By Michael J. Searcy
Twenty-five dollars. That was the tiny amount that caused a friend’s daughter to lose the government benefits she was receiving for her special needs.
When you are a parent or caregiver to a child with special needs, navigating the system alone is a challenge. As hard as you try to do everything right, sometimes a small mistake can have lasting repercussions. In this instance, a friend set up an account for her daughter and paid a $25 fee to get the account started. She then transferred $2,000 into the account, the legal limit allowed in her daughter’s case, so they could manage her finances from this account. She was devastated to find out that the $25 had been reported as causing her daughter’s account to exceed her limit and therefore lose her benefits.
When it comes to managing finances that are impacted by special needs, it can be helpful to have an overview of the financial and legal concerns to consider.
Naming a Trustee
A trustee will control the child’s money in order to make responsible decisions and distributions to meet their living expenses and needs. This role can be filled by a parent or family member, trusted friend, or an institution. Because a trustee must keep up on trust laws, you may consider a co-trustee or a trust protector for their legal skills and knowledge.
Setting Up a Special Needs Trust
A Special Needs Trust allows a child to receive money, gifts, inheritance or other assets while still maintaining their government benefits. The child should never directly receive assets because staying under the legal limit of personal assets is essential to protecting their benefits status.
Writing a Will
In the absence of a Will, a probate judge could name your child with special needs as the beneficiary to your estate. An attorney can help you develop a Will that leaves your assets to the child’s Special Needs Trust so their benefits are not lost or compromised.
Considering an ABLE Account
Before ABLE accounts, individuals with special needs had difficulty saving due to the $2,000 asset restrictions placed upon them, so money wasn’t always available for additional costs that weren’t covered by their benefits. Now, with restrictions, money can be saved into an ABLE account and used for qualified disability expenses.
It can take a large village to raise a child, and an even bigger village to raise a child with special needs. By having people on your team who can walk with you through the maze of benefits and financial considerations, share ideas and resources, and talk to you about challenges other parents have overcome, it could help reduce some of the headaches and mistakes that pop up along the way.