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special needs parent

Possible Pitfalls for Special Needs Planning for Parents

Possible Pitfalls for Special Needs Planning for Parents

 

Public benefits for disabled individuals include health care, supplemental income, and resources, like day programs and other vital services. Some benefits are based on the individual’s disability status, but others are “needs tested,” where eligibility is determined based on financial resources, as explained in the article “Planning for loved ones with special needs” from NWTimes.com.

Needs testing” is something that parents must address as part of special needs planning, in concert with their own estate planning. This ensures that the individual’s government benefits will continue, while their family has the comfort of knowing that after the parents die, their child may have access to resources to cover additional costs and maintain a quality of life they may not otherwise have.

Families must be very careful to make informed planning decisions, otherwise their loved ones may lose the benefits they rely upon.

A variety of special planning tools may be used, and the importance of skilled help from an elder law estate planning attorney cannot be overstated.

One family received a “re-determination” letter from the Social Security Administration. This is the process whereby the SSA scrutinizes a person’s eligibility for benefits, based on their possible access to other non-governmental resources. Once the process begins, the potential exists for a disabled person to lose benefits or be required to pay back benefits if they were deemed to have wrongfully received them.

In this case, a woman who lived in California, engaged in a periodic phone call with California Medicaid. California is known for aggressively pursuing on-going benefits eligibility. The woman mentioned a trust that had been created as a result of estate planning done by her late father. The brief mention was enough to spark an in-depth review of planning. The SSA requested no less than 15 different items, including estate documents, account history and a review of all disbursements for the last two years.

The process has created a tremendous amount of stress for the woman and for her family. The re-determination will also create expenses, as the attorney who drafted the original trust in Indiana, where the father lived, will need to work with a special needs attorney in California, who is knowledgeable about the process in the state.

Similar to estate planning, the special needs process required by Medicaid and the SSA is a constantly evolving process, and not a “one-and-done” transaction. Special needs and estate planning documents created as recently as three or four years ago should be reviewed.

Reference: NWTimes.com (June 21, 2020) “Planning for loved ones with special needs”

Read other related articles at:

11 Things Special Needs Parents Need to Survive and Thrive

Common Pitfalls When Planning Estates for Families with Special Needs Children

Also, Read one of our previous Blogs at :

Special Needs Guardianship Can Be a Challenge

Click here to check out our Master Class!

 

 

trust

10 Reasons Why You Need A Trust

10 Reasons Why You Need A Trust

 

Christine Fletcher Contributor

If your estate is not subject to estate taxes now, it may be in a few years.

Clients often ask, “Why do I need a trust?” This question comes up even more frequently since Congress passed the Tax Cuts and Jobs Act of 2017, which increased the federal estate tax exemption amount from approximately $5 million per person to $11 million per person or $22 million per couple. Those amounts are adjusted for inflation, so this year the exemption amount is $11.4 million per person.

If you and your spouse have less than $22 million, you may think you can get by with a simple will. Here is why you need more than that.

The tax cuts are temporary. The $11 million federal estate tax exemption amount is scheduled to drop back to the $5 million range in 2026. If your estate is not subject to estate taxes now, it may be in a few years.

Your state matters. Your state may impose its own state estate tax. This is true of Massachusetts which has a $1 million estate tax exemption. If you own real estate in another state, you may be subject to that state’s estate tax laws as well. You should be planning to minimize state estate taxes in all applicable states. (Explore 2019 state estate and inheritance taxes.)

Avoiding probate. If you fund your trust during your lifetime, you will avoid probate. Avoiding probate means your family will not have to go to court to authenticate your will after your death in order to access your assets. This saves time and money.

Planning for incapacity. Another benefit to funding your trust while you are alive is that your successor trustee can access the assets for your benefit if you become incapacitated. If you are in the ICU or a long-term care facility, who will pay your bills and manage your assets? If your trust is funded, the successor trustee can do that. Otherwise, your family may have to go to court to have a conservator appointed to oversee your assets.

 

Limiting children’s access to their inheritance. If you have minor children, you want to make sure their inheritance is overseen by a trustee until they are old enough to manage the monies themselves.

Making lifetime gifts to children. If you want to make a lifetime gift to a child, this is best done through an irrevocable trust to define the child’s access to the funds and to allow you some tax savings.

Protecting beneficiaries from themselves. If a beneficiary has a drug addiction, is a spendthrift or just makes poor choices, having a trustee limits their access to the trust funds.

Divorce happens. If a beneficiary goes through a divorce, a trust could prevent their divorcing spouse from obtaining all or a portion of their monies in a settlement.

Creditor protection. If a beneficiary is in a business or profession that makes her susceptible to lawsuits, having a trust can protect the assets and keep them out of reach by her creditors. Clients with children who are physicians often keep the child’s inheritance in trust to protect from any such judgments.

Preventing bad decisions by a surviving spouse. Do you really want him or her spending your hard-earned money on European vacations with the pool boy or the local cocktail waitress? What if your surviving spouse blows the money on shopping trips leaving your children with nothing? I have seen both situations and they are not pretty. Trusts can prevent these scenarios.

Different trusts serve different purposes. Estate tax savings can be an important part of trust planning, but there are many other facets of trust planning to consider and incorporate into your estate plan.

Read more related articles at :

We Asked Our Experts: Do You Need a Trust?

Understanding the Differences Between a Will and a Trust

Also, read one of our previous Blogs at :

Not a Billionaire? Trusts Can Still Be Beneficial

 

Guardianship

What Should I Know about Guardianship?

What Should I Know about Guardianship?

In a perfect world, a child would be raised by its parents. However, this isn’t always possible, and legally enforceable decisions must sometimes be made to name the person who is best positioned to look after a child.

Guardianship is generally only needed when a person is incapable—whether legally or practically—of looking after their own affairs, says VENTS Magazine in the article “Legal Guardianship 101: What You Need to Know.”

Courts have the power to appoint guardians for adults and children. This is usually a person who is unable to make decisions for themselves.

It may be a disabled person, and guardians are appointed for children when parents consent to it, when their parental rights are removed by a court, or when both parents are dead or permanently incapacitated.

Guardians have duties as to both the protected person and their estate. The duties to the person include providing necessities, education and appropriate medical treatment, where necessary. As far as the estate of the protected person, the duties are to manage any funds properly and to spend them, pursuant to the protected person’s needs. Guardians must prepare an inventory of assets within 60 days of their appointment to the role.

Custody is only granted for children. When appointed, a custodian is given parental rights over the child. Guardianship does not bestow these rights.

A guardian is appointed to take care of a protected person and to safeguard their estate. Biological parents, if alive, keep their parental rights over the child.

To become a guardian, you must file a petition with the court. There will be a hearing on your application. You must present proof (from a doctor, for example) that guardianship is necessary under the circumstances.

Guardianship litigation can eb stressful, but it is frequently necessary, so engage an attorney to help you.

Reference: VENTS Magazine (April 13, 2020) “Legal Guardianship 101: What You Need to Know”

Read some related articles at :

What You Should Know About Guardianship

5 Ways To Know You Need A Guardianship For Mom (Or Dad)

Also, read one of our previous Blogs at : 

How is a Guardianship Determined?

 

 

elderly female mask

How to Talk to a Parent Suffering from Alzheimer’s or Dementia during the Pandemic

If you have a parent living in an assisted living facility or a nursing home, or they’re at home, caregivers need to know how to explain the current coronavirus pandemic in an appropriate and clear manner—and in a way that protects and cares for your own personal health.

Long Island Weekly’s recent article entitled “Caregiving During The Coronavirus” explains that older adults often have more health complications, like heart disease, diabetes and hypertension. As a result, they’re more susceptible to the complications of the coronavirus. Review the recommendations of the Centers for Disease Control and Prevention (CDC) and World Health Organization (WHO) for protecting you and your family from exposure.

And although some people suffering from Alzheimer’s or dementia may not fully understand the complexity and severity that the COVID-19 pandemic is having on our communities, they can sense what’s happening. They can read your personal energy and can sense your stress. This may cause them to show more symptoms of anxiety, agitation, cognitive decline and confusion. Communicate as best you can to your parent frequently and clearly about what’s happening. While they may not need to have all the details, let them know that there’s a virus spreading within the community and that we need to wash our hands thoroughly and stay indoors.

For those still being cared for at home, take the necessary precautions as you’d do for yourself. Modify your grocery shopping trips, since stores are adding special senior hours, reschedule unnecessary doctor visits, stock up on needed medications and talk to your doctors about any concerns.

For those in a facility, understand the visitation policies, because many have adjusted their policies to limit or prohibit personal visitation. Ask the administration about visitation and what the care facility is doing to ensure your parent’s care.

Although you might be frustrated that your parent’s facility is limiting or cancelling visitation, remember that the new rules are designed to protect the residents. You may be able to schedule a time to speak with your mother or father on the phone every few days, or you can deliver food or items, like photos albums or other gifts to stay connected. Try to be reasonable and understand that these facilities may be understaffed.

Here are a few key points that may be helpful to get through this crisis:

  • Have a talk with your parent and with the facilities in which they’re living, so they can understand the new policies.
  • Be careful yourself. Take reasonable precautions for yourself and your family member.
  • Avoid public spaces. This includes routine, or non-essential doctor visits, grocery shopping and other visits.
  • Stay upbeat. Know the latest news and guidelines but try to remain calm, because your parent may sense your stress and reflect that.

Be reasonable and understanding and try your best in these uncertain times—for yourself and your loved one.

Reference: Long Island Weekly (April 12, 2020) “Caregiving During The Coronavirus”

Read more related articles at:

Coronavirus (COVID-19): Tips for Dementia Caregivers

Caring for Someone with Alzheimer’s During the COVID-19 Outbreak: 5 Tips

Also read one of our previous blogs at:

Why is an Advance Directive so Important with Dementia?

 

 

family first coronavirus response act

Caregivers May be Eligible for Paid Sick Leave Under Coronavirus Response Act

Caregivers May be Eligible for Paid Sick Leave Under Coronavirus Response Act

The U.S. Department of Labor (DOL) has issued regulations clarifying that people who have to take time off work to care for family members with disabilities may be eligible for the new paid sick leave protections enacted by Congress in the wake of the COVID-19 pandemic.

Until the pandemic, federal protections for employees seeking leave to care for family members or their own health was limited to the Family Medical Leave Act (FMLA), which guarantees certain employees 12 weeks of unpaid leave to care for family members. The Families First Coronavirus Response Act (FFCRA), signed into law March 18, 2020, by President Trump, amends the FMLA to provide two weeks of paid family and sick leave for certain employees. These provisions are temporary, with an expiration scheduled for December 31, 2020.

The new law contains numerous limitations. It exempts employers with more than 500 employees, as well as employers with fewer than 50 employees if the leave protections pose a “substantial risk” to the company. In terms of compensation, workers with COVID-19 are entitled to two weeks of paid sick leave at their regular pay rate. Other workers are entitled to two weeks of paid sick leave at two-thirds of their regular salary, up to a certain maximum, if they have a “qualifying need related to a public health emergency.”

Upon the FFCRA’s passage, disability rights advocates raised concerns about whether the law protected people who needed to temporarily leave a job to care for family members with disabilities whose regular services have been disrupted by the COVID-19 pandemic. DOL regulations implementing the FFCRA, published in the Federal Register on April 6, make clear that the paid leave will cover care for a son or daughter under 18 years of age if the school or place of care has been closed, or the child care provider  is unavailable, due to a public health emergency.

The FFCRA, however, did not expressly define ‘son and daughter.” Would it, as the earlier FMLA does, explicitly define “son and daughter” to not only include children under age 18, but also people of any age who “are incapable of self-care because of a mental or physical disability”?

To the relief of advocates, the implementing regulations explicitly state that employers should interpret the FFCRA and FMLA the same. In other words, family members caring for people with disabilities, even those over age 18, may be eligible for paid leave protections.

“The bill provides unprecedented paid leave benefits to American workers affected by the virus, while ensuring that businesses are reimbursed dollar-for-dollar,” DOL Secretary Eugene Scalia said in a news release.

Although a welcome step, many disability advocates still view the FFCRA as an incomplete set of protections.

“I am concerned that the rule is limited to parental caregivers,” Bethany Lilly, director of income policy at The Arc, told Disability Scoop. “We would like to see other family members included.”

Some states have enacted significantly more expansive sick leave protections than the federal government as a result of the pandemic. In New York State, for example, employers with more than 100 or more employees must provide 14 days of paid sick leave, employers with 10 to 99 employees or more than $1 million in business income must provide five paid sick days, and other employers, while not required to compensate for time off, must nonetheless provide job protections. California has passed a similar law.

Click here to read the full FFCRA regulation.

Read more related articles at:

Families First Coronavirus Response Act: Employee Paid Leave Rights

How the Families First Coronavirus Response Act affects families and their caregivers

Also read one of our Previous Blogs at:

C19 UPDATE: CDC Recommends Care Plans for Both Older Adults and Caregivers

 

Special Needs Trusts

Do Beneficiaries of Special Needs Trusts Have Rights?

Do Beneficiaries of Special Needs Trusts Have Rights?

A special needs trust is set up to provide money for the care and support of the beneficiary with special needs. A trustee is then named or appointed to manage the trust’s assets and act in the best interests of the beneficiary. The duty a trustee owes to a beneficiary is a fiduciary duty which is the highest duty the law creates for one person to another. It is much like the duty a parent owes to a minor child.

What happens, though, if disputes arise? Perhaps the beneficiary wants money for a particular purpose, for example to pay for an alternative form of treatment or therapy, and the trustee refuses to comply, believing such an expense is not within the terms of the trust or would breach the trustee’s fiduciary duty towards the beneficiary.

Even though the terms of the trust have been long established, does the beneficiary have any rights to challenge the trustee or dispute the terms of the trust itself? Special needs trusts are typically irrevocable, which means that the trust’s terms and its assigned beneficiaries cannot be changed without a court’s intervention. Does the named beneficiary of a special needs trust have any rights beyond that? In general terms, yes, thanks to something called the Uniform Trust Code, or UTC. Drawn up in 2000 by the Uniform Law Commission, the UTC is a nonbinding set of guidelines relating to trusts. State legislatures can vote to adopt the UTC into state law, with their own modifications if they so choose, and as of January 2020, 34 states had done so.

Here are five common rights of beneficiaries recommended by the UTC, any of which might come into play in a dispute between the special needs beneficiary and the trustee. These would be brought forward in a court and decided according to state law.

Payment: The special needs beneficiary has the right to distributions from the trust, to pay for her care and support as detailed in the trust’s terms and conditions.

The right to be informed: Beneficiaries are entitled to the trust’s financial information, such as tax returns, annual reports, quarterly earnings statements, and so on. These can be provided on a regular basis or on the beneficiary’s request.

The right to an accounting: If a beneficiary has questions about the trust’s performance or assets, he can request a thorough accounting from the trustee.

Removal and replacement of trustees: If a trustee has demonstrated behavior that violates the purpose of the trust or does not adequately protect the beneficiary’s interests, that trustee can be removed and replaced with someone else.

Termination: If the trust has failed to fulfill its purpose, or is no longer valid, the beneficiary may petition to terminate the trust altogether.

It’s important to keep in mind that these rights are codes, drawn up by the Uniform Law Commission to guide state legislatures. They are only binding if state law puts them into effect. States have made their own modifications to the UTC guidelines or enacted them only selectively. Some, such as California, haven’t adopted them at all, although these states’ laws governing trusts also likely include protections for beneficiaries.

If you are a special needs beneficiary and have questions about your rights, you will first need to find out if your state has adopted the UTC, and to what extent, and if not, what beneficiary rights and protections your state’s law provides. Consult with your special needs planner to get a complete picture of beneficiary rights where you live.

Read more related articles at:

5 Rights That Trust Beneficiaries Have

Can the Beneficiary of a Special Needs Trust Change the Trustee?

Estate Planning for Parents of Children with Autism

Also check out one of our previous blogs at : 

What is a Special Needs Trust?

disability coronavirus

COVID-19 Raises Fears of Health Care Rationing, Disability Discrimination

COVID-19 Raises Fears of Health Care Rationing, Disability Discrimination

As hospitals around the country brace for an expected surge of patients infected with the COVID-19 coronavirus, fears have been raised that health care providers will begin rationing treatment, with lethal consequences for people with disabilities.

Reacting to protocols to ration care adopted by Washington State and Alabama, advocacy groups filed strongly worded complaints.  In response, the federal government has issued a bulletin warning health care facilities not to discriminate against people with disabilities when making treatment decisions during the COVID-19 health care emergency.

Washington State, the first state slammed by the pandemic, released a plan March 16 to guide hospitals on treatment decisions if, as expected, they run short of ventilators and other life-saving medical equipment. The plan suggests that when allocating resources, hospitals should rely on a “utilitarian framework” and consider, for example, a patient’s “baseline functional status” and “loss of reserves in energy, physical ability, cognition and general health.”

In a March 20 letter to the U.S. Department of Health and Human Services (HHS), the Consortium for Citizens with Disabilities wrote, “The lives of people with disabilities are equally valuable to those without disabilities, and healthcare decisions based on devaluing the lives of people with disabilities are discriminatory.” .

Three advocacy groups — Disability Rights Washington (DRW), the Arc of the United States, and Self Advocates in Leadership — filed a federal complaint with HHS’ Office of Civil Rights (OCR) on March 23. They alleged the Washington State plan was created without input from the disability rights community and violates the Americans with Disabilities Act, Section 504 of the Rehabilitation Act, and the Affordable Care Act’s disability discrimination provisions.

The groups argued that the language in the plan, particularly without any guidance on federal anti-discrimination laws, will be interpreted to permit medical professionals to deny services to people solely based on their disabilities—without any individualized assessment as to how these patients, many of whom are already among society’s most vulnerable to COVID-19, will survive treatments for the coronavirus.

Even if disability discrimination is not overt, the advocacy groups worried that medical professionals will ration services based on outdated stereotypes of disabilities or other factors, such as a person’s need for subsequent accommodations or long-term survival prospects, which have no bearing on a patient’s immediate ability to survive the pandemic and legally cannot be considered.

“We will not sit by as members of our community are left for dead,” DRW Director of Advocacy David R. Carlson said in a news release. “We stand up for those with preexisting disabilities and those with newly acquired disabilities who are impacted by COVID-19. We implore OCR to rein in and provide urgently needed guidance to the health care professionals who are prepared to relegate members of our community to die.”

Meanwhile, the Alabama Disabilities Advocacy Program filed a separate complaint to OCR on March 24. Alabama’s emergency plan, if it goes into effect, explicitly orders hospitals to “not offer mechanical ventilator support for patients” with “severe or profound mental retardation,” “moderate to severe dementia,” and “severe traumatic brain injury.”

Both complaints urged the federal government to “act swiftly” to investigate and issue nationwide anti-discrimination protocols.

The concerns were evidently heard.  On March 28 the OCR issued its bulletin reminding health care providers to “keep in mind their obligations under laws and regulations that prohibit discrimination” against those with disabilities, and OCR director Roger Severino announced his office was opening an investigation to ensure state rationing plans are fully compliant with civil rights law.

“Our civil rights laws protect the equal dignity of every human life from ruthless utilitarianism,” Severino said in the bulletin.  “HHS is committed to leaving no one behind during an emergency, and helping health care providers meet that goal.” “Persons with disabilities, with limited English skills, and older persons should not be put at the end of the line for health care during emergencies.”  Severino added.

For more information on disability discrimination in medical decision-making, click here to read DRW’s 2012 report, “Devaluing People with Disabilities: Medical Procedures that Violate Civil Rights,” and click here to read the NCD’s recent “Bioethics and Disability Report Series.”

Read more about this at :

Stemming the Risk of Disability Bias During the COVID-19 Pandemic

WHY COVID-19 SPARKS FEARS FOR PEOPLE WITH DISABILITIES

And check out one of our previous Blogs at :

Special Needs Planning

 

 

Alzheimer’s

New Blood Test May Make Alzheimer’s Diagnosis Easier

New Blood Test May Make Alzheimer’s Diagnosis Easier.  Researchers at the University of California – UC San Francisco have analyzed the blood test in more than 300 patients and believe that they will see such a test available in doctor’s offices within five years, according to a press release from The University of California- San Francisco’s entitled “New Blood Test Could Make Alzheimer’s Diagnosis Easier Than Ever.”

“This test could eventually be deployed in a primary care setting for people with memory concerns to identify who should be referred to specialized centers to participate in clinical trials or to be treated with new Alzheimer’s therapies, once they are approved,” said Adam Boxer, MD, PhD, neurologist at the UCSF Memory and Aging Center and senior author of the study published in Nature Medicine. Boxer also is affiliated with the UCSF Weill Institute for Neurosciences.

There is currently no blood test for either condition. Alzheimer’s diagnoses can only be confirmed by a PET scan of the brain, which can be expensive or an invasive lumbar puncture to test cerebrospinal fluid.

If approved, the new blood test could make screening easier and help increase the number of patients eligible for clinical trials—vital to the search for drugs to stop or slow dementia. Patients who know whether they have Alzheimer’s or FTD are also better able to manage their symptoms.

In the new study, scientists collected blood samples from 362 people aged 58 to 70, including 56 individuals who’d been diagnosed with Alzheimer’s, 190 diagnosed with FTD, 47 with mild cognitive impairment, plus 69 healthy controls.

Researchers checked the blood samples for proteins that could serve as signs of dementia. One protein, called pTau181, is known to aggregate in tangles in the brains of patients with Alzheimer’s. Blood levels of pTau181 were about 3½ times higher in people with Alzheimer’s as opposed to their healthy peers. People with FTD had normal levels of pTau181, and those with mild cognitive impairment due to underlying Alzheimer’s had an intermediate increase.

When researchers followed the patients for two years, they saw that higher levels of pTau181 predicted more rapid cognitive decline in those with Alzheimer’s or mild cognitive impairment.

The researchers note the new blood test has the same degree of accuracy as current PET scans and lumbar punctures in distinguishing Alzheimer’s from FTD. It would be less expensive and easier.

Alzheimer’s impacts nearly 6 million Americans and comprises two-thirds of dementia cases. FTD includes a broad group of brain disorders often linked with degeneration of the frontal and temporal lobes of the brain. So this New Blood Test May Make Alzheimer’s Diagnosis Easier.

Reference: UCSF (March 2, 2020) “New Blood Test Could Make Alzheimer’s Diagnosis Easier Than Ever”

Read more related articles at: 

Simple Blood Test May be Able to Diagnose Alzheimer’s Disease

Blood test is highly accurate at identifying Alzheimer’s before symptoms arise

How to Pay for a Loved One’s Memory Care and Manage Their Finances

Also read our previous Blogs at: 

How Do I Prepare my Parents for Alzheimer’s?

How Do We Live Our Lives When A Loved One Has Alzheimer’s?

 

 

 

Special Needs

Special Needs Guardianship Can Be a Challenge

Special Needs Guardianship Can Be a Challenge. A person who’s diagnosed with autism should have a named guardian before turning 18. At that point, the person can sign binding contracts, make health care decisions and sign IEPs (Individualized Education Plan) without parental involvement.

Autism Parenting’s recent article entitled “A Brief Overview of Special Needs Guardianship” explains that guardianship is a legal process in which a responsible person is named as the final decision maker for another. When it’s the parent and their child with autism, the parent can become the guardian of the 18-year-old with autism in a specific legal process. Guardianship gives the parent the final say, on all decisions regarding the child.

It’s not uncommon for a parent to be hesitant about becoming the guardian, especially if the child is developing well and has several abilities. One question to ask in this situation concerns the intellectual or developmental age of my child. If the honest answer is below the age 18 (like 14 or 12 years old), then you’ll want to ask yourself if you’d allow your 14-year-old make all healthcare, education, housing and financial decisions and have those decisions be legally binding. Probably not. In that case, you should look into guardianship.

If your adult child continues to develop and at some point down the road can make decisions on her own, the guardian can petition the court to have relationship revoked.

Another important time period that guardianship needs to be considered is when the parents die. The appointed guardian then will be responsible for day-to-day care or decisions on that day to day care. The selection of a guardian for this situation is often a large roadblock to finishing up a family’s plan.

The reason is because parents must make this decision before completing their will. If parents have trouble with choosing a potential guardian, consider these criteria when considering each person: location, family circumstances, their personality qualities and demeanor, their age, their experience with special needs individuals, the fact that the person knows your family member, your parent or your loved one knows the individual, their financial position, marital status and work schedule.

By the following factors, parents can rank each possible future guardian and settle on the best possible choice.

Although the guardian might never be as committed as a parent, if you use a more objective process (like the criteria above), parents will be better able to find a qualified future guardian.

Special Needs Guardianship Can Be a Challenge but with careful planning it can be achieved.

Reference: Autism Parenting (undated) “A Brief Overview of Special Needs Guardianship”

For More Information on this subject Click here: Guardianship and Conservatorship | Autism Speaks

Special Needs Children turning 18 Years Old -Caregiver.com

Also Read our Previous Blog at :  Estate Planning for Special Needs Family Members

 

Able Accounts

An Introduction to ABLE Accounts

An Introduction to ABLE Accounts

When Congress passed the Achieving a Better Life Experience (ABLE) Act in 2014, it was a game-changer for families with special needs. For the first time there was a tax-advantaged way to put money aside for dependents with disabilities without compromising their eligibility for government benefits. And, unlike a special needs trust, an ABLE account can be managed and controlled by the beneficiary.

Since this law was enacted, however, there has been some confusion about how ABLE accounts work, and the public has been slow to sign on. Here are answers to a few basic questions to help clarify what ABLE accounts can and can’t accomplish for the special needs family.

What is the ABLE Act, and what does it mean?

The ABLE Act is a provision of the 529 section of the IRS code, the section that previously established the framework for education savings plans to help families save for college. The ABLE Act allows money to be set aside for a person with special needs in a similar way. This money can grow tax-free over time and is used to pay for qualifying expenses toward the care and support of the special needs beneficiary. These accounts are administered by the individual states and accept contributions in the form of cash only (not bonds, securities, real estate, or other assets). As of February 2020, 42 states and the District of Columbia had set up ABLE programs, although if your state does not yet have its own program, many state programs allow out-of-state beneficiaries to open accounts. For a directory of state programs, click here.

What can ABLE accounts pay for?

Money in an ABLE account is intended for the care and support of the person with special needs. Qualifying expenses include housing, transportation, assistive technology, health care, and employment support. Any amount withdrawn for non-qualifying expenses incurs a 10 percent penalty payable to the IRS and is subject to taxation on any gains or investment returns.

What are the advantages ABLE accounts?

ABLE accounts provide advantages in two areas: taxation and access to government benefits. Through an ABLE account, a person with special needs can accumulate savings in a tax-advantaged way similar to 529 college savings plans. Like 529 plans, the funds in an ABLE account grow tax-free, and some states even offer account contributors a deduction from state income taxes.

A person with disabilities who has more than $2,000 in assets would normally not qualify for federal government benefits such as Supplemental Security Income (SSI), but under the ABLE Act, families may establish ABLE accounts that will not affect the child’s eligibility for SSI (up to $100,000), Medicaid, and other public benefits. Such accounts are also easy and inexpensive to set up and do not require the services of a lawyer or special needs planner.

Are there any drawbacks or limits to ABLE accounts?

Due to certain restrictions, ABLE accounts may not be for everyone. Eligibility is limited to people who developed their disability before age 26, so anyone who becomes disabled later in life does not qualify. Also, unlike 529 plans, total contributions to ABLE accounts are limited to $15,000 per year, although beneficiaries who work can make ABLE contributions above the $15,000 annual cap from their own income up to the Federal Poverty Level, which is $12,760 for a single individual in the lower 48 states (in 2020), provided they do not participate in their employer’s retirement plan.

If the value of the account exceeds $100,000, any SSI income is suspended until the account dips below that limit. Faced with saving for the lifetime needs of a loved one with disabilities, families realize that $100,000 may not be enough yet are wary of losing that government income even for a short period. Another drawback is that after the death of the ABLE account beneficiary states can claim reimbursements from funds remaining in the account for any Medicaid benefits paid during the beneficiary’s lifetime.

Before setting up an ABLE account for your loved one, make sure you understand every aspect of the law, and consult your special needs planner.

For more on ABLE accounts, click herehere and here.

 

Other important information for Able Accounts can be found here:     What to know before opening an Able Account/USNews.com

    How to draw up a Special Needs Trust for a Child with Disabilities/ USNews.com

 

Also read one of our Previous Blogs here:              How much money should I put in a Special Needs Trust for my Child?

 

 

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