Thriving with special needs

For most parents of a special needs or disabled child, ensuring total care of their loved one is their life's work, perhaps becoming even more important when they're no longer able to provide the care themselves. Working with a financial advisor and other professionals on the bigger financial picture can provide a sense of ease, knowing you've done all you can to protect and provide for someone you love. It just takes some extra planning to bring a colorful vision of a special needs future to life.

SPECIAL NEEDS TRUST

Special needs trusts are a commonly used estate planning tool, and they’re structured so the beneficiary doesn't own the assets directly, allowing continued eligibility for need-based government benefits like Medicaid and SSI. The trust can be funded with just about any type of asset, including securities, real estate and cash. Some parents leave the trust empty until funded by the proceeds of their life insurance policy, while others use it right away to set aside money for their child.

ABLE ACCOUNTS

The Achieving a Better Life Experience (ABLE) Act of 2014 created the federal framework that allows parents to fund long-term care for a disabled child in a tax-free savings account, similar to a 529 education account, for the life of the child.

The funds are held in a way that preserves eligibility for Supplemental Security Income (SSI), in which recipients must have less than $2,000 in assets, as well as for potential Medicaid assistance. You may already be aware, but these types of means-tested benefits come with tricky rules for eligibility. That's why it's important to consult a financial professional before gifting assets to a person who relies on government benefits.