Ann Catherine Heigl, a 19-year-old with Down syndrome, graduated from high school and became a student of George Mason University, through their LIFE program, a full-time college program for intellectually and developmentally disabled students. It’s one of only a few full-time college programs for people with special needs.
Not only is Ann Catherine an engaging and accomplished student at Mason. She is also making headlines for making the University’s Division One cheerleading squad. In attending Mason, Ann Catherine is embarking on the college experience that her brother, sister, and friends have told her about. Among her goals are to earn good grades and join a sorority, in addition to being a cheerleader. She looks forward to gaining independence and wants to learn how to teach and take care of young children.
According to the Today Show, which featured other trailblazers with Down Syndrome, people with Down syndrome have weaker muscle tone, so experts often warn them against playing sports. But more and more people with Down syndrome are pursuing athletics — everything from running marathons to powerlifting.
Another misconception that the Today Show is trying to dispel is that people with Down syndrome can’t have careers or even work. They featured Collette DiVitto, who doesn’t simply work at a job, but owns a commercial bakery that delivers cookies to people across the country.
As you can see, more people with Down syndrome are pursuing post-secondary education, getting married, and entering the workforce. These instances are extremely uplifting. It seems that the best people to dispel misconceptions about those with Down syndrome, are the people with Down Syndrome themselves!
What if Your Loved One with Special Needs Requires a Lifetime of Assistance?
Unfortunately, not all people with special needs can be as independent and self-sufficient as those described above. For those who have a child with a more severe disability who needs lifetime care, financial challenges abound. One such challenge that many families with special needs children confront is funding the ever-growing expenses that their child may need over their lifetime. With additional costs of important medical and support care often reaching over $100,000 per year for a child with special needs, many families look to government programs to fill the gap.
Using an ABLE Account to Save for a Loved One with Special Needs
The task of balancing the use of a family’s assets alongside potential government aid became a bit easier when Congress passed the ABLE Act of 2014. ABLE stands for “Achieving a Better Life Experience,” and the law helps support families by providing a mechanism for saving via a tax-free account. These are three main benefits of ABLE Accounts, along with one significant downside:
- Assets in the ABLE account grow tax-free.
- Distributions from an ABLE account are tax-free as long as funds are used to cover qualified expenses.
- So long as the ABLE account balance remains below $100,000, assets in the ABLE account are not counted in asset calculations used to determine qualification for many public benefits programs, especially Social Security income (SSI) and Medicaid.
The main downside of an able account is that some or all of money remaining in the account upon the death of the account holder may have to be paid back to the state for Medicaid benefits received. The amount of any Medicaid payback is calculated based on amounts paid by Medicaid after the creation of the ABLE account
ABLE accounts are intended to help both children and adults. The main rule is that a beneficiary’s disability must be diagnosed before their 26th birthday. Their condition must be expected to last at least 12 consecutive months, and they must be receiving benefits under Supplemental Security Income or Social Security Disability Insurance, or they need to obtain a disability certificate from a doctor. Read more here.
Special Needs Trusts to Protect a Disabled Person’s Financial Future
When planning for individuals with special needs, ABLE accounts are an important planning tool alongside more-traditional techniques such as special-needs trusts. While ABLE accounts are often the first step in structuring a long-term financial plan for someone living with a disability, the next step is to create a Special Needs Trust.
A special needs trust is often an essential tool to protect a disabled individual’s financial future. Also known as “a supplemental needs trust,” this type of trust preserves eligibility for federal and state benefits by keeping assets out of the disabled person’s name. Here are five common reasons for establishing a special needs trust:
- To provide a legal way to title and hold assets to be used to support one or more beneficiaries.
- To appoint a trustee to manage investment decisions and oversee the distribution of assets. The trustee fills an important role of watching over the assets and administrating spending decisions. The trustee is also required to ensure that assets are used according to the initial intentions.
- To maintain a disabled person’s government aid. A range of government programs have income restrictions including Supplemental Security Income (SSI), Medicaid and other services such as job training and subsidized housing. To protect the beneficiary, grantors can direct intended inheritance or life insurance benefits to a special needs trust. In doing so, you can provide for spending that may improve a beneficiary’s quality of life without jeopardizing government aid.
- Protecting assets from lawsuits, divorce, bankruptcy, medical bills, etc. Similar to other asset protection trusts, a special needs trust can be effective in protecting assets if your beneficiary were ever sued or if they go through a divorce.
- Preserving family wealth. The reason to establish a special needs trust is similar to reasons for using other types of trusts. This is because a trust structure is helpful to create a way to provide assets while limiting their use. A special needs trust also helps ensure that wealth is allocated properly without disturbing government entitlements.
Special Needs Planning to Protect a Loved One
As you can see, special needs trusts have a variety of important uses and can be an effective planning tool for families who want to ensure a person with disabilities is taken care of in the future.
When it comes to special needs planning, the Farr Law Firm can guide you through this process. If you have a loved one with special needs, call one of our offices to make an appointment for an initial consultation:
Fairfax Special Needs Planning: 703-691-1888
Fredericksburg Special Needs Planning: 540-479-1435
Rockville Special Needs Planning: 301-519-8041
DC Special Needs Planning: 202-587-2797
About Evan H Farr, CELA, CAP
