Parents and caregivers of special needs dependents need to provide for them intelligently and adequately with proper special needs planning. There is a balance to be struck between government benefits, which generally only meet the most basic of special needs, and the supplementing of additional monies to go beyond those basic needs. 

There are 58 million Americans five years of age or older that are identified as special needs making them the largest single minority in this country. As the majority of federal and state benefits are “needs-based” benefit assignments are continuously subject to review. Navigating the rules and regulations to qualify your special needs dependent for government assistance without violating legal requirements can be a daunting task. 

What to Avoid when Engaging in Special Needs Planning

One of the most common mistakes a parent or caregiver makes is disinheriting their dependent who has special needs. Previously a parent or caretaker would often believe their dependent would be institutionalized however most of these institutions have been closed. Yet dependents with disabilities are living longer and more independent lives but still need additional care. Oversimplifying the regulations and processes of current disability lifestyles can leave a special needs individual with far less than is necessary to survive adequately. Government benefits attend to food, shelter, and medical care needs for the disabled but there are many more costs, beyond the basics, associated with thriving while being disabled.

Qualifications for government benefits like Supplemental Security Income (SSI) or Medi-Cal (California’s Medicaid program)  dictate that the disabled individual has no more than $2,000 in assets. If your disabled dependent has assets above this threshold, they will have to be “spent down” to qualify for government assistance. Some popular financial vehicles to save taxes in the case would work for dependent is not disabled but may put a disabled dependent’s eligibility for government benefits in jeopardy. 

Well-meaning friends and extended family may not understand the complexity of disability benefits and gift or leave an inheritance for your dependent money or assets that would disqualify them for state and federal benefits. It is especially difficult if the disabled person already has benefits and becomes disqualified because the “needs-based” review discovered additional funding putting them over the $2,000 asset limit. It is best to avoid this situation as it is a big hassle to re-qualify your dependent for government assistance.

Leaving money to your other children to support a special needs sibling and relying on them to take care of the disabled one’s needs is also a mistake. Thrusting this moral, financial, and emotional obligation onto an unwilling or unreliable sibling can create resentment and lead to inadequate care of the disabled dependent. After all, those siblings may want to marry, have children of their own, and personal obligations that trump the needs of a disabled brother or sister.

Start Special Needs Planning in Advance

What to do? Plan ahead! There are several ways to provide for your special needs dependent and stay within government guidelines for additional benefits. One of the best ways is to establish a special needs trust that has the specific purpose of supplementing federal and state assistance programs.

There are rules to be followed to create a strong trust beginning with the trust’s ownership. The dependent cannot own the trust. A trustee or third-party provider must be appointed to dispense the money. The critical regulation of a special needs trust is that although the funds can be used to improve the dependents quality of life, the money can never be directly distributed to them.

Be wary of crowdfunding sites like GoFundMe to benefit your dependent with special needs. In the absence of qualified legal planning, these donations can disqualify an otherwise eligible recipient of SSI, Medicaid, food stamps and section 8 housing. A well-meaning fund campaign could gut the benefits of a disabled person and make their living circumstances worse than before.  

As a caretaker or parent, it is necessary to create a highly detailed letter of intent. This letter will describe how, in their absence, the guardian expects their disabled dependent’s life to move forward. It details the historical context of the dependents lifestyle as well as hopes for future achievements such as living semi-independently in specialized housing or getting an education beyond high school.

Another way to help your special needs dependent is to set up an Achieving Better Life Experience (ABLE) account. This particular vehicle allows a maximum contribution of $15,000 annually provided the dependent is diagnosed disabled before 26 years of age. The contribution cap to an ABLE account is $100,000 before your dependent would lose government benefits.

It is imperative to retain a trusted, experienced attorney to create the most financially beneficial systems possible for your special needs dependent. Contact our Orange County law office today and schedule an appointment to discuss how we can help you with your special needs planning.

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Orange County Estate Planning Attorney Kevin SnyderKevin Snyder is a husband, father, and an Orange County estate planning attorney and elder law attorney at Snyder Law, PC in Irvine, California. He's all about family and passionate about estate planning, elder law, and veterans. He founded Snyder Law to help people be prepared and have the peace of mind they are protecting their families and aging parents for when life happens.

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