Special Needs Kids Need Special Long-Term Care Plans
As parents of a young special needs child, it might be a good time to consider special long-term care plans more seriously.
You may not need to put your plan in effect immediately, but one never knows what challenges life is going to present. So, it makes good sense to have a plan in place as soon as possible, no matter how young your child.
According to a CNBC.com article, “Parents of special needs children often find themselves staring down a seven-figure bill to cover the cost of lifetime care. Coming up with that cash doesn’t have to be impossible — if families know how to plan for it.”
As an attorney who has helped many families with special needs children and adults, I second that emotion. It can be an expensive proposition, but if one knows how to establish the right kind of plan and puts that plan in place as early as possible, it certainly doesn’t have to create hardship to protect your loved one.
Supplemental Security Income, Medicaid And Trusts
Most people immediately think about Supplemental Security Income and Medicaid when they have a special needs child. Both of those are extremely helpful, however, there are requirements that must be met in order to qualify and, they are limited in their scope. For instance your disabled loved one is subject to what’s called “means testing” in order to qualify. In addition, if the disabled individual is the owner of $2,000 or more in assets, they do not qualify for monthly Supplemental Social Security benefit.
This is where special needs trust comes in. What you’ll need is a third-party special needs trust. As the parents, you create the trust funded with assets that aren’t owned by the disabled family member. Assets to be included are including life insurance and other real property.
The benefit of using this trust is that the assets don’t belong to the beneficiary, so they can go to other family members or to charity after his or her death, instead of going toward Medicaid reimbursement.
One of the most common mistakes families make is to designate the special needs child as the beneficiary of a qualified plan or life insurance policy. This is why it’s important to hire an attorney who specializes in estate planning for families with special needs individuals. If you designate the special needs person as beneficiary this can make it difficult if not impossible to get government aid.
Achieving A Better Life Experience (ABLE)
Another government program many people are not aware of is the ABLE account which allows families to save money for a beneficiary and let it grow on a tax-deferred basis. In addition, distributions are tax-free if used for qualified disability expenses. The only requirement is that your child must have been diagnosed with their disability before or by the age of 26. Currently there are no set up fees or enrollment fees nor do they have minimum contribution requirements. This is a great program if you don’t have millions of dollars to provide for your special needs child.
As part of a well thought out estate plan, you will be able to provide for your special needs child for the remainder of their lives. If you would like to establish a plan for your loved one give us a call.