Special Needs Financial Planning
My Emily is in Kindergarten which helps you to  know where I am on the special needs journey personally.  In February, her class celebrated the 100th day of school. Her assignment was to choose 100 of the same item and create a poster to communicate her ability to count these items. She chose 100 pennies, and my husband happily helped her glue them on a poster board to display her skills. Numbers, Counting, Math Story Problems, this is all a part of Kindergarten. Just like typical children, there is academic emphasis on the importance of gaining math skills for an individual like Emily. 

This leads me to the topic for my March Newsletterit's all about the numbers. Emily, because of her disability, which is Down syndrome, will be limited in how she can have access to and use money. This is because she receives public benefits. Public benefits are resources provided by the Federal and State government to supplement her financial needs knowing her disABILITY could potentially impact her ABILITY to be financially independent.
Understanding Public Benefits & Their Impact

When a disabled individual receives public benefits, there are limitations in the amount of income that can be earned, as well as the number of assets that can be in their name.  The two most common public benefits for disabled individuals are:  

Supplemental Security Income (SSI) and  *Medicaid (Health Insurance)

When an individual turns 18, SSI will provide a modest monthly cash grant for food and shelter if they are disabled, blind, or 65+ years old. In 2017, the SSI Federal payment standard is $735 per month or $8,830 per year for a single disabled individual. To maintain these public benefits individuals need to meet asset and income limits. 

The asset limit for SSI and Medicaid is $2,000 per month, meaning a disabled individual is not able to have any more than $2,000 in their name at any given point in time. The income limit is typically around $1,000 per month. If the asset and/or income limit exceeds these limits, it's possible SSI will be reduced or suspended.      

                        *programs are state specific, check with your Medicaid provider for more details.

Planning for a Lifetime of Care Beyond the Minimums
Public benefits are meant for a disabled individual to live at the poverty level. It is difficult to imagine that $735 a month can provide all that is needed for food, shelter, clothing, entertainment, transportation,  medical expenses, etc.  To ensure a disabled individual can have access to additional financial resources to maintain or improve their quality of living, parents have several options available.  Deciding which options to use and when to implement is the basis for the work I do with my clients as a Financial Advisor focusing on Special Needs Financial Planning.
Common myths:
  • Disinherit the disabled individual - Parents were told to make sure they did not include their loved one in any aspect of their estate planning with no inheritance provided.
  • Leave assets to sibling(s) Parents assumed that all of their assets should be given to the typical sibling(s) who would assume financial responsibility for the disabled individual.

These are just two examples of how families have "planned" in the past, and depending which professionals you talk to, it's quite possible you may still receive this advice today!

It is important that family members are aware of all options regarding planning for a lifetime of care for a disabled individual. There is more to consider today when you are planning for two lifetimes - yours, as a parent, and the future of your loved one with special needs.

What are your options in 2017?

1) 529 ABLE Savings Accounts
  • Tax-advantaged savings accounts for individuals with disabilities and their families. 
  • Tax free distributions as long as assets are used for Qualified Disability Expenses.
  • Account owner is the disabled individual with maximum of $14,000 contributed annually per account.
  • Account balances DO NOT impact an individuals' ability to receive and maintain public benefits.*
  • No Wisconsin state program; however there are tax benefits for Wisconsin residents if you use another state program. 
  • Medicaid payback, upon the death of the beneficiary the state in which the beneficiary lived may file a claim to all or a portion of the funds in the account equal to the amount in which the state spent on the beneficiary through their state Medicaid program.  
  • Access to funds via check writing, debit cards to allow for financial independence, or supported with loadable debit card. 
  • ABLE National Resource Center -Click here for more advantages and disadvantages related to ABLE Savings Accounts.
    *SSI impacted when account balance is $100,000
2)  Life Insurance
  • Purchasing life insurance on one or both(Survivorship) parents is a means of providing supplemental financial resources for the disabled individual when the parents choose to or are no longer able to provide for them.
  • Proceeds (Death Benefit) of the insurance should be distributed to a Third Party Special Needs Trust [SNT] for the benefit of the disabled individual. Proper estate planning will protect these assets to insure the disabled individual can maintain public benefits.
  • Trustee is responsible for managing distribution of assets which can supplement public benefits.
  • Understanding insurance options available including types (terms vs. permanent), costs associated, as well as how the financial/insurance professional may be compensated when you purchase(d) the policies is beneficial for proper insurance planning.  
And the number is......... infinite.......
  • Emily is working very hard in Kindergarten to learn how to count and recognize numbers. Soon she will learn the concepts of money like how to identify a penny from a nickel to a dollar bill. 
  • It is my hope that the 529 ABLE Accounts, and additional financial solutions continue to improve so that Emily and ALL INDIVIDUALS like her have the opportunity for financial independence based on their ABILITIES and not their DISABILITIES. 
  • Proper Financial Planning by parents and loved ones can help make this possible. 
My Upcoming Speaking Events

March 13: ABLE Accounts and Special Needs Trust - What can ABLE Accomplish?

  • Mequon-Thiensville School District
  • VOICES Parent Committee Meeting 
  • Location/Time - Homestead High School - Mequon @ Noon

March 22: People with Disabilities Network - Disability Policy Legislation: The ABLE Act, ABLE to Work, and More

  • GE Healthcare - Innovation Drive - Wauwatosa 10am to Noon
  • Joining John Macco [pictured top left] who co-sponsored the Wisconsin ABLE Act with Sara Weir [pictured bottom left] - President of the Down Syndrome Society (NDSS) - for a policy discussion on 529 ABLE Accounts and the ABLE to Work bill which is currently going through Congress for approval.

* All entities are separate and not affiliated with LPL Financia

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