Caring for a loved one with special mental, physical, or emotional needs can be scary and stressful. Special needs law is constantly improving to provide protective resources for the special needs community. Today, special needs individuals are living longer, healthier lives and many are facing a new issue they may not have considered in decades past: retirement planning. Many special needs individuals are living well past their retirement age, and as a result, need to extend their resources further. Five ways to protect for the future of your special needs family member or friend include:
- Create an ABLE Account: Under the Stephen Beck Jr. Achieving a Better Life Experience Act of 2014, an ABLE account is a tax-advantaged savings account for individuals with special needs that allows for contributions from any person (post-tax dollars) while allowing the special needs individual to maintain their eligibility for public benefits (SSI, SNAP, Medicaid). If the individual is on SSI or SSDI (social security disability), and was disabled prior to age 26, they can contribute up to $16,000 per year (the current annual gift tax exclusion amount) but if they are an SSI recipient, they cannot exceed $100,000 in contributions. An ABLE account can be used for qualified expenses without impacting public benefits which give the account owner some control over their own finances.
- Hire an elder law attorney: If the special needs individual has the ability, they can execute estate planning documents, specifically a Last Will and Testament, Durable Power of Attorney, Advance Health Care Directive, and Living Will. The purpose of these documents is to allow a chosen “Agent” or “Surrogate” to respond to financial and medical issues which may arise and to which the special needs individual cannot respond personally. The Durable Power of Attorney is especially important as this document can help avoid the need for a guardianship.
- Seek Guardian Advocacy: Guardian Advocacy is a process for family and friends of special needs individuals to obtain legal authority to act on the individual’s behalf. This is done without declaring the individual incapacitated which is required under a traditional guardianship and allows the individual to retain some rights such as the right to travel or work.
- Create a Special Needs Trust: SNTs allows an individual to qualify for public benefits without fully spending down available assets or allows family to leave funds for the individual’s special needs when they are gone.
- First Party Special Needs Trust: Often used when the special needs individual is receiving an inheritance or personal injury settlement, a first party special needs trust can allow the individual to protect their money while still qualifying for or maintaining public benefits. However, there are payback provisions to the state if the induvial is receiving Medicaid at or after the age of 55 and must be created prior to age 65.
- Third Party Special Needs Trust: Money from a third party (family, friend, etc.) held in trust for the special needs individual. The individual cannot have direct access to the funds, but rather works with a Trustee to receive payments for their special needs not provided by public benefits. Third Party Trusts do not have a payback to the state and can be funded through a will or trust during probate or set up during lifetime to receive funds from family and friends.
- Pooled Trust: Established and administered by a non-profit organization, the pooled trust “pools” assets together from many separate accounts for greater investment purposes. A pooled trust is the only option for individuals over the age of 65, looking to remain eligible for public benefits or become eligible. While restricted in many states, Florida still currently allows.
- Build a Team: It is important for the special needs individual to have a team of who can assist now and after you are gone. An elder law attorney, financial advisor, geriatric care manager and a professional trustee can work together to bring security and comfort to your loved one’s life.