For families raising children with disabilities, the legal tools available for long-term financial and care planning can make an enormous difference in a child’s quality of life and long-term security. Special Needs Trusts, the ABLE Act, and guardianship are three of the most important legal frameworks these families need to understand. Shawna Brown, an Associate at Mandelbaum Barrett PC, addressed all three at a special interactive family event hosted by Progressive Comprehensive Services, LLC.
The session was designed as a hands-on, conversational event where families could ask questions and leave with a clearer picture of the legal options available to them as they plan for the future. Topics included the ABLE Act, Special Needs Trusts, and guardianship, three areas that often work together in a comprehensive plan for a loved one with a disability.
The ABLE Act: Tax-Advantaged Savings for People with Disabilities
The Achieving a Better Life Experience Act, signed into federal law in 2014, created a category of tax-advantaged savings accounts for individuals who were disabled before age 26. ABLE accounts allow eligible individuals and their families to save money without jeopardizing eligibility for federal benefit programs like Supplemental Security Income and Medicaid, which typically impose strict asset limits.
Contributions to an ABLE account grow tax-free, and withdrawals used for qualified disability expenses are not subject to tax. Qualified expenses are broadly defined and include housing, education, transportation, employment training, assistive technology, health and wellness costs, and financial management services, among others.
For many families, an ABLE account provides a practical and accessible savings option. The account may work best in combination with a Special Needs Trust, depending on the amount of assets involved and the nature of the benefits the individual receives.
Special Needs Trusts: Long-Term Asset Protection
A Special Needs Trust, also called a Supplemental Needs Trust, is a legal arrangement that holds assets for the benefit of a person with a disability while preserving that individual’s eligibility for government benefit programs. Without such a trust, an inheritance, personal injury settlement, or accumulated savings may disqualify a disabled individual from the programs that help cover their basic needs.
New Jersey and federal law recognize several types of Special Needs Trusts. A first-party trust holds assets that belong to the disabled individual, such as funds from a personal injury settlement. A third-party trust holds assets contributed by family members or others, generally without a Medicaid payback requirement upon the beneficiary’s death when properly structured.
Establishing the right trust structure and naming appropriate trustees requires careful planning. The trust document must comply with applicable law while giving the trustee sufficient flexibility to use trust funds for the beneficiary’s supplemental needs, those things that government benefits do not cover.
Guardianship: Securing Legal Authority for Decision-Making
When a child with a disability reaches age 18, they legally become an adult, and parents no longer have automatic legal authority to make decisions on their behalf. For a young adult who lacks the capacity to manage their own affairs, a guardianship proceeding may be necessary to establish formal decision-making authority in a parent or another trusted individual.
New Jersey guardianship law requires a court proceeding in which the individual’s rights are protected throughout. The process involves medical or psychological evaluations, a court hearing, and a formal court order. A guardian of the person may have authority over healthcare and personal decisions, while a guardian of the property handles financial matters.
Alternatives to full guardianship, including supported decision-making agreements and limited guardianship arrangements, may be appropriate depending on the individual’s specific capabilities. Families are encouraged to explore these options and discuss them with an attorney before assuming that full guardianship is the only path forward.
Why Early Planning Matters
The timing of these planning decisions matters considerably. Families who put these legal structures in place before a crisis arises, before a child reaches adulthood, before an inheritance arrives unexpectedly, or before a government benefits review creates urgency, retain more options and avoid the costs and delays associated with rushed legal proceedings.
Events like the Progressive Comprehensive Services session are designed to help families understand these options early, so planning can happen on their own timeline rather than in response to a crisis.
Special Needs Planning at Mandelbaum Barrett PC
Shawna Brown and the Elder Law and Special Needs Planning attorneys at Mandelbaum Barrett PC work with families navigating these decisions across New Jersey. Whether a family is just beginning to think about long-term planning for a child with a disability or is facing a guardianship proceeding as their child approaches adulthood, the firm has handled matters across the full range of these issues.
To speak with a member of the Elder Law Practice Group at Mandelbaum Barrett PC, contact the firm through the contact page. Our attorneys are prepared to discuss your family’s situation and help identify the most appropriate planning strategies for your circumstances.