When is a Special Needs Trust Needed?

Have You Wondered When Is A Special Needs Trust Needed?

A special needs trust is needed if your child with a disability is expected to be able to collect Supplemental Security Income, SSI, or some other government benefits, which could include Medicaid, SNAP, or housing benefits, when they become an adult. This would be because your child is unlikely to be able to support themselves by working independently. If you think this is a possibility, and you have assets you would like to leave your child when you die, you should have a Special Needs Trust.

What Is A Special Needs trust?

A special needs trust, also known as a “supplemental needs trust”, is an estate planning tool that enables a person with a disability or functional needs to receive financial support without negatively affecting any means-tested government benefits they’re receiving like Medicaid or Supplemental Security Income (SSI). Because needs-based government benefits have income and asset limits, receiving financial gifts or assets could reduce or eliminate eligibility. This means if you have an adult daughter with autism on SSI benefits and want to give her money to meet her living expenses, she could be disqualified from receiving needs-based government benefits. Likewise, if you die and leave her your Roth IRA worth hundreds of thousands of dollars or any amount that exceeds the asset limit, she could no longer receive SSI or Medicaid. But if you put the assets into a special needs trust for your daughter, she can keep her benefits and receive your financial support for the rest of her life. What can a special needs trust pay for? Money in a special needs trust is meant to be a supplemental resource, meaning it should cover expenses that aren’t already covered by government benefits. More specifically, the beneficiary should use the money for expenses other than food and shelter. You must ensure money is spent in accordance with IRS guidelines, so hold on to receipts or make a spreadsheet to keep track.

Benefits of a special needs trust

Setting up a special needs trust for someone can help you enhance their quality of life and give you peace of mind. These trusts ensure that a person with functional needs will receive the financial support they need throughout their lifetime, whether you’re here or not. Here are a few key benefits of special needs trusts: Your loved one can still receive needs-based government benefits. In some situations, creditors or lawsuit winners can’t access the funds or assets in the trust. Trust funds can be invested by a trustee or financial advisor. You may be able to have control over who inherits the trust when the beneficiary dies. Trusts provide protection against financial abuse, as trustees have a fiduciary duty to act in the beneficiary’s best interest.

Need Information About Special Needs Trusts?

I am Tom Sannicandro, a Special Needs Trust Attorney and I am here to help. I am the founder of a nonprofit corporation that provides quality information about resources available to families as well as providing affordable Special Needs Trusts and estate planning for families. I have over 20 years of experience helping families just like yours. Find out more information at SpecialNeedsTrustsOnline.com or click here to set up a free appointment

November 16, 2022February 14, 2024

Watch this video for an overview of special needs wills and trusts.

Below is the powerpoint with live links

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April 29, 2022February 14, 2024

Special Education Basics

10 Basic Steps in Special Education | Center for Parent Information and Resources

When a child is having trouble in school, it’s important to find out why. The child may have a disability. By law, schools must provide special help to eligible children with disabilities. This help is called special education and related services.

There’s a lot to know about the process by which children are identified as having a disability and in need of special education and related services.

This brief overview is an excellent place to start. Here, we’ve distilled the process into 10 basic steps. Once you have the big picture of the process, it’s easier to understand the many details under each step. We’ve indicated throughout this overview where, on our site, click here to ask a question via email or you can set up a free appointment for a consult by clicking here.

Step 1. Child is identified as possibly needing special education and related services.

There are two primary ways in which children are identified as possibly needing special education and related services: the system known as (which operates in each state), and by referral of a parent or school personnel. Child Find

Child Find. Each state is required by IDEA to identify, locate, and evaluate all children with disabilities in the state who need special education and related services. To do so, states conduct what are known as Child Find activities.

When a child is identified by Child Find as possibly having a disability and as needing special education, parents may be asked for permission to evaluate their child. Parents can also call the Child Find office and ask that their child be evaluated.

Referral or request for evaluation. A school professional may ask that a child be evaluated to see if he or she has a disability. Parents may also contact the child’s teacher or other school professional to ask that their child be evaluated. This request may be verbal, but it’s best to put it in writing.

Parental consent is needed before a child may be evaluated. Under the federal IDEA regulations, evaluation needs to be completed within 60 days after the parent gives consent. However, if a State’s IDEA regulations give a different timeline for completion of the evaluation, the State’s timeline is applied.

Step 2. Child is evaluated.

is an essential early step in the special education process for a child. It’s intended to answer these questions: Evaluation

Does the child have a disability that requires the provision of special education and related services?

What are the child’s specific educational needs?

What special education services and related services, then, are appropriate for addressing those needs?

By law, the initial evaluation of the child must be “full and individual”—which is to say, focused on that child and that child alone. The evaluation must assess the child in all areas related to the child’s suspected disability.

The evaluation results will be used to decide the child’s eligibility for special education and related services and to make decisions about an appropriate educational program for the child.

If the parents disagree with the evaluation, they have the right to take their child for an Independent Educational Evaluation (IEE). They can ask that the school system pay for this IEE.

Step 3. Eligibility is decided.

A group of qualified professionals and the parents look at the child’s evaluation results. Together, they decide if the child is a “,” as defined by IDEA. If the parents do not agree with the eligibility decision, they may ask for a hearing to challenge the decision. child with a disability

Step 4. Child is found eligible for services.

If the child is found to be a child with a disability, as defined by IDEA, he or she eligiblefor special education and related services. Within 30 calendar days after a child is determined eligible, a team of school professionals and the parents must meet to write an (IEP) for the child. individualized education program

Step 5. IEP meeting is scheduled.

The school system schedules and conducts the IEP Meeting . School staff must:

contact the participants, including the parents;

notify parents early enough to make sure they have an opportunity to attend;

schedule the meeting at a time and place agreeable to parents and the school;

tell the parents the purpose, time, and location of the meeting;

tell the parents who will be attending; and

tell the parents that they may invite people to the meeting who have knowledge or special expertise about the child.

Step 6. IEP meeting is held and the IEP is written.

The gathers to talk about the child’s needs and write the student’s IEP. Parents and the student (when appropriate) are full participating members of the team. If the child’s IEP team

Before the school system may provide special education and related services to the child for the first time, the parents must give consent. The child begins to receive services as soon as possible after the IEP is written and this consent is given.

If the parents do not agree with the IEP and placement, they may discuss their concerns with other members of the IEP team and try to work out an agreement. If they still disagree, parents can ask for , or the school may offer mediation. Parents may file a mediation

Step 7. After the IEP is written, services are provided.

The school makes sure that the child’s IEP is carried out as it was written. Parents are given a copy of the IEP. Each of the child’s teachers and service providers has access to the IEP and knows his or her specific responsibilities for carrying out the IEP. This includes the that must be provided to the child, in keeping with the IEP. accommodations, modifications, and supports

Step 8. Progress is measured and reported to parents.

The child’s progress toward the annual goals is measured, as stated in the IEP. His or her parents are regularly informed of their child’s progress and whether that progress is enough for the child to achieve the goals by the end of the year. These must be given to parents at least as often as parents are informed of their nondisabled children’s progress. progress reports

Step 9. IEP is reviewed.

The child’s IEP is reviewed by the IEP team at least once a year, or more often if the parents or school ask for a review. If necessary, the IEP is revised. Parents, as team members, must be invited to participate in these meetings. Parents can make suggestions for changes, can agree or disagree with the IEP, and agree or disagree with the placement.

If parents do not agree with the IEP and placement, they may discuss their concerns with other members of the IEP team and try to work out an agreement. There are several options, including additional testing, an independent evaluation, or asking for mediation, or a due process hearing. They may also file a complaint with the state education agency.

Step 10. Child is reevaluated.

At least every three years the child must be reevaluated. This evaluation is sometimes called a “triennial.” Its purpose is to find out if the child continues to be a child with a disability, as defined by IDEA, and what the child’s educational needs are. However, the child must be reevaluated more often if conditions warrant or if the child’s parent or teacher asks for a new evaluation.

Special Needs Trusts Online Can Help!

I am a Special Needs Trust Attorney and I am here to help. I am the founder of a nonprofit corporation that provides quality information about Able Accounts and affordable Special Needs Trusts to families. I have over 20 years of experience helping families just like yours. Find out more information at SpecialNeedsTrustsOnline.com or click here to set up a free appointment.

Source: specialneedstrustsonline.co

April 25, 2022February 14, 2024

Who Qualifies for a Special Needs Trust?

Who Can Benefit From a Special Needs Trust?

Consider making a special needs trust for a loved one who receives government benefits.

Someone With Permanent Special Needs

Special needs trusts are most commonly used for people who likely will need government assistance from the SSI and Medicaid programs their entire lives because of a permanent or severe disabling condition.

Not all persons with a disability qualify for SSI or Medicaid. Someone who is commonly understood to be “disabled” may not qualify for these public benefits if, despite the disabling condition, the person is able to earn a living.

People with blindness, developmental disabilities, Down syndrome, organic brain damage, chronic mental illness, physical paralysis (paraplegia), or congenital disabling afflictions such as cerebral palsy or cystic fibrosis have been the most common automatic beneficiaries of government benefits for persons with disabilities. But there are many other physical and mental conditions that meet the Social Security Administration’s definition of disability and that are likely to last a lifetime.

Source: nolo.com

Someone With Special Needs Who May Not Need Benefits Later

Many factors make it hard to predict whether someone who currently has a disability will always need to rely on SSI and Medicaid. Many disabling conditions are not permanent and changes in the workplace, new treatments for disabilities, and new technologies for living with disabilities may affect whether your loved one will need government benefits in the future.

While you may not be able to know with certainty whether your loved one will continue to need SSI or Medicaid, you can create a special needs trust without worrying that you will needlessly tie up your loved one’s inheritance. Most special needs trusts take into account the possibility that the trust, for whatever reason, may not always be necessary, and they give the trustee power to terminate the trust if that is the best for the beneficiary.

Source: nolo.com

Someone Who May Need Benefits Later

Some people who aren’t disabled now may need assistance from SSI or Medicaid at some point because of a condition that is likely to get worse. In this situation, creating a special needs trust involves some guesswork. But if you think it’s more likely than not that a loved one will need government assistance for a significant length of time, it makes sense to set up a special needs trust now. In the trust, you can give the trustee the power to terminate the trust if it is not needed.

Source: nolo.com

Someone Who Is Eligible for Medicare or SSDI

A loved one who receives Medicare or Social Security Disability Insurance (SSDI) may not need a special needs trust because these programs do not base eligibility on the amount of money or assets an applicant has. However, if the SSDI payment is low, SSI may be a valuable way to supplement your loved one’s income. And Medicaid may be necessary to provide benefits not included in the Medicare program for instance, long-term nursing home care.

Source: nolo.com

Someone Who Cannot Manage Finances

People whose temperaments make it unlikely that they will be able to wisely manage an inheritance are good candidates for a special needs trust, even if they ultimately won’t need SSI or Medicaid. Such trusts are often called “spendthrift” trusts when used to keep assets out of the hands of a beneficiary (and of his or her creditors) and in the firm control of a wise trustee. For example, someone with mild developmental disabilities, mild autism, attention deficit disorder, or bipolar syndrome might benefit from a trust that prevents reckless spending of inherited money even in the absence of a disability. (Read more about Spendthrift Trusts Another good reason to use a special needs trust is to prevent a loved one with a disability from being the victim of predators. There are many unscrupulous and dangerous people out there who will target a person with mental or physical disabilities if they believe the person has money. A special needs trust prevents a person with a disability from falling prey to these predators because the person with a disability does not have control over trust funds.

Talk to a Lawyer

Need a lawyer? Start here.

Special Needs Trusts Online Can Help!

I am a Special Needs Trust Attorney and I am here to help. I am the founder of a nonprofit 501(c)(3) corporation that provides quality information about resources available to families as well as providing affordable Special Needs Trusts and estate planning for families. I have over 20 years of experience helping families just like yours. Find out more information at SpecialNeedsTrustsOnline.com or click here to set up a free appointment.

Source: specialneedstrustsonline.com

April 24, 2022February 14, 2024

The 7 most important reasons to have a will

More than half of Americans don’t have a will. This is a list of seven of the reasons to create one.

Having a will is a must! Not having a will could lead to problems when you’re gone. Your loved ones may be left wondering about what to do with your belongings or money. People who don’t have a will often end up getting into disputes over inheritance. A will ensures that your wishes are followed after you pass away.

The Reasons To Have A Will

1. Save time, money, and stress for your loved ones.

Almost all states have a legal process called probate court that oversees the distribution of assets. However, if you don’t own a will, the court system — which is called intestate administration — can become especially complicated. If there is no will, the court has no choice but to appoint someone to administer your estate. And this can be difficult, expensive, and even controversial for your family members.

One of the top reasons to have a will is to streamline this court process. When you have a will, you can choose the person you want to handle your estate, making it easier for your loved ones.

2. Determine who will manage your estate.

As mentioned above, deciding who will handle your estate is a great reason to have a will. When you write a will, you become a “testator” and have the opportunity to nominate an “executor” or in many states is referred to as a “personal representative.” This is the person who will be in charge of wrapping up all your affairs.

Being an executor is an important job. They may be responsible for everything from closing bank accounts and liquidating assets to managing cash flow. You should choose someone who is competent and who you trust to perform these tasks. If you don’t choose an executor in advance, the court will appoint one for you, and it might not be the person you’d want.

3. Decide who gets your assets and property — and who does not.

A will lets you decide who gets your property after you die. You can name people as beneficiaries of specific assets. You can also name beneficiaries for any property that you didn’t list – the “residuary” of your estate. Your executor will handle your estate after you die. They’ll distribute your assets among your beneficiaries.

You might not know that you can also use your will to help ensure that certain people don’t receive anything.

4. Choose who will take care of your minor children.

You can use your will to name guardians for your minor children.## Inputs If one parent dies, the surviving parent will usually get full legal custody. But if both parents die, this is one of several reasons why having a will is so important.

A guardian will be in charge of all your children’s daily needs, including food and shelter. If you don’t nominate a guardian in your Will, a Court will have to choose one. This might mean that someone you wouldn’t have chosen will raise your children.

5. Lower the potential for family disputes.

If you have complicated familial dynamics, there’re good reasons to have a will. If you don’t have a will, your family members will have to guess at your final wishes. And chances are, they won’t always agree. This ambiguity can create conflict, and even fights, that last for a lifetime. Creating a will eliminates the need for guessing.

6. If you have a child with special needs you can provide them with a comfortable future.

If you have a child with special needs it is especially important that you provide for them in a way that will leave them your assets and still allow them to collect government benefits. You can do this by leaving your assets to a trust for the child and not directly to the child themselves.

7. It’s easy to make a will and gain peace of mind.

Some people don’t create or update their wills because they assume their loved ones will automatically inherit everything. But this isn’t always true. Probate can be an expensive and lengthy process for your heirs. And, a will only addresses your current circumstances. You should update it over time as your needs and the people in your life change.

You can leave instructions for your loved ones and provide them with a clear path to follow after you die. It gives many people peace of mind, making it one of the top reasons for having a will.

It’s easier than it has ever been to make a will. Unless you have a very large estate, complex family dynamics, or feel that you need expert legal advice, you don’t need a lawyer to draft your will. With SpecialNeedsTrustsOnline.com, you can create your own will for free, using our simple, online self-help tools.

Special Needs Trusts Online Can Help!

Source: specialneedstrustsonline.com

April 22, 2022February 14, 2024

How A Special Needs Trust Works

What Is a Special Needs Trust?

A special needs trust is a legal arrangement and fiduciary relationship that allows a physically or mentally disabled or chronically ill person to receive income without reducing their eligibility for the public assistance disability benefits provided by Social Security, Supplemental Security Income, Medicare or Medicaid. In a fiduciary relationship, a person or entity acts on behalf of another person or people to manage assets.

A special needs trust is a popular strategy for those who want to help someone in need without taking the risk that the person will lose their eligibility for programs that require their income or assets to remain below a certain limit.

Source: investopedia.com

Key Takeaways

A special needs trust is a legal arrangement that lets a physically or mentally ill person, or someone chronically disabled, have access to funding without potentially losing the benefits provided by public assistance programs.

This trust allows for the additional financial support of an individual with special needs, without risking bumping them out of contention for disability benefits.

Public assistance programs set up for people with special needs are predicated on certain income and asset restrictions; money put in the trust doesn’t count toward the purpose of qualifying for public assistance.

Source: investopedia.com

How a Special Needs Trust Works

A special needs trust covers the percentage of a person’s financial needs that are not covered by public assistance payments. The assets held in the trust do not count for the purposes of qualifying for public assistance, as long as they are not used for certain food or shelter expenditures. Proceeds from this type of trust are commonly used for medical expenses, payments for caretakers, transportation costs, and other permitted expenses.

The party who creates the trust will designate a trustee who will have control over the trust. This trustee will also oversee its management and the disbursement of funds. Assets originally belonging to the disabled individual that get placed into the trust may be subject to Medicaid’s repayment rules, but assets provided by third parties such as parents are not. This type of trust is sometimes also called a “supplemental needs trust.”

Special needs trusts are irrevocable—neither creditors nor the winner of a lawsuit can access funds designated for the beneficiary.

Source: investopedia.com

Benefits of a Special Needs Trust

Establishing a special needs trust can have benefits for both parties. The beneficiary has a way to receive financial support without putting their eligibility for income-restricted programs or services in jeopardy. Meanwhile, the person or party that creates the trust has some reassurance that the proceeds will go to expenses they stipulate.

When a third party puts money in a special needs trust, the party is assured that the money will be used for its intended purpose. For example, parents might put assets in a special needs trust to provide for their disabled daughter instead of giving that money to their son. Special needs trusts are irrevocable, and their assets cannot be seized by creditors or by the winner of a lawsuit.

It is important that the person who creates the trust or their legal representative word the terms of the trust documents very carefully to ensure its validity, and to confirm that the directives and purpose of the document are explicitly clear. The special needs trust must be established before the beneficiary turns 65.

Source: investopedia.com

Providing For A Family Member with a Disability

The primary purpose of a special needs trust is to provide for the needs of an individual without disrupting that person’s eligibility for Medicaid and Social Security and other government benefits. The experienced supplemental benefits trust attorney SpecialNeedsTrustsOnline.com, can structure the trust to make sure your loved one has the provisions necessary to maintain his or her quality of life without losing government benefits.

We provide comprehensive estate planning services to families throughout Massachusetts and across the United States.

Arrange for a free consultation today about creating a special needs trust.

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Special Needs Trusts Online Can Help!

I am a Special Needs Trust Attorney and I am here to help. I am the founder of a nonprofit 501(c)(3) corporation that provides quality affordable Special Needs Trusts to families. I have over 20 years of experience helping families just like yours. Find out more information at SpecialNeedsTrustsOnline.com or click here to set up a free appointment.

The Main Bullet Points Of How A Special Needs Trust Works

Establishment: A Special Needs Trust (SNT) is created to manage assets for the benefit of an individual with a disability, known as the beneficiary.
Funding: Assets, such as cash, investments, or real estate, are transferred into the trust by the grantor, typically a parent, guardian, or relative of the beneficiary.
Trustee: A trustee is appointed to manage the trust assets and make distributions according to the terms outlined in the trust document. This could be a family member, friend, attorney, or professional trustee.
Government Benefits Preservation: One of the primary functions of an SNT is to preserve the beneficiary’s eligibility for means-tested government benefits, such as Supplemental Security Income (SSI) and Medicaid, by keeping assets in the trust rather than in the beneficiary’s name.
Supplemental Support: The trust can provide supplemental support to enhance the beneficiary’s quality of life, covering expenses not met by government benefits, such as medical treatments, therapy, education, housing, transportation, and recreational activities.
Discretionary Distributions: Distributions from the trust are made at the discretion of the trustee, based on the beneficiary’s needs and best interests, rather than as direct payments to the beneficiary.
Trust Administration: The trustee manages the trust assets, invests them prudently, keeps accurate records, files tax returns, and ensures compliance with legal requirements.
Termination: The trust may terminate upon the beneficiary’s death or upon exhausting its assets, at which point any remaining funds may be distributed according to the terms of the trust document, such as to other family members or charitable organizations.

April 21, 2022February 14, 2024

Power of Attorney for Education

Power of Attorney for Educational Purposes

Through an educational power of attorney, a student can authorize an agent to make educational decisions. That leaves the student free to focus on learning. The student’s designated agent can apply for financial aid, register for courses, and review ed

Why the EPOA Is Useful

Once a student turns 18, she’s legally an adult, empowered to control her own life. If she has disabilities, however, she may not be ready to make all the necessary adult decisions. It’s not a matter of intelligence – a student who’s a whiz in class may still not be able to talk with faculty advisers, decide a schedule or navigate the maze of financial aid.

In general, a power of attorney authorizes an agent to make decisions for the person who signs the document. It allows the agent to do just about anything the person could do for himself. Limited POAs assign the agent specific tasks, such as selling a house, or a specialized area of authority, such as making medical decisions. An Educational Power of Attorney, or EPOA, grants the agent authority to act only in the educational world.

The Power of an EPOA

The educational power of attorney allows the agent to handle any decisions the student doesn’t think she can cope with. It can be broad, covering all the bureaucratic tasks and paperwork involved in attending college, or specialized to deal with specific areas. The agent can make decisions exactly as if she were the student herself. These include:

registering for class.
deciding on a course of study.
meeting with the administration.
requesting any special assistance the student needs.
applying for financial aid.
The agent cannot, however, attend classes or take tests for the student.

As an adult, the student has the legal right to decide to create a EPOA. If he doesn’t think it’s in his best interest to appoint an agent, it can’t be forced on him. The EPOA is supposed to meet his needs, but not what other people think he needs.

Creating an EPOA

You can create your power of attorney for educational matters now, or find out more information by clicking here!

Special Needs Trusts Online Can Help!

I am a Special Needs Attorney and I am here to help. I am the founder of a nonprofit corporation to that provides quality affordable Special Needs Trusts to families. I have over 20 years of experience helping families just like yours. Find out more information at SpecialNeedsTrustsOnline.com or click here to set up a free appointment.

April 20, 2022February 14, 2024

Financial Planning

GMB Episode #125: Estate Planning For Families With Special Needs Children With Tom Sannicandro

Show Notes

[02:54] Tom’s Journey – Tom shares why he switched his legal practice from corporate law to disability law.

[11:48] Asset Protection – Tom shares his perspective on asset protection related to individuals with disabilities.

[18:16] Finding a Trustee – Appointing a trustee for a special needs trust entails a great deal of confidence. Tom stresses the importance of selecting a suitable person to manage the trust.

[21:40] Special Needs Trust – Tom shares how he assists his clients, and what the process for setting up a special needs trust through his website looks like.

[36:08] ABLE Account – Tom discusses the functionality of a ABLE account.

[11:25] Letter of Intent – Tom and Grant discuss the purpose of a Letter of Intent.

[14:09] Medical Support vs. Financial Support – Tom shares his perspective on having an individual assisting with medical decisions simultaneously serving as the trustee.

[16:57] Future Work – Tom shares his future goals, and how he intends to continue serving his clients.

Resources

April 20, 2022February 14, 2024

Special Needs Government Benefits

Government Benefits for Individuals with Special Needs

While it is critical to ensure that you have adequate planning in place to preserve your child’s eligibility for government assistance, it is important for individuals to know what government benefits are available to a child with special needs and when these benefits are available. Because government programs can be confusing and since they change often, anyone seeking to learn more about receiving government benefits for a child with special needs should contact me with any questions.

There are four relevant government benefit programs available to special needs families. These are Supplemental Security Income (“SSI”), Medicaid, Medicare and Social Security Disability Insurance (“SSDI”). Both SSDI and Medicare are not means based programs. In other words, there is no investigation into your finances to determine if you qualify for the program based on your income or your resources. Medicare is a form of sponsored health insurance available for the elderly and the disabled and SSDI is available to individuals and minors or special needs children of an individual who has died, retired or become disabled. A special needs child who is under age 22 and who is not working can obtain SSDI benefits based on his or her parents’ prior earnings.

SSI and Medicaid are both means based programs. Eligibility for those programs is based on financial need and strict requirements must be met prior to receiving benefits. Medicaid can provide in-home care, cost of hospitalization and nursing home care as well as some housing benefits to recipients. A special needs child can receive SSI, SSDI, Medicaid and Medicare all at the same time.

The distinction between means and non-means based programs is important to understand. Since these benefits add greatly to a disabled person’s ability to receive care, and given the expensive cost of long-term medical and nursing care, anyone seeking to give a special needs child assets may disqualify him or her from receiving means-based program benefits. However, setting up a supplemental needs trust for your special needs individual can help provide for their care without disqualifying him or her from SSI or Medicaid benefits.

Although the requirements should be reviewed periodically for changes, currently, to qualify for SSI benefits, a disabled adult cannot own more than $2,000 of assets. There is a link between eligibility for Medicaid and eligibility for SSI. Eligibility for SSI makes a disabled person eligible for food stamps and Medicaid, which pays medical expenses, nursing home care and mental health services. Given the very low poverty threshold, setting up a supplemental needs trust can help provide for extra care over and above that which the government may provide.

In addition to applying for the benefits above, special needs individuals with developmental disabilities should get in touch with the state agency that provides services for adults with disabilities. Find your state agency by clicking here. These agencies provide a wide array of benefits including day services such as support for people who are employed, residential services such as individual support that assists an individual living at home or elsewhere in the community, and family support services that assist families caring for loved ones at home.

Parents of children with special needs should make sure their child will be protected after they have passed away as they have protected the child during their lifetimes. Given the cost of long-term care for a child with special needs, you should consider whether government benefits can be helpful in meeting some of those needs. A typical plan for an individual may include drafting a will and creating a special needs trust. Also important are designations of trustees, a conservator in the event of future incapacity or a standby guardian for a developmentally disabled family member. In addition durable powers of attorney, living will and related documents should be in place. Finally, securing government benefits for a special needs child can enable that person to have the resources necessary for quality long-term care.

Special Needs Trusts Online Can Help!

I am a Special Needs Trust Attorney and I am here to help. I am the founder of a nonprofit corporation to that provides quality information about resources available to families as well as providing affordable Special Needs Trusts and estate planning for families. I have over 20 years of experience helping families just like yours. Find out more information at SpecialNeedsTrustsOnline.com or click here to set up a free appointment.

Source: specialneedstrustsonline.com

April 17, 2022February 14, 2024

Able Account vs Special Needs Trusts

Understanding an Able Account vs Special Needs Trusts

ABLE accounts and special needs trusts (SNTs), also known as supplemental needs trusts, both give people with disabilities a way to save money tax-free. By saving money in an ABLE account or supplemental needs trust, you can also make sure that a disabled person continues to be eligible for public programs.

Both ABLE accounts and supplemental needs trusts protect resources. Each allows the accumulation of resources for the benefit of an individual with a disability without jeopardizing key federally funded benefits like Supplemental Security Income and Medicaid.

There are significant differences between the two ways of saving, though. ABLE accounts and SNTs have different rules when it comes to what you can use your savings for. They also have different annual limits on how much you can save. Then there are a number of other differences that may have an impact on you, depending on your circumstances.

In this article, we’ll take a brief look at each type of saving strategy, and then explore the differences between them.

Source: investopedia.com

Key Takeaways

Both ABLE accounts and supplemental needs trusts allow a person diagnosed with disabilities—or their relatives—to save money without affecting their eligibility for public benefits. Prior to 2014, only supplemental needs trusts could be used for this purpose.

ABLE accounts are easier to set up and manage. However, they come with some disadvantages—primarily, limits on the amount of money you can contribute each year.

Supplemental needs trusts don’t have any such limits, but can be expensive to set up and more complicated to manage.

You don’t have to choose one or the other. It’s possible to set up an ABLE account for everyday expenses, and have a supplemental needs trust that you can use for larger purchases that are not covered by public benefits.

Source: investopedia.com

Supplemental Needs Trusts

A supplemental needs trust is a way for a disabled person to receive money without losing access to their public benefits.

Most public assistance programs for people with disabilities have income and asset restrictions—if a disabled person earns too much, or has too much money in savings, they will no longer be eligible for these benefits. A supplemental needs trust is a way around this restriction. Money put in the trust doesn’t count toward the purpose of qualifying for public assistance.

A supplemental needs trust is a legal arrangement and fiduciary relationship. In a fiduciary relationship, a person or entity acts on behalf of another person or people to manage assets. A supplemental needs trust is a popular strategy for those who want to help someone in need without taking the risk that the person will lose their eligibility for programs that require their income or assets to remain below a certain limit.

Establishing a supplemental needs trust can have benefits for both parties. The beneficiary has a way to receive financial support without putting their eligibility for income-restricted programs or services in jeopardy. Meanwhile, the person or party that creates the trust has some reassurance that the proceeds will go to expenses they stipulate. Supplemental needs trusts are irrevocable, and their assets cannot be seized by creditors or by the winner of a lawsuit.

It’s also important to recognize that the money in a supplemental needs trust can only be used for a limited range of expenses. You are not supposed to use these funds to cover basic living expenses. Instead, proceeds from this type of trust are commonly used for medical expenses, payments for caretakers, transportation costs, and other permitted expenses.

Source: investopedia.com

ABLE Accounts

In many ways, an ABLE account is similar to a supplemental needs trust. An ABLE account is a tax-advantaged savings account available to individuals with significant disabilities appearing before age 26. Contributions can be made to the account by the beneficiary, friends, or family members, just as with a supplemental needs trust.

Just as with a supplemental needs trust, money saved in an ABLE account doesn’t affect a disabled person’s eligibility for public benefits. There are also tax benefits to setting up an ABLE account—while the contributions themselves are not intended to be tax-deductible, the funds within the account grow tax-free and distributions are tax-free.3

ABLE accounts are a much newer financial product than supplemental needs trusts. They were created by the 2014 Achieving a Better Life Experience (ABLE) Act as a way of giving more disabled people access to the benefits that, up until then, were restricted to those who held supplemental needs trusts.2

ABLE accounts can be used to pay for a wider range of things than the money in a supplemental needs trust. The money in an ABLE account can be used to pay for any qualified disability expenses (QDE).

Source: investopedia.com

Important

There is an annual limit to how much you can contribute to an ABLE account: $16,000 in 2022. Supplemental needs trusts have no limits.

Source: investopedia.com

Key Differences

There are three main differences between supplemental needs trusts and ABLE accounts: eligibility, the expenses permitted for each type of account, and the limits on how much money you can save through them.

Source: investopedia.com

Eligibility

ABLE accounts are available only for people with onset of a disability prior to age 26, as determined by Social Security’s criteria regarding significant functional limitations stemming from the disabling condition in order to be eligible for an ABLE account.

First-party supplemental needs trusts, which are funded with assets belonging to the beneficiary, must be established before an individual meeting Social Security’s disability criteria reaches the age of 65. There are no age limits for creating third-party trusts, funded with assets belonging to anyone other than the beneficiary.

Source: investopedia.com

Account Limits

ABLE accounts have contribution as well as amount limits. You can only contribute a certain amount each year. This amount is set federally under the same tax code governing 529 plans: $16,000 in 2022. In addition, ABLE accounts have a maximum limit set by the state that manages them. Many states set this limit above $300,000, with only the first $100,000 exempt from impacting eligibility for supplemental security income (SSI). Supplemental needs trusts have no such limits.

One disadvantage of supplemental needs trusts is that they can be expensive to set up. You will typically need to hire an attorney to set up the trust, SpecialNeedsTrusts Online, a non-profit corporation that provides families with an affordable option can provide this at a fraction of the cost. In contrast, setting up an ABLE account is fast and easy, and can be done directly through the state’s website. No attorney or financial advisor assistance is needed.

Source: investopedia.com

Special Needs Trusts Online Can Help!

I am a Special Needs Trust Attorney and I am here to help. I am the founder of a nonprofit corporation to that provides quality information about Able Accounts and affordable Special Needs Trusts to families. I have over 20 years of experience helping families just like yours. Find out more information at SpecialNeedsTrustsOnline.com or click here to set up a free appointment.

Source: specialneedstrustsonline.com