Special Needs Estate Planning: Preserving Your Disabled Child’s Public Benefits and Maintaining Their Quality of Life

Send us Fan Mail• It’s important that an individual with special needs maintains some level of covered benefits, such as social security or Medicaid, amongst other resources. However, without proper planning it is easy for a family or individual to misstep and lose their benefits. • A special-needs individual can generally have up to $2,000 in their name- anything above that and they may lose their eligibility for government benefits. While this is not a lot of money, it’s very possible to maintain and stay under that limit with proper planning.• The two primary planning options to assist a disabled individual in staying under the $2,000 resource limit are: 1) An ABLE account; and 2) a Special Needs Trust (either first-party or a third-party).• The two major differences between a first-party special needs trust and a third-party special needs trust is that a first-party trust is always irrevocable, whereas a third-party trust can be either irrevocable or revocable. Additionally, a first-party special needs trust has a “Medicaid payback”, meaning if the individual with the disability passes away, any funds left in the trust would go to Medicaid, whereas this is not the case with a third-party special needs trust.• Common trust strategies: -Create a testamentary trust: a trust that does not become active until the grantors have passed away.-Create and fund at third-party trust now, however this will be subject to accounting and taxes.-Create a third-party trust as a “dry” trust, meaning it’s active but there’s nothing in it. This allows family members to include this third-party special needs trust in their own estate plans.-Create an ABLE account: this is an account that can accumulate $15,000/annually, or $100,000 in total, of funds that will not count against the resource limit or eligibility of the individual with a disability. This account also allows for the special-needs individual to have access to a set amount of funds via a loadable debit card. Unlike first- and third-party special needs trusts, an ABLE account cannot account for assets; it can only account for money. Therefore, it’s a great option to be considered alongside a trust, rather than in place of a trust.• Create a list of all personal preferences, details, medical notes and contact information, and activity schedules of the special-needs individual for any person who may assume a guardianship role in their life to help ensure sustained quality of life.