Planning for a Secure Future For Your Special Needs Child

Did you know that 20.9 million American families have a family member with a disability? Parents spend about $326 per month, which adds up to about $4,000 a year. 75% of adults with special needs are unemployed for many reasons; such as, unreliable transportation, not capable of working, and those adults suffering from discrimination. An adult with autism will spend $3 billion on lifetime care according to a Harvard study. Planning for a secure future not only helps your children, but gives you peace of mind.

Concerns of a Secure Future

Medicaid

Medicaid coverage does vary from state to state. This generally covers low income children and families, but children with disabilities are sometimes eligible as well. In many states, individuals receiving supplemental security income (SSI) automatically qualify for Medicaid. For states that do not automatically qualify for Medicaid must require an impairment that prevents an individual from “performing substantial gainful activity” for at least one year. After that disability is determined, the individual undergoes an asset test, which is needed to meet specific income requirements for eligibility.

Supplemental Security Income (SSI)

You can qualify for SSI when the individual is born, and this lasts until they are 18 years old. The physical or mental condition of the individual that seriously limits his/her activities and the condition must have lasted, or is expected to last, a minimum of 1 year. The process can take 3 -5 months. It is also based on family income, resources and personal information. A state agency assesses the disability and makes the final decision.

Social Security Disability Income (SSDI)

You must be 18 years of age or older to qualify for this benefit. The adult must have had a disability before 22 years of age. One parent must be receiving Social Security retirement or Social Security Disability benefits. Or, one parent must be deceased after working long enough to qualify for Social Security.

Medicare

Medicare is eligible for an individual that is 65 years or older. To qualify for Medicare, they must receive SSDI benefits for at least two years.

Divorce & Government Benefits for a Secure Future

Divorce is an issue that no one likes to talk, or even think, about. But it happens and it happens to families with special needs children. When a couple divorces and child support is mandated by the court, that money, in effect, is income and property of the child. This can reduce the amount of benefits a child receives from the government. According the law, the Social Security Administration excludes 1/3rd of the monthly child support payment from countable income, when determining amount of SSI benefits.

Common Benefit Misconceptions

It is true that qualifying for government benefits—and then continuing to qualify for government benefits—can be confusing.



There are several common misconceptions when it comes to special needs individuals receiving these benefits. For example:

• We do not qualify for any government benefits. There are usually an income ceiling for many benefit programs. This can lead some families paying out of pocket for the services their child requires. But your personal income does not have to negatively impact your child’s access to care.
• I have to resign my parental rights in order for my child to continue receiving benefits. No. Not true. In fact, this can be detrimental to your child’s long-term care. Making your child a ward of the state in order to receive benefits is not the answer. You child may not receive the care you think he/she needs, but you lose all say in their care once you resign your rights.
• I cannot pursue guardianship of my child after 18 otherwise he/she will lose access to government benefits. Again, this is not true. Your child needs you to make the decisions about housing, therapy, health care, education. You know what is best for them.
• I cannot leave my child any of my estate otherwise he/she will own too much personal property. This, too, is untrue. You can manage the care of your child, make sure your child’s future is well-funded and ensure they receive all of the care they need---if you start planning NOW.

What is a Special Needs Trust?

The easiest way to protect your child’s financial future is to create a Special Needs Trust. A special needs trust allows you to provide for extras that will improve your adult child’s life experience without compromising the services he/she needs on a daily basis. Special Needs Trust's can pay for education, recreation, counseling, therapy and care above the necessities. A well-designed Special Needs Trust can also preserve access to valuable services paid for by the government, such as Medicaid, Social Security, housing assistance, training and attendant services.

Benefits of Special Needs Trust

There are several benefits to a special needs trust:

• Provides additional income for care and living expenses.
• Protects monetary gifts and/or property given to the individual with special needs.
• Provide families with peace of mind.
• Beneficiaries experience a higher quality of life

Special Needs Trust: Third-Party Trust

There are two types of special needs trusts. The first type is the most common type. The purpose of a Special Needs Trust was created to protect gifts and future inheritance. It also protects the available assets of a person with disabilities. If an individual with special needs owns too much property, he/she can become ineligible for government benefits. A special needs trust avoids this issue because the trust owns the property, not the individual. Third-Party Trusts are funded with property that does not belong to the beneficiary (individuals with special needs).



This is an irrevocable trust. Generally established by a parent, or grandparent, of an individual with special needs. Funded by income/assets belonging to anyone BUT the beneficiary. No Medicaid payback requirement.

Special Needs Trust: Self-Settled Trust

The difference between third-party trusts and self-settled trusts is that self-settled special needs trusts are funded with the beneficiary’s, or the individual with special needs, own property. This is also known as a “First-Party trust”. This type of trust can be established by a parent, grandparent, legal guardian or court. As stated before, any significant amount of property or assets own directly by an individual with special needs affects the eligibility for government benefits. We want to preserve that eligibility. So, to do that, the property and assets are transferred into a first-party SNT. Trust assets can benefit the individual with special needs without jeopardizing government benefits. However, be aware that First-party trusts are generally subject to “Pay Back” rules. Pay Back rules require the state be reimbursed for medical expenses after the trust beneficiary dies.

Why Guardianship is Important?

Another critical component to special needs planning is addressing the issue of guardianship. Many parents shy away from guardianship because they are afraid their child will lose benefits. But if you have a trust in place, pursuing guardianship will allow you to make decisions regarding health care, housing, therapies, etc.



Sometimes guardianship is the only way to ensure your loved one is receiving the care you think they deserve. This is even more important when you are talking about your special needs child. Once your child turns 18, you no longer have a say in their care. If you want to have the right to decide what facility your child is living at or what doctor treats them, you must file for guardianship BEFORE they turn 18. Otherwise, it becomes a lengthy and expensive process.

Guardianship

Guardianship, sometimes called a conservatorship, is a term when one individual has a legal responsibility to protect and manage the financial affairs or everyday life of another individual. Basically, this means a guardian can manage a financial estate only or they can make health care, daily activities, or living arrangement decisions. Guardianships are typically for individuals that suffer a physical or mental disability. And, as stated earlier, it is easier to obtain guardianship prior to age 18.

"Living Probate"

There are different types of guardianship offered for the individual. It is not always easy to obtain guardianship.

• To retain guardianship over a loved one, the decisions you make must be approved by a judge.
• It can be costly
• Sometimes, as noted earlier, it is the best option



If you are considering guardianship, it is important to talk through it with someone who understands both the pros and cons and can help you make the best decision for you and your child.

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