Most parents recognize that they need to consider their estate plan in terms of how to protect their children in the future. But when your child has special emotional, physical or mental challenges, the process of estate planning is even more important. One of the main reasons you want to put together an appropriate estate plan is to preserve that child’s eligibility for programs such as government benefits.
Unfortunately, many of the different estate planning tactics that are out there today may be appropriate for other children but may not fit the requirements of your special needs child. For example, using trusts that do not consider the unique needs of the special needs child could jeopardize your minor’s ability to access government benefits in the future.
One common trap is beneficiary designations in retirement plans. Beneficiary designations are common tools in retirement saving plans that give you a lot of flexibility for passing on an inheritance since you can designate primary and contingent beneficiaries to receive your benefits. The flexibility and convenience of leaving funds behind in retirement plans, however, can have a major unintended financial influence on those receiving government benefits because of their special needs. Qualifying for Medicaid, for example, could be jeopardized if you use these beneficiary designations to pass on assets to your loved one.
The best way to avoid these problems is to put together a special needs trust and leave the assets intended for the child inside that trust. The special needs trust is used to supplement benefits that are already received from government programs without jeopardizing the person’s eligibility to receive them. Consulting with an experienced estate planning attorney who has years of experience helping parents with special needs children is strongly recommended.
A 2011 study shared by the Centers for Disease Control and Prevention identified that the number of children who had developmental disabilities increased by 17% between 1997 and 2008. The prevalence of autism alone increased by 290% and attention deficit and hyperactivity disorder increased by 33%.
This expanding portion of the population needs help. Alzheimer’s disease and other cognitive issues may also impact aging parents raising questions about who will be responsible for caretaking and what will happen to an individual’s assets when he or she needs to qualify for Medicaid or additional services. Consulting with an experienced estate planning attorney to discuss future planning for Medicaid and other goals for your assets is extremely important. Many people looking to the future need to consider how a child with developmental disabilities would be cared for.
It is essential that these individuals be able to qualify for government benefits and programs and planning ahead for a sudden asset transfer without taking this into consideration could jeopardize your loved one’s ability to qualify for Medicaid or other benefit programs designed for special needs individuals. Having a conversation well in advance is the best way to plan for this.
Whether it’s a cognitive or a physical disability, the right planning goes a long way. Having a knowledgeable caregiver and plans put in place well in advance can help anyone who is going through the process of protecting the interests of a person with a disability. Talk to an estate planning lawyer today about strategies and options for those with special needs.
You may have heard that there’s a new kind of plan out there for savings for disabled individuals, specifically as it relates to long-term care. Some people are under the impression that this is a new version of a 529 plan, but it’s actually a new type of account that is similar in certain ways, especially meant for those who have disabilities. This is known as the ‘Achieving A Better Life Experience’ Act which was signed by Barack Obama in December of 2014. This Law allows individuals with disabilities to have a tax-free savings account in which they can set aside up to $100,000 without jeopardizing their eligibility for government programs, like Medicaid or supplemental security income.
This is known as the ‘Achieving A Better Life Experience’ Act, which was signed by Barack Obama in December of 2014. This Law allows individuals with disabilities to have a tax-free savings account in which they can set aside up to $100,000 without jeopardizing their eligibility for government programs, like Medicaid or Supplemental Security Income.
SSI benefits would be suspended for individuals who have more $100,000 in these accounts, but Medicaid benefits would continue. These ABLE accounts are modeled quite like 529 college savings plan, since interest earned on the savings is income tax-free. Bear in mind, however, that any contributions to an account like this are not tax-deductible, though.
The funds inside an ABLE account can be used to pay for healthcare, transportation, housing, and education. In order to qualify to have an account like this, an individual has to have a disability that occurred prior to Age 26.
There are annual caps on contributions under the Federal annual gift-tax exclusion. In 2016, this amount is $14,000. If you’d like to talk more about caring for an individual in your family who has special needs, consult with an experienced New Jersey estate planning attorney today.
The tax code on its own is quite confusing but it can become even more complicated when you’re thinking about leaving behind assets for a special needs beneficiary. One of the most common points of confusion in the U.S. tax code has to do with the gift tax.
While most people are familiar with the basic magic number of $14,000 which is what each individual can give to one other person per year. Some clarification and planning strategies are necessary for individuals with special needs beneficiaries. How you pass on assets to a beneficiary with special needs is critical. Because you do not want to do this in a manner that would compromise that person’s eligibility for government programs.
Special needs individuals frequently rely on government programs to help support them well into adulthood. It’s a good idea to talk over planning opportunities like trusts that can help to provide for an individual with special needs without removing his or her possibility of receiving assets or receiving benefits from these essential government programs. Consult with a knowledgeable estate planning attorney today to see how you can address this issue.
Parents of special needs children have unique needs when it comes to estate planning. As a recent article explains, parents of special needs children who have not yet created an estate plan should put it on the top of their to-do list.
Unlike the majority of non-special needs children, many special needs children will require constant care for the remainder of their lives. Additionally, many special needs children are not able to work or otherwise earn the income necessary to pay for their care. Therefore, planning for a special needs child includes not only leaving the proper amount of resources for procuring the proper care, but also helping to determine how that care will be provided.
However, planning for special needs children is not as simple as leaving ample resources and a plan for that child’s continuing care. This is because most special needs children already receive government benefits to assist in paying for their care. However, these benefits are need-based and will cease if the child no longer qualifies to receive them. Therefore, many parents of special needs children employ a special needs trust. This trust, rather than the child, owns the child’s inheritance. By using this trust, the money is not considered to be the child’s and he or she will continue to receive government benefits.