Taking care of a sibling, child, or cousin with special needs is tough. You love that person with all your heart, but you also stay awake at night worrying about what will happen to them after you’re gone and whether they can live on their own and be happy. Fortunately, proper estate planning can help, just like it can with many other common worries about the financial well-being of our loved ones. But folks with special needs also have special legal needs, and not just any estate planning solutions will do.
In this article, we’ll talk about some of the challenges that come up when you try to leave money or give financial help to a person with special needs and how an estate planning lawyer who understands special needs issues can help you solve them.
Eligibility for Government Benefits: When Generosity Hurts
Helping a family member with special needs is one of those areas in life where the best of intentions can lead to the worst of results. If you give money or provide rent-free housing to a person with special needs, it can mean the world to them, but it might also affect the public benefits they’re receiving in ways you never expected.
For example, if you take in a family member with a disability and give them rent-free housing and the government finds out about it, they’ll probably take away a portion of your family member’s benefits — up to a third of them, in fact — on the grounds that, because the person’s housing is covered, they don’t need that extra money. If your family member was getting $770 in monthly benefits, more than $250 of that could go right down the drain.
On the other hand, if you worked with an attorney to draw up a special rental agreement, you could potentially charge your family member $250 in rent and have them pay you from their monthly benefits — leaving them with the exact same amount of monthly income they would have if you’d let them stay rent-free while also giving you an extra $250 per month that you can put toward benefitting your loved one, perhaps through upkeep on your home or paying off debt!
As another example, let’s say you work hard to help your son or daughter with a disability apply for Supplemental Security Income (SSI) Social Security benefits and Medicaid coverage, but then you also hold a fundraiser for them to pull together some extra money for medical treatment and in-home care they need. If you put the money you raise directly into their bank account, it might cause the government to cut back on the SSI benefits and take away the Medicaid coverage that you just worked so hard to get for them!
None of this is meant to discourage you from helping a family member with a disability. There are plenty of ways you can give money and other assistance to a loved one who really needs it without putting their other benefits in jeopardy. However, it’s important to understand the challenges so you can help your loved one in the right way and translate your good intentions into the best results for them.
Special Needs Trusts and Other Options for Disabled People and Their Families
People with special needs usually have to live with very little money in their bank accounts so they can stay eligible for government benefits, but there are some legal ways to help with this. You can work with an estate planning lawyer who understands special needs legal issues to explore some of the following options for your loved one.
(Don’t expect that any given estate planning attorney you contact will understand why these options are important and how they work, by the way. They don’t teach you about how to preserve public benefits in law school, even though they should!)
- Special needs trusts: A special needs trust (also sometimes called a supplemental needs trust) works like a regular trust in that you choose someone to serve as the trustee and allow them to manage the assets in the trust. The person who serves as trustee has a legal obligation to follow the terms you create for the trust and use the benefits for the person with special needs that you choose as the trust’s beneficiary.The difference between a special needs trust and a regular trust is that the assets in the special needs trust never belong to the beneficiary. This means that the government won’t consider those assets when looking at the disabled person’s eligibility for public benefits. A special needs trust can give that person the best of both worlds: access to a financial safety net plus their government benefits.
- Pooled trusts: A pooled trust is like many special needs trusts bundled together. Nonprofit organizations create these trusts, and individual beneficiaries get their own accounts within the trust. Because the trustees have access to the funds of all the beneficiaries, they can make larger and more stable investments than they could managing an individual trust, and they can offer additional management services. Just like a special needs trust, a pooled trust won’t affect a beneficiary’s eligibility for public benefits.
- ABLE accounts: Only available since 2014, ABLE (Achieving a Better Life Experience) accounts are bank accounts that let people with special needs save money without putting their disability benefits in danger. ABLE accounts can fill the gap between a special needs trust and a regular bank account, giving the disabled person a modest bank balance they can use for their day-to-day expenses while the special needs trust takes care of their long-term needs.
If you want to explore any of these options for your family member with a disability, the Devolder Law Firm team is here to help. We’re ready to listen to your story and learn about your unique situation so we can find the special needs estate planning option that’s right for you and your loved one.
Other Resources for Caretakers of People with Special Needs
The State of Florida’s Agency for Persons with Disabilities (http://apd.myflorida.com/index.htm) has resources for people with disabilities that can help them live on their own — with roommates of their choice — in houses purchased by family members or friends. This special housing arrangement won’t put their benefits in danger. While it might be stressful at first to think about your loved one living on their own, this is an important step that can let them get used to having some independence while you can still supervise their living situation and make sure everything is okay.
Another valuable resource is the nonprofit group Hannah & Friends (https://www.hannahandfriends.org/), which provides quality-of-life grants for the families of individuals with special needs in Florida and several other states. In addition to these grants, which you can apply for here, Hannah & Friends also organizes fun, educational programs and activities for kids and adults with special needs, and you can visit their website to learn about events near you.
The Devolder Law Firm: Helping You Protect What Matters Most
Worrying about a loved one with special needs is normal, but you shouldn’t have to worry about how they’ll be provided for after you’re gone. With the right estate planning solutions, you won’t have to. At the Devolder Law Firm, we understand the unique legal issues that people with special needs and their families face, and we can work with you to set up a special needs trust or pooled trust that will provide for your loved one and give you peace of mind and confidence for their future.
To meet the Devolder Law Firm team and get started today, call us at 813-724-3880 or fill out our quick and easy online contact form and we’ll get in touch with you right away to schedule your initial consultation.
The content provided here is for informational purposes only and should not be construed as legal advice on any subject.