needs dependent and stay within government guidelines for additional benefits. One of the best ways is to establish a special needs trust that has the specific purpose of supplementing federal and state assistance programs. By doing so, a disabled loved one can benefit from government programs, and have additional money to supplement what those programs provide.

There are strict rules when it comes to creating special needs trusts for a disabled family member. There are also restrictions on what the money can be used for. We can help you determine what type of trust is best based on you and your loved one’s particular circumstances. Give us a call at your convenience to set up a time to discuss your situation further.

Special Needs Trusts – What You Need to Know

In general, a trust is created when property or assets are managed by a person or firm for another person’s benefit. The person or entity who manages the trust is known as the “trustee” and is entrusted with the responsibility of making decisions in the best interest of the person who benefits from the trust, known as the beneficiary. Trusts are advantageous because they provide the ability to place conditions on how and when your assets will be distributed when you die, reduce estate and gift taxes, and allow you to skip the lengthy and expensive probate process.

Special needs trusts are a class of trusts made specifically for the benefit of those with physical and/or mental disabilities. These differ from the typical trust due to the special conditions that often need to be in place to accommodate the specific needs and lifestyle of the beneficiary of a special needs trust. Another one of the main reasons for having this type of trust is to ensure the beneficiary does not render him/herself ineligible for government benefits due to an increase in assets.

Choosing the right trustee for a special needs trust is extremely important and the trustee must be someone you are certain will act in the beneficiary’s best interest after your death. Often, this takes place in the form of a trusted family member who knows the beneficiary and his/her needs. However, if your situation doesn’t allow for this, the court will appoint a third party to manage the trust according to your written wishes.

One of the important features of a special needs trust is that the assets in the trust will not be counted toward asset thresholds contained in government programs such as Supplemental Security Income (SSI) and Medicaid. The trustee has complete control over the assets in the trust, instead of the beneficiary. For this reason, government programs such as SSI and Medicaid ignore assets in a trust when determining eligibility. Many people are unaware of this and make the mistake of distributing their assets to a loved one with special needs through a will. This could cause them to exceed the asset limits for SSI and/or Medicaid, thus losing their benefits from these programs.

Special needs trust may also be set up to take the proceeds from a legal settlement on behalf of the person with special needs. This is important for the same reason as mentioned earlier, to ensure a windfall does not preclude the beneficiary from receiving government benefits. Also, in the event the person with special needs is the one being sued, the funds in the special needs trust are protected from being paid out in damages.

Even if you believe your loved one with special needs will never need government benefits, it is still prudent to consider a special needs trust. Special needs trusts can provide for the unique and specific needs of the beneficiary in ways that other types of trusts cannot. Further, you never know what may happen in the future, especially when you’re no longer around. It may turn out that your loved one needs these government benefits one day and they’ll be glad you provided them this option.

Special needs trusts are an excellent vehicle to ensure your loved one with special needs is taken care of in the event of your passing. However, they can be difficult to set up and it is advised that you consult an elder law attorney who will be able to examine your specific situation and make sure your loved one is taken care of for years to come. If you would like to speak with an attorney regarding your situation, or have questions about something you have read, please do not hesitate to contact our office.

3 Things to Consider When Your Special Needs Child Turns 18

Having a special needs child has many challenges. One of the toughest challenges faced by many parents is knowing how to best care for their special needs child as they reach adulthood. There are many areas that need consideration when planning for the transition of a special needs child to adulthood. Let’s take a look at some of these areas.
Education
During childhood, the public education system provides for the bulk of the care, structure, and services that a special needs child requires. However, once they are out of public education, this support and service abruptly come to an end. If parents don’t plan for this transition, it can be difficult for the child and the family. That is why the Individuals with Disabilities Education Act (IDEA) requires that at age 14, the student’s Individualized Education Plan (IEP) contain a plan with steps that will be taken to help the special needs student acquire skills that are necessary to transition from school to the workforce. Schools are required to monitor progress of the students as they acquire the specific skills. It is important for parents to understand their child’s rights and for parents of children with special needs to be advocates for their child as they turn 14 and enter this time of transition.
Employment
Special needs individuals if trained in skills specific to the workforce can find ways to have a job. For example, the local Walmart hired a young lady who has special needs to work as a cashier. The young lady while in school had an IEP. From the time the young lady was in elementary school, part of her IEP include life skills goals. These goals allowed her to learn necessary skills to get and keep a job as a cashier.
Beyond preparing your child early for the workforce, it is helpful to research companies that hire people with special needs and determine the types of skills they will need to succeed. Then, parents or other caregivers, should seek out ways to develop those necessary skills in their child. The key to employment is being prepared to help your child both during and after school. Be patient with the process. Sometimes it takes time for a special needs adult to get hired. Many special needs people do not work because they are scared that they may lose benefits if they work.
Financial
Working can be a great way for special needs adults to earn some additional income. However, it is important to keep in mind that there are limits on the amount of money a special needs person can earn without affecting Social Security Insurance (SSI) and Social Security Disability Insurance (SSDI). Once a child reaches 18, these benefits are based on his or her own assets. Other ways to protect the assets of your special needs child is by creating a first or third-party trust. This way, your special needs child can draw benefits while also having assets.
If you are the parent of a special needs child, it is important to begin planning early for the future of your child. Don’t wait until your child is 18. The public education system can be a great resource but you will need to do some planning on your own. The good news is there are organizations that can help you and your child find the right employment opportunities to match their skills. An elder law attorney who specializes in adults with special needs can be very helpful in planning for the financial future of your child with special needs.
If you have any questions about creating a secure financial future for your special needs child, call us today! Tel: 623-252-0292