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. The majority of federal and state benefits available to help persons with disabilities are needs-based, meaning income and assets are strictly limited and can often be misunderstood or misinterpreted, resulting in costly mistakes.
One of the most common mistakes a parent or loved one makes is disinheriting the family member with special needs. The reason is often because the family believes other siblings will step in and take care of the disabled family member. However, this can lead to numerous problems, especially if the non-disabled sibling gets sued, divorced, or otherwise loses the money left to them.
Another common mistake is failing to create a properly drafted trust to qualify the disabled family member for government benefits than can help pay for costly medical and/or living expenses. Qualifications for government benefits like Supplemental Security Income (SSI) or Medicaid require the disabled individual to have no more than $2,000 in assets. If your disabled loved one has assets above this threshold, the excess funds will have to be “spent down” or protected in a properly drafted trust in order for the special needs family member to qualify for government assistance.
Well-meaning friends and extended family may not understand the complexity of disability benefits and give a disabled loved one money or assets that would disqualify them from receiving 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 special needs loved one for government assistance.
Be wary of using crowdfunding sites like GoFundMe to benefit your special needs loved one. Without careful and qualified legal planning, these donations can result in the loss of numerous benefits, such as SSI, Medicaid, food stamps and Section 8 housing. A well-meaning fund campaign could eliminate or severely reduce the benefits of a disabled person, placing them in a much worse financial situation than they were in to begin with.
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. By doing so, a disabled loved one can benefit from government programs, and have additional money to supplement what those programs provide.
There are strict rules when it comes to creating special needs trusts for a disabled family member. There are also restrictions on what the money can be used for.
We can help you determine what type of trust is best based on you and your loved one’s particular circumstances. Please contact our offices at 678-319-0100.