Every part of you cares and loves your child, and while you may be there to help them now, they will need you to put a plan in place for their care when you are no longer able to provide it. This is true for all children, but even more so for a child with special needs. Design a plan that will allow you to leave money or even property to your child with caution; there are many considerations because it is important that your child has all the support possible after you are gone.
If you do not work with the right team or take the time to examine the details of your plan, your child may not be able to receive Medicaid and Supplemental Security Income (SSI). The experienced Milwaukee estate planning attorneys at the Walny Legal Group, LLC. will prepare a customized plan that leverages the full benefits of the law so that the needs of your child are met. This can include advising you on putting a special needs trust in your will to avoid missing out on these governmental benefits.
What is a Special Needs Trust and How Will it Help?
If you were to simply put money away that you intend on leaving your child, it could cost your child necessary governmental benefits. These specialized trusts exist to help individuals with disabilities obtain benefits from the government while also having a financial supplement to those benefits.
Trusts are made up of three parties.
The donor funds the trust
The trustee manages the funds in accordance with the donor’s wishes
The beneficiary receives the funds
Trusts are popular for a couple of reasons. One benefit is that they help people ensure that their estate is managed the way they want. The second reason is that when the donor has passed, this system is a cost-effective way to keep the donor’s assets administered according to the donor’s requirements.
The special needs trust allows for a person with special needs to receive funds while not losing much-needed access to the benefits from the government. When you are discussing opening a special needs trust, there are three options.
A first-party trust keeps assets belonging to the special needs individual, such as an inheritance
A third-party trust keeps funds that are for others that will be taking responsibility for the care of the special needs person, such as a sibling who will take over care when a parent passes.
A pooled trust has funds that are for many beneficiaries who have special needs. These trusts are managed by non-profit organizations and are selected when you do not have enough money to set up a personalized trust or if you do not have an option for whom you want to be the trustee.
What is Supplemental Security Income (SSI)?
Those individuals with limited incomes who also have special needs will benefit from SSI. They must have less than $2,000 to qualify without a special needs trust. When an individual has more than $2,000 it is necessary to develop a special needs trust in order to qualify for SSI. The government allows special needs individuals to set up a first-party special needs trust so that they can gain the SSI benefits. However, upon their death, anything left in the trust will go to the government as reimbursement for medical care.
Those individuals who will come into large amounts of money will do well to develop a special needs trust. Third-party trusts are popular with families because they can hold all assets and will not affect SSI benefits. The difference between the third-party trust and the first-party trust is that any assets left in a third-party trust do not have to go to the government to pay them back for medical costs. The remaining funds in the trust can go to any other party including other family members or to charitable causes.
Pooled trusts are a bit more complex as they are run by a charity. Beneficiaries associated with the charity pool their resources and the money is used for investments as well as to offer each individual supplemental money to assist with unique life requirements. After death, a portion of the remaining funds in an account will go to the government as a reimbursement for medical costs while the rest will go to the non-profit that managed the trust.
How can I Establish a Special Needs Trust For My Child?
Every person with special needs has a unique story. Each individual has unique circumstances that will determine which pathway forward is best applied. For this reason, having a qualified and knowledgeable Wisconsin estate planning attorney is key to ensuring that you have the best plan in place to help.
In addition to a special needs trust, the federal ABLE (Achieving a Better Life Experience) Act adds an element to consider when you are planning for the future of your child with special needs. Those individuals who had a disability early on in life, before the age of 26, can create an ABLE account. The amount of funds that can be put in an ABLE account is up to $15,000 annually. An individual receiving SSI, though, cannot have more than $100,000 in his or her account. There are tax advantages to these accounts and they also can be utilized to pay for disability expenses. ABLE accounts are also subject to reimburse the government for costs after the individual who owns the account passes.
Your loved one deserves just as high a quality of life when you are gone as when you are present. While you cannot stay with your child and protect him or her for life, you can set up a safety net to ensure that your loved one is well cared for when you are gone.
If you are the parent of a special needs child, call the Walny Legal Group today and speak with one of our talented Milwaukee asset protection attorneys at (414) 775-3780. Our team of caring, client-centered attorneys will take a compassionate approach to working with you to develop a plan that is best suited to your child and your family.