While many people in a family (grandparents, siblings, etc.) may want to provide for a family member with special needs, it is the aging parents who are still caring for disabled children who stay up at night worrying. These parents live in dread of the day they die, leaving their children alone.
Many need a nursing home themselves…but they’re still caring for adult children.
So when we do our estate planning, how can we be assured that a disabled child will be cared for after we’re either gone or in a nursing home?
First of all, for obvious reasons, do not leave “extra” money to the other sibling to take care of his brother or sister. This money is subject to creditors, ex spouses etc. And it’s not necessary.
The two best options are to either create a 1) Special Needs Trust or to consider the provisions of the 2) ABLE act.
A Special Needs Trust works in tandem with any public benefits a child may be receiving, such as Supplemental Security Income or Medicaid. It allows parents to leave money for their child beyond what Medicaid or other public benefits pay. It can provide supplemental funds for recreation, social activities, pets, special therapies, entertainment, and even vacations. And it can purchase professional care-management, to enhance the life of a disabled adult child. Life insurance can be purchased to fund the trust at the parent’s death.
The Special Needs Trust is a loving solution to this challenge. It allows you to continue to provide protection for your child, while preserving his/her eligibility for public health and Medicaid benefits.
But in some cases, the cost of preparing and administering a Special Needs Trust may not make sense because the size of the gift may be relatively small. Enter the ABLE Act. The Achieving a Better Life Experience (ABLE Act or Able United in Florida) allows anyone to create a savings program for people with disabilities. Funds from these ABLE accounts can help our special needs beneficiaries pay for certain disability expenses similar to what we pay for from a Special Needs Trust. The disability must have occurred before the age of 26 and the maximum deposit is $15,000 per year. There can be only one account and it is sometimes capped at $100,000.
Obviously, this is something we would talk about when you come into our office so we can put together the best plan for your loved one. And since we’re talking about Medicaid here, you’ll need a skillful Elder Law attorney to guide you through the maze of regulations and roadblocks.
P.S.: Don’t forget to ask about the Letter of Intent!
