Dive into ABLE accounts and special needs trusts

We frequently get asked by families whether an ABLE account or a special needs trust is best for them.  The short answer is a typical lawyer answer: it depends.  The medium answer is that they serve different purposes and its not a matter of choosing one or the other, its about choosing the best vehicle for specific purposes, and in the end, most families should have both an ABLE and a special needs trust.

They both serve as a place where money can be accumulated for a person with a disability without interfering with eligibility for SSI and Medicaid benefits. Past that commonality, there are significant differences.

Ownership

An ABLE account can be owned and even managed by the person with the disability, if they otherwise have the ability. The disabled individual can make his or her own decisions and use a debit card or checks to pay for items.

A special needs trust must be managed by a trustee, who makes all the decisions about investment and use of the money in the trust.  The person with the disability, or a guardian or caretaker, can propose expenditures from the trust, but the trustee makes the final decision and handles the purchase.

Holdings

An ABLE account has both yearly and lifetime deposit limits, at least for purposes of excluding assets from consideration for SSI and Medicaid eligibility. Up to $15,000 per year (approximate, this amount is tied to an index so will vary slightly year to year) may be deposited without impacting SSI or Medicaid eligibility.  A maximum of $100,000 total can be held in the ABLE account without impacting SSI or Medicaid eligibility.  The yearly deposit limit is far below what a person might typically receive from a parent upon the parent’s death, when property, retirement accounts and life insurance are all figured in.  An ABLE account can hold only cash, as well, so if a child is left property other than cash it could not be shielded by the ABLE account.  Money can be contributed by any person.

A special needs trust has no limit on the amount that can be contributed to it at any time, nor a maximum value overall.  A special needs trust can also hold any type of property, including a house, car, or other non-cash assets (with the exception of a pooled trust, which is not discussed in this article).  Like the ABLE account, money can be contributed by any person, but if the disabled person will be a contributor then the trust itself must have some special provisions.

Number of accounts

A person may have only one ABLE account.  It is not possible to get around the contribution limits by opening multiple accounts, as only one account is legal permitted.

A person may have any number of special needs trusts naming them as beneficiary.  Each parent and each individual grandparent could set up their own special needs trust for a person if they so chose, giving them the ability to choose the trustee and terms of their own liking.

Read more on ABLE accounts and special needs trusts:

ABLE Account Q&A,

4 Things to know about ABLE Accounts,

How NOT to use special needs trust money,

Does your child need a special needs trust to get Medicaid?,

The basics of special needs trusts

A special needs law firm can help you figure out what you need for your child, and how to put all the planning pieces together.

If you have questions about preparing for your own special needs child’s future, Parker Counsel Legal Services a call or shoot us an email. legal@parkercounsel.com or 833-733-2668

Portsmouth NH Special Needs Trust Attorney

Parents of children with developmental disabilities that will not be able to work and support themselves as adults can provide for their children in the future with special needs trusts. This special type of trust allows families of all economic means to leave money to help provide a better quality of life for their child without endangering their very important social security and Medicaid benefits. You can find more information on special needs trusts here. Our firm can help you develop a comprehensive estate plan that includes a special needs trust for your child with special needs to ensure resources for their care long into the future.

Your child may also need guardianship after they turn 18, when you, the parents, can no longer make decisions for them or even access educational and medical information without your child’s permission. Our firm can help families in Rockingham county and Stratford county apply for and present the necessary evidence to a Court to obtain an order of guardianship. Some of your questions about guardianship are answered here.

The best way to get answers to your questions and see if we can help you is to give us a call or send an email. We love to chat with families about their needs, and we promise you will learn something you didn’t already know when you talk to us. 833-RED-BOOT (833-733-2668) or legal@parkercounsel.com

A New Hampshire special needs trust attorney can help you from our office in downtown Portsmouth, 155 Fleet St, Portsmouth NH 03801.

How NOT to use Special Needs Trust Money

Special needs trusts are simple and yet oh so complicated, like almost everything devised by the government. They are a wonderful tool for parents and others to provide money to use for a disabled child while protecting the child’s eligibility for Medicaid and SSI (social security benefits). They can hold any amount of money and that money can be used to supplement the benefits received from the government and thereby, it is hoped, enhance the quality of life of the individual.

The money cannot ever, however, be used to pay for items that the benefits are intended to cover, without causing some reduction in, or sometimes loss of, the benefits. This includes things like:

Cash given directly to the beneficiary for any purpose

Food or groceries

Restaurant meals (except if given as an occasional gift)

Rent or mortgage payments

Utilities such as electricity, gas, and water

Utilities hookup or connection charges

On the other hand, a special needs trust CAN make contributions to an ABLE account, and the ABLE account CAN be used to pay for many of the items the Trust cannot pay for. See? Simple and yet complicated all at the same time.

Parker Counsel Legal Services serves families in Central Texas, Western Massachusetts, Northern New Jersey, and the New Hampshire Seacoast with special needs estate planning, special needs trusts, and guardianships. Contact us for a consultation at 833-RED-BOOT (833-733-2668) or legal@parkercounsel.com

Does your child need a special needs trust to get Medicaid?

Children with developmental disabilities – cerebral palsy, Down Syndrome, autism, and any other condition that began in childhood – who are not able to work and support themselves are probably going to be able to get social security benefits and Medicaid (called MassHealth in Massachusetts) when they turn 18 years of age. In some cases, they can receive these benefits before 18, but in almost every case they can do so after 18. Social security provides a limited cash payment to persons with a disability who have very low or no income and assets. Even if a child with a disability continues to live at home with parents after they turn 18, if they have little or no income and little or no other resources like savings, they will probably be eligible for supplemental security income (SSI) and Medicaid.

SSI cash benefits are pretty low (currently $770 a month, with some states adding a little bit more), so it’s important to have a way to supplement the limited spending power of that SSI money. While parents are alive, they can buy “extras,” like computers, videos, vacations, even additional therapy or vocational training not covered by insurance. But when the parents die, an inheritance to a child receives SSI and Medicaid will almost always cause them to lose those benefits. People with developmental disabilities who are receiving, or will probably receive in the future, SSI and Medicaid benefits, should never be left an inheritance or be named as a life insurance or pension beneficiary because it will jeopardize their benefits.

That’s where the special needs trust comes in. If a parent or grandparent puts money into this very special type of trust, that money can be used to supplement the government benefits while keeping those benefits in place. A New Jersey special needs trust, a Massachusetts special needs trust, a New Hampshire special needs trust, even a Texas special needs trust, all work the same way to let parents, grandparents, and anyone else who wants to leave money to improve the quality of life of a person with a disability give them money without causing any problem to their government benefits.

So back to the original question: Do you need a special needs trust in order for your adult child to get Medicaid? There are two parts to the answer. First, you may need a special needs trust to get Medicaid at age 18 if the child already has significant assets in their own name. Those assets can be moved to a special needs trust so that the adult child meets the very low asset threshold for eligibility.

The second part of the answer is that even if the adult child initially qualifies for Medicaid without a trust, they will probably need a special needs trust in order to keep those benefits when their parents die. The trust can receive an inheritance, life insurance proceeds, or even pensions, and that money can be used to enhance the quality of life of the adult child without causing them to lose their Medicaid or SSI benefits.

Parker Counsel Legal Services serves families in Central Texas, Western Massachusetts, Northern New Jersey, and the New Hampshire Seacoast with special needs estate planning, special needs trusts, and guardianships. Contact us for a consultation at 833-RED-BOOT (833-733-2668) or legal@parkercounsel.com or schedule a short information call at calendly.

Special needs trusts and other scary things

planning journalCan you guess what the hardest part of doing special needs planning is?

Getting started. Hands down, the number one thing that keeps people from doing their plan is never getting started.

Is the thought of calling an attorney intimidating/scary/expensive/overwhelming?

Here’s how we can help you get over that and start your plan – talk to us on the phone for 15 minutes and you’ll see just how nice and helpful we can be. Tell us a little about your family and we’ll walk through what we can do for you. We guarantee that you will learn something new when you talk to us.

Schedule your free, no strings attached phone introduction now – you can even drink coffee while we talk!
https://calendly.com/parkercounsel

We have attorneys in Central Texas, the Pioneer Valley of Massachusetts, Northern New Jersey, and Portsmouth, New Hampshire that can work with you to design a plan that will provide all the supports needed to care for your child with a disability once you are no longer able to do so.  We will help you figure out the seemingly impossible task of caring for a child for many years after you are no longer around.

So click the calendar link above and take advantage of this free, personal introduction to our firm and what we can do for you.  We guarantee you’ll learn something you didn’t know before.

The Basics of Special Needs Trusts

What is a Special Needs Trust?   Special needs trusts (SNT) are  a tool that lets families provide money to take care of their adult kids without preventing them from receiving medicaid and services from related government programs.

Why do you need an SNT?  Medicaid benefits are available to people who 1) have a disability,  2) have very low income, and 3) have very few assets.   To qualify for medicaid, an individual cannot make more than approximately $1300 a month (specific amounts can be found on the social security website) and cannot have assets totaling more than $2000 (there are some items that are exempt from inclusion in the asset determination, like a home and a vehicle used for transportation).   If a parent is able to provide some money to make a good life for their child either through gift, inheritance or life insurance, the SNT is the way to do it.  Without the SNT, whatever money the parent leaves the child will have to be spent on basic care before government benefits can be used.

How does the SNT work?  Money or property the parent wants to make available to the child is put in the trust.  Most families use the trust to hold inheritance money, or they obtain life insurance that will be paid to the trust.  A trustee is appointed to spend the money on the child in accordance with the wishes of the parents or at the trustees discretion.  In order for the SNT to work for preserving medicaid eligibility, the money is to be used only for things that are NOT covered by government benefits, and cannot be paid directly to the child .

What happens to the money in the SNT if the child dies?  There are actually two types of SNT’s.  The first is created by parents or grandparents for the benefit of the child and funded with their own money and money from any person other than the child.  Money left in the trust upon the death of the child is distributed to beneficiaries who were named in the trust itself at the time it was created. Commonly, remaining money is left either to siblings or their children, or to a charity.

The other type of SNT is one that is created with money that actually belongs to the person with the disability.  These trusts are common when the disability is the result of an accident and there is a lawsuit or damages paid to the individual.  These may also be created if a parent dies and leaves money outright to the child without creating an SNT first. For these trusts, the money is used during the lifetime of the individual in the same way as for a trust created with other people’s money, and the individual may also receive government benefits.  But upon death, any money in the trust must first be used to repay the state for benefits received by the individual.

If you need to set up a special needs trust for your own child or grandchild, we are happy to help you out.  Parker Counsel special needs law firm can be reached by phone: 833-RED-BOOT (833-733-2668)  email: legal@parkercounsel.com or schedule a short informational phone call at Calendly.