Special Needs Trust

Basics of a Special Needs Trust

Published on: July 18, 2019 | By McCulloch & Miller, PLLC

Parents of special needs children need to be especially proactive about planning for the future. Their planning should start with an estate plan, that includes a Special Needs Trust.

It’s one of the hardest things for any parent to think about, but for special needs families, planning for the child’s needs when the parents have passed, is particularly important. Trying to determine how much money the child will need while the parents are living and after they have died is complicated.

A recent Kiplinger’s article asks “How Much Should Go into Your Special Needs Trust?” As the article explains, a special needs trust, when properly established and managed, lets someone with a disability continue getting certain public benefits.

Special Needs Planning and ABLE Accounts

Published on: May 24, 2019 | By McCulloch & Miller, PLLC

How the “Achieving a Better Life Experience” Act, known as ABLE, provides a mechanism to create a tax-advantaged savings tool for individuals with disabilities and their families.

The benefits for income, health care, food and housing for disabled Americans are awarded based on a resource test, so that individuals who seek benefits are typically limited to have no more than $2,000 in savings or assets. This includes eligibility for Supplemental Security Income (SSI), SNAP and Medicaid.

In 2014, Congress passed legislation allowing people with disabilities to establish an account, similar to a special needs trust and with some similarities to a 529 college savings account, to accumulate funds to pay for qualified disability expenses. The legislation was named the Achieving a Better Life Experience Act (ABLE).

Special Needs Planning With Special Needs Trusts

Published on: April 11, 2019 | By McCulloch & Miller, PLLC

It is important to understand the basics of special needs planning, so that you can plan for your child’s future. There are many issues to address, but an experienced Houston estate planning professional will be able to help.

Special needs planning is challenging. It’s important to have a strong team to work with. An estate planning attorney with experience in helping special needs families will be able to guide you through the process. They will also likely have access to other professionals to help.

A recent Forbes article, “Special Needs Kids Require Specialized Estate Planning,” says that if you have a child with special needs, it’s critical that you look at your planning options with your estate planning attorney and discuss your child’s health, capabilities and prognosis. You can then customize a plan that works for your child, with as much flexibility as possible.

How Do Trust Funds Work?

Published on: December 26, 2018 | By McCulloch & Miller, PLLC

Trusts serve a variety of functions in estate planning, and they aren’t just for wealthy people.

Trusts can be simple, or they can be complex, depending on what type of trust is being considered and how they are structured. Trusts should be set up by an estate planning attorney, who is familiar with asset ownership and how trusts impact inheritances and taxes.

U.S. News & World Report’s recent article, “Setting Up a Trust Fund,” explains that a trust fund refers to a fund made up of assets, like stocks, cash, real estate, mutual bonds, collectibles, or even a business, that are distributed after a death. The person setting up a trust fund is called the grantor, and the person, people or organization(s) receiving the assets are known as the beneficiaries. The person the grantor names to ensure that his or her wishes are carried out is the trustee.

Special Needs Families Need Strong Financial Planning

Published on: September 10, 2018 | By McCulloch & Miller, PLLC

The cost of raising a child with special needs is easily twice that of an average child, and college costs are higher as well.

Families with special needs children need to plan their child’s future carefully in many regards, and financial concerns are, by necessity, a big part of planning. While the average cost of raising a child from birth to 18 is about $250,000, according to The American College of Financial Services, the cost to raise a child with special needs can easily be twice that amount. One of the challenges is preparing for the special needs child when its time to attend college.

WTNH’s recent article, “Financial planning for families with children with special needs,” advises that working with a team of different professionals can help parents manage both the financial and non-financial aspects of providing care. Here are some of the key roles:

When Special Needs Children Become Legal Adults

Published on: May 21, 2018 | By McCulloch & Miller, PLLC

The saying “little children, little problems, big children, big problems,” is particularly appropriate for parents of special needs children. Preparing for the next phase takes time, so it’s best to begin the process, once they celebrate their 17^th birthday.

One of the many decisions that parents need to make before a special needs child becomes a legal adult, is whether or not the child needs a guardian, or if the parents need a power of attorney, as detailed in a helpful article from Effingham (IL) Daily News, “Teaching parents about guardianship of disabled children.”

Once a child is age 18, the parent is no longer the child's legal guardian.

How Does a Living Trust Work?

Published on: August 11, 2017 | By McCulloch & Miller, PLLC

Living trusts can achieve different goals, depending upon how they are drafted. Knowing the fundamentals will help you decide how to go forward.

It’s important to know that not all living trusts are the same. However, common reasons for using a living trust are for privacy and avoiding probate. Placing assets in a living trust also provides protection to beneficiaries from divorce, nursing home costs, legal actions and creditors. Should a living trust be part of your estate plan?

The Green Bay Press-Gazette’s recent article, “Common questions about a living trust,” notes that this can be especially important for a beneficiary who may have special needs. A Special Needs Trust can be created so their government program benefits, like Medicaid, won’t be impacted by their inheritance. Let’s look at some specific situations:

Can an Estate Plan Protect an Adult Child with an Addiction or Mental Illness?

Published on: April 5, 2017 | By McCulloch & Miller, PLLC

When all of your time is spent battling the challenges of mental illness or addiction, it’s hard to imagine what the future will bring. However, that’s exactly why estate planning is so important.

It’s not an easy issue to discuss with an estate planning attorney for the first time. However, if your children, minors or adults, suffer from mental illnesses or addiction to drugs, alcohol, gambling or any other form of addiction, the attorney will need to know so they can advise you properly. As described in Trust Advisor’s helpful article, “Hope For The Best, But Build Trusts For The Future Of Children With Special Challenges,” there are certain planning techniques that could be used in these situations.

Before diving in, estate planning requires a parent to acknowledge that an addicted son or daughter may never recover. With this in mind, estate planning must be done so that the child never has easy access to the funds. In this instance, a trust with special-purpose language may be a wise option.

Before You File Your 2016 Taxes, Review These Tax Breaks for the Disabled

Published on: March 13, 2017 | By McCulloch & Miller, PLLC

There is some kindness in the tax code, especially when it comes to the disabled and their care givers. There are a few tax breaks that are intended to alleviate some of the financial burden.

Even when a disabled person is able to work, they or their caregivers must incur many additional costs, from transportation needs to medicines and special supplies for care. A study by the Centers for Disease Control and Prevention reported that one out of every five Americans lives with a disability. If this includes you or someone you care for, you’ll want to know about some tax tips that are designed to help. A recent article in Yahoo Finance, “8 Tax Tips for People With Disabilities (and Their Caregivers),” offers some useful details.

ABLE accounts. These accounts are newer savings vehicles for those who become blind or disabled before the age of 26. The accounts are like 529 college savings accounts—the account grows tax-free and can be spent on eligible expenses with no taxes. Contributions to these accounts don’t qualify for a federal tax credit or deduction. However, Iowa, Michigan, and Nebraska offer state tax benefits for contributing.

Longer Life Spans for Special Needs Children Impact Parents’ Retirement Planning

Published on: July 29, 2016 | By McCulloch & Miller, PLLC

A dramatic increase in the number of adults with developmental disabilities, coupled with their increasing life spans, presents planning challenges for parents.

Special needs families are accustomed to things being more complicated, and retirement planning is no exception. Parents must plan for their own retirement as well as ensure that a plan is in place for the time when the parents are no longer able to care for their special needs child. That includes everything from the basics, like making sure that beneficiary designations are up-to-date, to ensuring that the child’s inheritance does not make the child ineligible for means-tested government benefits.

A recent MarketWatch article, “Parents of special needs children plan for two futures,” says that special needs parents are really planning for two lifetimes. In 2030, there will be approximately 1.2 million adults age 60 and older in the U.S. with developmental disabilities. That’s about twice as many of the 642,000 who fit that profile in 2000, according to 2012 research by the University of Illinois at Chicago. Also, according to the National Down Syndrome Society, today people with Down syndrome have a life expectancy of 60, compared with just 25 in 1983.