Families with members who have disabilities face a legal and financial landscape that most planning guides do not address adequately. Ordinary estate planning tools can actually harm the people they are meant to protect if they are not carefully adapted to avoid disqualifying a beneficiary from means-tested government benefits. Getting this right requires legal guidance that is both current and specific to the programs involved.
Mandelbaum Barrett PC’s February 2019 Special Needs Newsletter delivered timely information on legal developments and planning strategies for families navigating the intersection of disability benefits and estate planning. The firm’s Trusts and Estates practice helps families build plans that protect their members with special needs without jeopardizing access to the benefits that support their quality of life.
What Special Needs Planning Involves
Special needs planning addresses the legal and financial tools that protect individuals with disabilities while preserving their eligibility for government benefits like Medicaid and Supplemental Security Income. A standard inheritance or outright bequest can inadvertently disqualify a beneficiary from these programs if the assets push them over the income or resource limits that govern eligibility.
The primary planning vehicle is the special needs trust, which allows a beneficiary to receive benefits that supplement rather than replace government assistance. Assets held in a properly structured special needs trust are generally not counted for purposes of Medicaid or SSI eligibility, preserving the beneficiary’s access to these programs while allowing family members to provide supplemental support.
Key Tools and Considerations in Special Needs Planning
Families engaged in special needs planning need to address several dimensions across both legal documents and financial arrangements. The following tools are commonly central to a comprehensive plan:
- First-party special needs trusts: Funded with the beneficiary’s own assets, typically following a personal injury settlement or a direct inheritance, and subject to Medicaid payback requirements.
- Third-party special needs trusts: Funded by family members on behalf of the beneficiary, not subject to Medicaid payback, and typically the preferred vehicle for family estate planning.
- ABLE accounts: Tax-advantaged savings accounts available to individuals with disabilities who meet eligibility requirements, providing a flexible supplement to trust planning.
- Letter of intent: A non-legal document that provides trustees and future caregivers with detailed information about the beneficiary’s needs, preferences, and daily routines.
Planning that takes all of these tools into account gives families the most comprehensive protection for their members with special needs while preserving access to the public benefits those individuals depend on.
The Social Security Administration provides detailed information on SSI eligibility requirements, including the resource limits that special needs planning is designed to work within when structuring trusts and accounts.
Why Staying Current on Special Needs Law Matters
Special needs law evolves through federal and state legislation and agency guidance. Changes to Medicaid eligibility rules, the ABLE Act, and trust administration standards can affect the planning strategies that families have in place. Regular communications like the Special Needs Newsletter ensure that clients who have already completed their planning are aware of changes that may require review and updates.
Mandelbaum Barrett PC’s trusts and estates attorneys monitor these developments and communicate them to clients who rely on the firm for ongoing guidance on disability planning matters.
Contact Mandelbaum Barrett PC
Families with members who have disabilities or special needs deserve legal guidance that is both technically sound and responsive to their specific circumstances. Mandelbaum Barrett PC’s Trusts and Estates practice provides the depth of knowledge these situations require.
To discuss special needs planning for your family, reach out through the firm’s contact page.