Jill Snyder of the Law Offices of JIll A. Snyder, LLC was recently interviewed on our show on the issue of special needs family planning.
She provided her expertise regarding planning ahead for situations where a special needs family member may not be able to live independently, may have costly future medical expenses or may have special needs that a parent or other caregiver or family member would like to ensure are taken care of if that parent or caregiver unfortunately passed away or becomes unable to care for the special needs family member.
Ms. Snyder recommended three steps to ensure that any special needs family member is taken care of in the event unfortunate circumstances do occur and a parent or other caregiver is unable to keep caring for a special needs child or relative.
First, Ms. Snyder recommends talking with other family members about who they might be comfortable with stepping in if a loved one with special needs unexpectedly becomes in need of care.
For instance, parents should speak with their other children as to whether they might comfortable with stepping in to care for a sibling who is disabled or requires around the clock care in the event that the parents unexpectedly pass away.
Secondly, Ms. Snyder also suggests speaking with a financial planner to determine if it is appropriate to help project what financial options would be available in the event a parent unexpectedly passes away.
A financial planner can help in formulating options to ensure that there are sufficient assets left over in such a situation to provide for the special needs family member’s care, such as by purchasing a certain amount of life insurance.
Third, Ms. Snyder also suggests speaking with an attorney to determine eligibility for any government benefits as well as to establish a special needs trust to ensure that the special needs family member is adequately cared for.
As explained by Ms. Snyder, a special needs trust is a legal vehicle that provides supplemental funds available for special needs individuals to cover their living expenses, medical expenses, etc. which are not covered by government programs.
Assets held in a special needs trust do not count for purposes of eligibility for government benefits like Supplemental Security Income (SSI) or Medicaid if the trust beneficiary is not able to force distributions from the trust, thus making it possible to qualify for those programs while still retaining assets for the care of a loved one with special needs in this type of trust.
These government programs have asset and income restrictions, meaning that without a special needs trust a loved one may not be able to qualify for these government programs to help cover their living and medical expenses if, for example, they were simply left a bequest of a certain amount of money in a will.
These are two main types of special needs trust, a self-settled special needs trust and a third party special needs trust. The distinction between the two is who contributes the money to the trust. For example, if a third party like parents, grandparents, or others contribute the money that will form the body of the trust, then it is considered a third party trust.
A self-settled trust is funded by the special needs individual him or herself, typically from the proceeds of a personal injury lawsuit.
Another key distinction between the two is that the government can recover any amounts paid by government programs like Medicaid or SSI from a primary, or self-settled trust upon the disabled individual’s death, whereas a third party trust cannot be levied against by the government for any amounts that were paid by government programs for the benefit of an individual with special needs.
If a family does not have the resources to create a special needs trust, both Congress as well as the Maryland Legislature have created plans which allow families of limited economic resources to create what are known as Able Accounts.
These are meant to provide a simplified type of vehicle for the support and maintenance of individuals with disabilities whose family or caregivers may not have the resources to hire a lawyer and establish a special needs trust. Money contributed to such amounts grows tax free and the Maryland plan at least has a $14,000 contribution limit.
If you are currently caring for a special needs family member or have parents that are doing so, it is particularly important that you consult the appropriate legal and financial professionals to ensure that your family member is taken care of in the event of an unforeseen death or incapacity of the family member’s current caregiver.
A financial planner can assist you in planning for the future of your special needs family member. Therefore, if you have a family member or loved one with special needs, consider consulting a financial professional to discuss the future of the care and maintenance of your loved one.
To watch the entire interview, go tohttps://www.youtube.com/watch?v=eHVsa9kyHbs&index=28&list=PLk-2b0dGvkFhk8Nj78tljpnc3fxkMecBf
Brian Kuhn CFP® is a financial planner at PSG Clarity in Fulton, Md. Securities offered through Triad Advisors, Member FINRA / SIPC. Advisory Services offered through Planning Solutions Group, LLC. Planning Solutions Group, LLC is not affiliated with Triad Advisors. PSG Clarity is a division of Planning Solutions Group, LLC.