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How Do I Plan for a Loved One with Special Needs? – Annapolis and Towson Estate Planning Attorneys

  • Post category:ABLE Account / Disability / Estate Planning / Estate Planning Attorney / Medicare/Medicaid / Special Needs Planning / Special Needs Trust

Parents and grandparents do all they can to help their children and grandchildren lead their best lives, and that often extends to the child or grandchild’s adult lives. When estate plans are made, people who can afford to, leave money and property to continue to support loved ones. However, when there is a family member with special needs, planning is different, explains the article “Planning for loved ones with special needs” from The Sentinel. The child may have been born with a developmental disability or a motor disability or developed mental illness or an addiction.

A person who is not able to work or care for themselves often receives public benefits to pay for food, shelter and medical care. Those public benefits will be jeopardized, if parents or grandparents make the mistake of leaving a gift of money or a bequest. Special needs planning addresses this issue.

Public benefits for people with no assets or income include Supplemental Security Income (SSI) to pay for food and shelter, Medicaid for medical care and the SNAP program for food, among others. Before money is given to a disabled family member or left in an estate plan, a review of the public benefits that are in use or available needs to be done, so benefits are not disrupted.

One example is SSI, a federal program that supports disabled persons who cannot earn enough, which in 2020 means $1,260 or more in a month. A disabled person who earns less than that and owns less than $2,000 in assets can receive $783 monthly to pay for food and shelter. If the person owns the home they live in or owns one car, they may still be considered to have under $2,000 in assets. Clothing and personal belongings are also not counted against the $2,000 asset limit.

However, to continue receiving the full benefit amount, the person cannot receive money from family or friends, since that money could be used for food and shelter. This also applies to “in kind” gifts, such as making a mortgage payment or helping with utility bills. Any direct gift reduces the SSI benefit.

There are ways for parents and grandparents to help their loved one enjoy a better quality of life. However, gifts must be carefully planned and within the laws. For instance, a family member may purchase certain services for a disabled person that would not disrupt their benefits. A parent or grandparent could pay for auto repairs, cell phone and land line phone services, educational expenses, medical care and social services. One very important note: the payments must be made directly to the merchant or provider and not to the disabled person.

There are two primary tools used to consider, when helping a special needs or disabled person:

Special Needs Trust: The gift is placed in the control of a trustee who manages the money, invests it, makes the appropriate tax filing and makes the decision about when to distribute funds.

Most family members do not understand the web of complex regulations that dictate how public benefits work. Properly created and managed by a responsible trustee, the Special Needs Trust avoids putting the burden of financial care on other family members and lets money be wisely distributed.

Money and property in a Special Needs Trust is not considered to be an asset of the individual, as it is owned by the trust. However, the same restrictions apply to making direct distributions from the trust to the individual beneficiary for food and shelter.

The other account is an ABLE account, created by the Achieving a Better Life Experience law. Anyone can contribute to it and money in the account is not considered income and not counted against the asset limitations. Contributions are currently capped at $15,000 per year, and the account cannot contain more than $100,000.

Distributions from the ABLE account can be used to pay for a wide array of expenses for a disabled person without impacting government benefits. That includes housing, transportation, assistive technology, health, education and other needs. Families need to be aware that the disabled individual owns the assets in the ABLE account. If they are unable to manage money or are susceptible to scams, the family will want to be cautious about putting funds into the account.

Reference: The Sentinel (Nov. 20, 2020) “Planning for loved ones with special needs”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Protecting Adult Children with Disabilities – Annapolis and Towson Estate Planning

  • Post category:ABLE Account / End of Life Planning / Estate Planning / Guardian / Medicare/Medicaid / Power of Attorney / Special Needs Trust / Trustee

One in four Americans has some kind of disability, and an increasing number of children are being diagnosed with some form of autism. The life expectancy for people with Down syndrome has increased from living to age 12 in the 1940s to nearly 60 today. Most children born with cerebral palsy live into their thirties. For parents of these children, it is more important than ever to create a plan and a community, says the article “How to build support system for adult children with disabilities” from The San Diego Union-Tribune.

Financial resources and support services need to be put into place, for when parents are no longer able to provide care. Here are the key points to address:

Preserving the child’s eligibility for government assistance programs, including Supplemental Security Income (SSI) and Medicaid, through the use of a Special Needs trust. Any amount of money can be placed in the trust, and the funds don’t count when determining eligibility. If parents leave money directly to a child, they will lose their ability to get SSI and Medicaid benefits.

Start early. A Third-Party Special Needs trust should be set up before the child turns 18. It doesn’t need to be funded, but it needs to be created.

Be a stickler for the rules. If the child receives SSI, money from the trust may not be used for food and housing, but it can be used for other costs, like therapies that are not covered by Medicaid, or even extras, like a cellphone or vacation. An experienced elder law attorney will be able to help the family with planning and learning the intricacies of these rules.

Name a trustee and a successor trustee. Selecting someone to manage the trust on behalf of the child is a critical decision, and not always an easy one. The trustee should be someone responsible who cares about your child’s well-being. It could be a sibling, if the relationship is good, or a family member. The person should be younger than the parents, so they will be around after the parents have passed.

Open an ABLE Account—Achieving a Better Life Experience account. These are accounts that work in much the same way as a 529 account. They can be established for a disabled person at any time, but the child must have the qualifying disability before age 26. Money from a Special Needs trust can be moved into an ABLE account, and the beneficiary can use it for any qualified disability expense.

Prepare a letter of intent or guidance. This is not a legally binding document, but rather a way of sharing information with others about your child: their preferences, routines, comfort levels and wishes. It can also be used to provide information about caregivers, medical providers and others who are a good fit with your child. You may also wish to share information about what and who they do not like. Update the letter every year or two.

Power of Attorney. Having a power of attorney for a disabled individual is far more flexible and less costly than a conservatorship or guardianship.

Housing options. Where will your child live? That depends on what kind of disability the child has and the family’s financial resources. Ideally, the child can transition from the family home to another place while the parents are still living. If feasible, the parents could leave the family home to the child in the Special Needs trust, but they will also need to leave enough money for ongoing expenses and maintenance of the house. Some disabled adults live in group home settings, where counselors and other staffers help residents live on their own.

An elder care lawyer will be able to connect the family with many different resources and help with creating a Special Needs trust.

Reference: The San Diego Union Tribune (Jan. 9, 2020) “How to build support system for adult children with disabilities”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Can 529 College Savings Plans Be Used Now in Estate Planning? – Annapolis and Towson Estate Planning

  • Post category:529 Savings Plan / ABLE Account / Asset Protection / Estate Planning / Estate Planning Attorney / Estate Tax Planning / Financial Planning / Inheritance / Probate / Tax Planning

A person who contributes to a 529 college savings plan can front load five years’ worth of contributions ($75,000 total) into one year, without any federal gift taxes being imposed.

In that case, say that two grandparents want to help finance college for their grandchild. They are able to deposit $150,000 into his or her 529 plan.

In addition, this helps them reduce the potential impact of estate taxes.

Barron’s recent article, “529 Plans Have Morphed Into Estate Planning Tools,” says the 2017 tax law also permits the withdrawal of up to $10,000 each year to pay for K-12 education at public, private, or parochial schools.

Funds in 529 plans (up to the annual contribution limit of $15,000 ) can also be rolled over into an Achieving a Better Life Experience (ABLE) Account. That type of account promotes savings for disability-related expenses.

The money from a 529 plan for one sibling can be rolled into an ABLE account for another sibling.

Research shows that roughly $259 million has been saved thus far in these accounts, which were created five years ago.

However, this benefit will end in 2026, unless Congress extends it.

In addition to these tax law changes, you can ask your estate planning attorney about techniques for using a 529 account in that area.

A 529 college savings plan can be used to purchase computers and other technology for a student.

These savings plans can also be used by adult account holders to pay for their own education or retraining. This is happening in about 2% of 529 plans.

Experts say that these types of uses for adults are expected to increase, as technological advances change the workplace.

Reference: Barron’s (September 9, 2019) “529 Plans Have Morphed Into Estate Planning Tools”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

How Do I Plan Financially with a Family Member with Special Needs? – Annapolis and Towson Estate Planning

  • Post category:ABLE Account / Asset Protection / Elder Law / Estate Planning / Inheritance / Probate / Social Security / Special Needs Planning

If you fail to provide any funds or support for a family member with special needs, their future may be left to a judge, and their well-being could suffer. If you leave too much, they could be ineligible for government services or be forced to pay back the state for some of their care.

SF Gate’s recent article, “Financial planning when a family member has special needs,” says the biggest mistake you can make, is making no plan. That frequently happens when a caregiver becomes so overwhelmed, that it prevents them from planning at all. However, it doesn’t have to be a major undertaking in every case. A young family may just need life insurance and an estate plan, and your needs can change over time. You also shouldn’t overlook estate planning, because it’s important to put basic safeguards in place, if someone relies on you for care.

The article says that if you do only one thing, write a letter of intent. This letter details a family’s hope for an individual and their estate. It tells of your vision for the child or family member’s life, who will be involved and how. This letter of intent can also include crucial information about medical, financial, or other essentials, like your loved one’s daily routine, likes and dislikes.

You should update this letter of intent annually.

You know that all the money in the world can’t provide the information parents may have in their hearts and minds for their children. Best of all, it’s free.

It can be very complicated to understand what’s needed for each family’s unique circumstances. You should get help in whatever way you can. One avenue is to ask other families with special needs for their input or consider any free training through advocacy groups or support groups.

This is a situation where a paid professional, such as an elder law attorney or a lawyer who specializes in disability law can be critical.

An attorney can educate you about the finer points of the various financial tools available, like special needs trusts, ABLE accounts and more. Commonly used financial tools, such as life insurance and Roth IRAs, take on new weight for families in this situation. An experienced attorney will have special knowledge on the implications the various tools will have on taxes, government benefits and more.

Finally, don’t forget to look after your own financial well-being. If you forgo taking care of yourself, it may mean you can’t provide the care for your family.

Reference: SF Gate (May 5, 2019) “Financial planning when a family member has special needs”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Suggested Key Terms: Asset Protection, Probate Court, Inheritance, Elder Law Attorney, Special Needs Planning, ABLE Account, Social Security Disability Insurance

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For Immediate Release

Contact: Jane Frankel Sims

410-828-7775

Contact: Frank Campbell

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Sims & Campbell Estates and Trusts

Frankel Sims Law and Holden & Campbell
Merge to Form Sims & Campbell

Firm will offer comprehensive Trusts & Estates services through offices in Towson and Annapolis

TOWSON, Md. (April 26,2019)  Frankel Sims Law and Holden & Campbell have jointly announced the merger of their firms to create a boutique Trusts & Estates law firm providing comprehensive services in the fields of Estate Planning, Estate Administration, Trust Administration and Charitable Giving. The combined firm will be named Sims & Campbell and have offices in Towson, Md. and Annapolis, Md.  Jane Frankel Sims and Frank Campbell will lead and hold equal ownership stakes in the firm.

Sims & Campbell will have 9 attorneys and 15 legal professionals that handle every facet of estate and wealth transfer planning, including wills, revocable living trusts, irrevocable trusts, estate and gift tax advice, and charitable giving strategies.  The firm will focus solely on Trusts & Estates but will serve a wide range of clients, from young families with modest resources to ultra-high net worth individuals.  This allows clients to remain with the firm as their level of wealth and the complexity of related estate and tax implications change over time. 

“By joining forces, we have expanded our footprint to conveniently serve clients in Maryland, D.C. and Virginia” said Jane Frankel Sims.  We are seeing some of the greatest wealth transfer in our country’s history, and we want to continue to be on the leading edge of helping our clients maintain and enhance their family’s wealth.  In addition, we aim to serve our clients for years to come, and the new firm structure will allow Sims & Campbell to thrive even after Frank and I have retired.”    

“Jane and I have always admired each other’s firms and recognized the need to provide even greater depth and breadth of focused expertise to help families amass and protect their wealth from generation to generation,” said Frank Campbell.  “Now we have even greater capabilities to make a real difference for our clients.” 

The Sims & Campbell Towson office is located at 500 York Road, on the corner of York Road and Pennsylvania Avenue in the heart of Towson.  The Annapolis office is currently located at 716 Melvin Avenue, and is moving to 181 Truman Parkway in August, 2019.  For more information, visit www.simscampbell.law.