Special Needs Planning

What is Special Needs Planning?

The process of considering and providing for the challenges that may be encountered during the lifetime of a person with disabilities.

What should be considered?

The person’s age, the person’s ability to work, the person’s assets, the person’s ability to access health care, the person’s wishes, where the person will live, who the person will live with, whether the person is expected to receive funds from an insurance policy or an inheritance, and if the person is expected to receive a settlement for an accident or a monetary award from lawsuit.

Who takes part in the process?

The person’s age, the person’s ability to work, the person’s assets, the person’s ability to access health care, the person’s wishes, where the person will live, who the person will live with, whether the person is expected to receive funds from an insurance policy or an inheritance, and if the person is expected to receive a settlement for an accident or a monetary award from lawsuit.

Who is considered a person with a disability?

Unlike the process for Special Education, the designation of having a disability is defined as someone who is disabled under the Social Security Act.

What is Supplemental Security Income?

Supplemental Security Income (SSI) is a means or needs-based program that provides for a person with a disability who, because of the disability, has limited ability to work.

What does limited in resources mean?

To qualify for SSI a person with a disability cannot have more than $2000 in assets for individuals. Someone receiving SSI is subject to asset checks by SSA.

If they receive SSI, will they qualify for Medicaid?

A person with a disability who qualifies for SSI automatically receives Medicaid in the state of residence. Additionally, they may be eligible for other state assistance, such as SNAP.

What is the difference between SSI and Social Security Disability Insurance?

Social Security Disability Insurance (SSDI) eligibility is based on work credits. The same criteria are used to determine disability, but qualification is based on how many work credits they have earned. Although there are exceptions, SSDI typically applies to older people who suffer a life event that completely changes how they will care for themselves.

Why are SSI and SSDI relevant to the discussion of special needs planning?

If a person with a disability has assets that equal more than $2000, the assets will disqualify them for SSI. Because many other government benefits may hinge on qualification for SSI, it is essential to determine if assets above $2000 can be excluded in the approval process.

Is there a way to allow a person with disability to have assets and still qualify for SSI?

There are ways that assets may be held for the benefit of the person with disabilities so the assets are not counted as income. An ABLE account and a Supplemental Needs Trust (sometimes called a Special Needs Trust) may be used to allow a person with disabilities to remain eligible for public benefits.

What is an ABLE account?

ABLE stands for Achieving a Better Life Experience. An ABLE account is a savings account that is not counted as an asset.

Who is eligible for an ABLE account?

A person with a significant disability that was diagnosed before the person turned 26 years old, regardless of the person’s current age, is eligible for an ABLE account. A person with a disability who qualifies for SSI or SSDI can use that eligibility for determining eligibility for an ABLE account. If a person with a disability is not eligible for SSI or SSDI, there is a certification process to determine eligibility.

Who can open an ABLE account?

The person with a disability, family members, guardians, or someone holding Power of Attorney for the person with a disability.

Who can contribute to an ABLE account?

There are no restrictions on who may contribute to the ABLE account. Grandparents, parents, the person with a disability, friends, etc. can make contributions to the ABLE account.

Is there a cap on how much can be contributed to an ABLE account?

Yes. Under federal law, the maximum contribution to an ABLE account during one calendar year is $15,000. The $15,000 can come from multiple sources, but the total cannot be more than $15,000. The account can have more than $15,000 in it as the federal government allows a total of $100,000 to be in the ABLE account before SSI benefits are terminated. Contributions to the account can continue as Texas allows a total of $370,000 to be in an ABLE account. A person may not have more than one ABLE account.

Who has control over an ABLE account?

The person with a disability, as long as there is not a guardian of the estate, owns and operates the account and is the beneficiary of the account.

How can distributions from an ABLE account be used?

To maintain eligibility for SSI, disbursements can be used for limited use such as housing, education, transportation, to name a few.

What happens to the money in an ABLE account when the person with a disability dies?

ABLE accounts have a payback clause that requires the balance of the account to be used to repay government benefits.

What is a Supplemental Needs Trust?

A Supplemental Needs Trust sometimes called a Special Needs Trust, is created to hold assets that will not be counted for eligibility of government benefits. Additionally, it is created to maintain eligibility for government benefits.There are two types of Special Needs Trusts – A First Party Trust and a Third-Party Trust.

What is a First Party Special Needs Trust?

A First Party Special Needs Trust is established with funds from the person with a disability. They act as both beneficiary and grantor. First Party Special Needs require a clause that requires any funds remaining in the trust at the time of the beneficiary’s death be used to repay the costs of government benefits. There is specific language that must be included; therefore, it is recommended that you consult with an attorney.

Does the beneficiary have control over the trust?

No. The trust is created for the benefit of the beneficiary. Even though the beneficiary’s money is used to fund the trust, the beneficiary cannot access the trust funds or demand the use of trust funds in a certain way.

Who makes the decisions regarding disbursements?

The Special Needs Trust requires a named trustee. The trustee is responsible for make disbursements on behalf of the beneficiary but not to the beneficiary.

How can distributions from the Special Needs Trust be used?

Distributions must be made on behalf of the beneficiary for bills, such as phone bills, utilities, transportation clothing, education, travel, and entertainment.

If the beneficiary wants to buy new furniture, can the trustee just give the beneficiary the money to go shopping?

No. The beneficiary never has control over the money or property in the trust. The trustee can go shopping with the beneficiary and pay the store directly.

What are the trustee’s duties?

The trustee has a fiduciary duty to the beneficiary. The trustee must file tax returns, provide accountings to the beneficiary, and provide accountings to SSA.

What happens when the beneficiary dies?

When the beneficiary dies, the remaining property in the trust must be used to repay government benefits.

Is it necessary to have an attorney prepare a Special Needs Trust?

It is not required, but it is recommended. An attorney familiar with Wills, Trusts, and Disabilities can advise you how best to meet the needs of the person with disabilities and the tax implications of each option.

Can a person with a disability have an ABLE account and a Special Needs Trust?

Yes. The disbursements of the Special Needs Trust might be deposited in an ABLE account, giving the person with a disability the control to pay their bills. A consultation with an attorney will help explain how the two can work together.

I have a son with a disability, and I am worried that he will hang around with the wrong crowd and get into trouble. Should I get guardianship of him?

Guardianship is typically reserved for persons with significant deficits in the ability to care for themselves or manage money. Guardianship may be an option if his disability impairs his ability to make decisions about money, receive medical treatment, etc. However, Texas law makes it very clear that Guardianship does not allow you to prevent the ward (the person whom you have guardianship of) from making bad decisions. If your son has difficulty with money and does not understand how to use it, then guardianship over the estate may be appropriate. If your son has difficulty communicating his needs, guardianship over the person may be necessary.

Do I have to go to court to get guardianship?

Yes. As with any court proceeding, you will need to present evidence of the potential ward’s inability to care for themselves or manage money. A doctor’s opinion will be necessary to show the impact of the disability on activities of daily living.

If it is determined that seeking guardianship is appropriate, is it permanent?

It might be. There are three types of guardianship – guardianship of the person, guardianship of the estate, and temporary guardianship.

What is guardianship of the person?

Guardianship of the person requires the guardian to provide care for the person with disabilities. The ward would continue to handle money and property.

What is guardianship of the estate?

Guardianship of the estate requires the guardian to take control of the finances and property. The ward would not need support with activities of daily living.

Can there be guardianship of both the person and the estate?

Yes.

How will the ward be affected by guardianship?

Although the ward is receiving help with activities of daily living, many of the ward’s rights are terminated. Guardianship is a significant deprivation of a person’s rights, and if possible, less permanent methods may be used to help a person with disabilities.

What are the less restrictive ways to help a person with disabilities?

Depending on their cognitive ability, it may be possible for the person with disabilities to give someone they trust the Durable Power of Attorney. This would allow the attorney-in-fact or agent to sign legal documents, obtain health care information, conduct banking as well as other delineated duties.

I am a mom, and I want to protect my daughter. She doesn’t know what is best for her, and I don’t want her making silly mistakes. Will the Power of Attorney allow me to make the right decisions for her?

No. A power of attorney allows the attorney-in-fact or agent to fulfill their requests when they are unavailable. If your daughter asks you to use the Power of Attorney to buy a motorcycle, but you think depositing the money in a savings account is the right thing to do for her future, you have violated your fiduciary duty under the Power of the Attorney. You must follow her wishes or not act at all.

What is another less restrictive way to help a person with disabilities?

A Supported Decision-Making Agreement allows the person with disabilities to have a say in what they need help with. The Agreement provides various areas of activities of daily living that they can ask for help or ask that they do on their own.

Special Needs Planning is complex and confusing. An experienced attorney can help navigate you through the process.

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