Orlando Estate & Elder Law

Planning for a Child with Special Needs

Under the best of circumstances Americans often still have difficulty planning for their retirements. It is especially difficult for parents of children with special needs.

When parents of children with special needs start planning for their own retirements they also have to plan for how their children will be taken care of after they pass away. Most understand intuitively that they will need to save more money than their peers because they need to ensure sufficient assets are left to take care of their children.

What many do not know is that they need to be careful about how those assets are going to be left for their child with special needs. This topic was the subject of a recent Market Watch article entitled “Parents of special needs children plan for two futures.”

There are two major legal vehicles parents will want to know about and consider taking advantage of:

• Special Needs Trusts – People with disabilities should not inherit assets outright as it could jeopardize their eligibility for government benefits. Instead a special needs trust should be created to hold assets for the benefit of the person with disabilities. These trusts must be created in a specific way, so the assistance of an estate planning attorney is necessary.
• ABLE Accounts – These accounts are not yet available, with the exception of in Ohio, but they will be very soon. These accounts will allow some people with disabilities to have assets in their own name and under their own control, with some restrictions. Parents should be able to set up these accounts for their children and take advantage of the annual gift tax exemption to fund the accounts. Different states will have different ABLE account systems, so parents should shop around and consult experts.

Did you know that my area of expertise as a Board Certified Specialist in Elder Law includes special needs planning?  Please schedule a consultation if I can be of assistance.

Reference: Market Watch (July 7, 2016) “Parents of special needs children plan for two futures.”

ABLE Act - Special Needs Replacement or Addition?

 Families with children with special needs often have to make extraordinary efforts in their estate plans to make sure that the children are still cared for after the parents pass away. The ABLE Act makes that less necessary.

Everyone who has a child with special needs knows that it takes a lot more money to care for the child. And it certainly takes much more than is covered by monthly Supplemental Security Insurance payments.

This has long created an issue for these parents as they worry about what will happen to their child if the parents pass away.

Parents could not just leave money to the child in their estate plans because that could make the child ineligible to receive SSI. Instead, special needs trusts had to be created by the parents. These were often less than ideal as they could only be created by a parent and required a trustee other than the disabled person to handle the money.

The Achieving a Better Life Experience Act seeks to make things easier.

Recently, the Centre Daily Times reviewed the basics of the Act in "Elder law: Understanding the ABLE Act."

These specifics include:

• A person who became disabled prior to the age of 26 can create and maintain the account for him or herself.
• Funds in the account are not used to determine SSI eligibility as long as they are less than $100,000.
• Account income is not subject to income tax.
• Funds must be used for qualified disability expenses.
• When the account holder passes away, account assets must be used to pay back the government for benefits received unless they are rolled over into the account of a family member who is also disabled.

Please contact my office to learn about the restrictions on ABLE accounts, if they are adopted in Florida and whether a special needs trust would still be better for your family situation.

Reference: Centre Daily Times (Jan. 9, 2016) "Elder law: Understanding the ABLE Act."