Patty Manko

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Using the ABLE Account: A Case Study - Save and Have Control of Your Own Money

Posted by Patty Manko on Sat, May 13, 2017 @ 08:02 AM

The Special Needs Financial Planning Team  Cynthia Haddad, CFP | John  Nadworny, CFP | Alexandria Nadworny, CFP  We are committed to offering educational workshops to organizations and parent  groups.  Please call Alex or click here to attend a workshop or discuss a presentation  to your group.

Workshops Calendar

ABLE.pngFinally, ABLE to Save and Have Control of Your Own Money

Important note: Individuals earning their own money may be able to contribute their earnings, within limits, above the $15,000 limit. Please see ABLE to Work Blog published August 2018. 

One benefit of The ABLE Account is that it provides the opportunity for gainfully employed people with disabilities, who meet the qualifying requirements, to save and control their own money without fear of jeopardizing benefits. 
 
Case Study:
 
The Situation:
"Sean" was diagnosed with bi-polar disorder and other concerns in his late teens and has struggled with many issues over the years.  One critical issue for him has been, and continues to be, money. He is able to work on a part-time basis, but usually does not work for an extended period of time. Working gives him a sense of purpose, but the fear of exceeding the $2,000 limit and losing his government benefits causes a great deal of anxiety. To maintain eligibility for monthly Supplemental Security Income (SSI), an individual cannot have more than $2000 of resources in his name. When he has had income, he often saved that money but if the balance crept up to the $2,000 limit, he would become very anxious and quit his job.  His therapist wants to be sure that he continues to work and does not depend solely on government benefits since then he becomes hyper-focused on not earning any money.  
 
The Options we Considered:
One option for Sean could be to fund a 1st party supplemental needs trust (SNT) and put his money in this account. But the expense involved in creating, managing and reporting for this trust account is substantial when compared to amount of money that will be in the account.  In addition, money in the trust could not be used to pay for rent or utilities. 
Another option would be to make sure that Sean spent his money each month to stay below the $2,000 limit. The concept of “forced spending” simply does not make any sense.  Spending money in order to reduce savings below the $2,000 limit is referred to as the “Spend Down Process”. 
Sean now has a thrid option: Since his diagnosis was made prior to age 26, he is eligible to open an ABLE account. He could then save his money in this account and use it as needed. 
Prior to the creation of the ABLE account, a Special Needs Trust and the “Spend Down” were the only options.
 
The Benefits of Using an ABLE Account:
Sean's earnings do not typically exceed $15,000(2018 limit); therefore technically he could save all of his earnings for future needs.  Practically he will not be able to do so, but he will be able to set aside money for future needs just like every other person! Having the ABLE account could grant Sean some sense of relief, as well as the independence associated with managing his own savings and spending.  The greatest benefit is that he may continue to work without fear of earning too much money. This is very important to his emotional well-being and self-worth.
 

Learn the Basics. The ABLE Account:  Ten Things to Know

 

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual, nor intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor. There is no assurance that the techniques and strategies discussed are suitable for all individuals or will yield positive outcomes.

The experiences described here may not be representative of any future experience of our clients, nor considered a recommendation of the advisor's services or abilities or indicate a favorable client experience. Individual results will vary.

Investing involves risk including loss of principal. Prior to investing in an ABLE account, investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other benefits available for investments in such state’s ABLE program.

Tags: ABLE Accoount

Using the ABLE Account: Case Study - Protecting Social Security Eligibility

Posted by Patty Manko on Sat, May 06, 2017 @ 08:35 AM

The Special Needs Financial Planning Team  Cynthia Haddad, CFP | John  Nadworny, CFP | Alexandria Nadworny, CFP  We are committed to offering educational workshops to organizations and parent  groups.  Please call Alex or click here to attend a workshop or discuss a presentation  to your group.Workshops Calendar

 

Protecting Social Security Eligibility

ABLE.pngAdults with disabilities become eligible for social security at age 18. Social Security (SSI) provides adults with disabilities a monthly benefit payment and health insurance if they meet a low income and asset threshold. To maintain eligibility for SSI benefits, an individual cannot have more than $2000 of resources in his or her name.  This includes cash, bank accounts, stocks, and U.S. Savings bonds.  Prior to the child's turning age 18, and before applying for SSI, make certain that the child meets this requirement. One strategy could involve transferring money to an ABLE account as this can help reduce savings beneath the $2,000 threshold and avoid the spend-down process.

Learn the Basics. The ABLE Account:  Ten Things to Know

 

Case Study:

The Situation:

During the settlement of an estate, the personal representative (PR) (may also be known as the executor) of the estate discovered one of the beneficiaries was receiving government benefits. While this person could definitely use the funds to pay for furnishings in her home and some much needed dental work, if she received the inheritance directly, it would disqualify her from the important benefits she was receiving, as it would bring her above the $2,000 asset limit she is allowed. The personal representative was required to distribute $33,000 to this beneficiary prior to the projected closing of the estate in February of the following year.

The Options we considered:

In discussing the current situation with the beneficiary and the PR, we discussed options for the purpose of educating the parties involved of establishing a 1st party supplemental needs trust (also known as a d4A or Payback trust) where the beneficiary could transfer the entire inheritance to the trust and continue to receive her benefits. 

We also discussed the option of distributing a portion of the inheritance this year and then again next year using an ABLE account. If the PR distributed $18,000 this year, the beneficiary would be able to buy new furnishings that she needed with about $2,000, get the needed dental work for another $2,000, and deposit $15,000 (2018 limit) into an ABLE account, assuming she had made no prior deposits into the ABLE in this year. The PR would then need to make the final distribution of about $15,000 to the beneficiary by the February of the following year. If the PR does this, the beneficiary could then keep $1,000 in her savings account (still under the $2,000 limit) and add an additional $15,000 to her ABLE account. The beneficiary would then able to use these funds for qualified disability expenses as needed without losing her SSI income and other benefits.

The Benefits of Using an ABLE Account:

Because of the amount of the inheritance, she did not need to go through the expense of hiring an attorney to establish a 1st party supplemental needs trust, find a trustee, file taxes, and then have to ask someone for money when she needed it.  She was already living independently and managing her own expenses fairly efficiently.  The ABLE account allowed her to continue to receive her benefits and use the funds in the account as she needed them.

Questions? Talk with us.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual, nor intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor. There is no assurance that the techniques and strategies discussed are suitable for all individuals or will yield positive outcomes.

The experiences described here may not be representative of any future experience of our clients, nor considered a recommendation of the advisor's services or abilities or indicate a favorable client experience. Individual results will vary.

Investing involves risk including loss of principal. Prior to investing in an ABLE account, investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other benefits available for investments in such state’s ABLE program.

 

Tags: ABLE Accoount

Finally ABLE to Save: A New Savings Tool for People with Disabilities

Posted by Patty Manko on Sat, Apr 29, 2017 @ 08:05 AM

 The Special Needs Financial Planning Team  Cynthia Haddad, CFP | John  Nadworny, CFP | Alexandria Nadworny, CFP  We are committed to offering educational workshops to organizations and parent  groups.  Please call Alex or click here to attend a workshop or discuss a presentation  to your group.

Workshops Calendar

ABLE.pngThe ABLE Account is available in several states currently and is due to be offered in Massachusetts next month.  Here are a few resources to help you learn about the ABLE account and whether it is right for you or your family member with a disability.

To learn about the basics of the ABLE account, click here to read ABLE Accounts: Ten Things You Need to Know. 


Click here for a chart, provided by the National Down Syndrome Society comparing elements of all of the currently operable ABLE programs in the U.S., along with their contact information.   

Stay tuned to our blog; over the next few weeks we will feature wealth accumulation planning strategies including: 

  • When the child turns 18, transferring money to an ABLE account can help avoid the spend-down process - reducing savings beneath the $2,000 threshold.
  • Gainfully employed persons with a disability may open an account to save their own money.
  • An ABLE account may be used to address the issue of staying below $2000 in a Representative Payee Account.
  • There are potential planning strategies around allowing distributions for housing related expenses. Currently, special needs trusts do not permit distributions for housing; only supplemental expenses. 

* We borrowed your great title!  The title Finally ABLE to Save: A New Savings Tool for People with Disabilities is from a presentation by  Heather Sachs, JD, Vice President of Advocacy & Public Policy, National Down Syndrome Society.  Thanks, Heather!

Tags: ABLE Account

Planning for College for People with Disabilities- Webinar on April 6

Posted by Patty Manko on Sat, Apr 01, 2017 @ 08:00 AM

The Special Needs Financial Planning Team  Cynthia Haddad, CFP | John  Nadworny, CFP | Alexandria Nadworny, CFP  We are committed to offering educational workshops to organizations and parent  groups.  Please call Alex or click here to attend a workshop or discuss a presentation  to your group.

Workshops Calendar


lower_logo.gifThink College
is a national organization dedicated to developing, expanding, and improving inclusive higher education options for people with intellectual disability. With a commitment to equity and excellence, Think College supports evidence-based and student centered research and practice by generating and sharing knowledge, guiding institutional change, informing public policy, and engaging with students, professionals and families.

We are presenting a webinar for Think College on Thursday, April 6, Let's Talk About the Money: Planning for College . On the agenda are:

  • Special Needs Planning Timeline
  • Cost of a College Education
  • Personal Resources, Savings, and Taxes
  • UTMA, 529, 529(a), Coverdell, Savings Bonds, Taxable Accounts and Cash Flow, Gifts
  • Public Resources
  • Borrowing and ‘Gift Aid’
  • State Initiatives
  • Advocacy
  • Q&A

 If this is a planning goal for your family, we encourage you to tune in!  It is free however, you must register.  Here are the webinar details and link to registration: https://events-na6.adobeconnect.com/content/connect/c1/839220836/en/events/event/private/1017458897/1378465648/event_landing.html?sco-id=1378867298&campaign-id= . 

 

Tags: planning for college

Managing Trust Assets:Balancing Fiduciary Responsibilities with Needs of Beneficiaries

Posted by Patty Manko on Sat, Mar 25, 2017 @ 08:00 AM

The Special Needs Financial Planning Team  Cynthia Haddad, CFP | John  Nadworny, CFP | Alexandria Nadworny, CFP  We are committed to offering educational workshops to organizations and parent  groups.  Please call Alex or click here to attend a workshop or discuss a presentation  to your group.Workshops Calendar

accountant-accounting-adviser-advisor-159804.jpegManaging Trust Assets: An Investment Balancing Act

We help trustees meet their fiduciary responsibility by providing independent, objective advice in managing the assets to meet the needs of the beneficiary. According to the UPIA, the following considerations should be examined when building the appropriate investment portfolio: financial situation, current investment portfolio, need for income; tax status and tax bracket, investment objective and risk tolerance.

The investment manager should view the portfolio from a cash flow perspective; how much money may be taken out of an account while maintaining a high level of confidence that the money will last for a certain period of time. A distribution analysis, monitoring the rate at which money is being distributed from an account, should be performed at least on a quarterly basis.

Many special needs trusts have been established by parents for the benefit of their child with a disability (third party trusts). Other trusts may have been established by a parent, grandparent or court for an individual with special needs allowing them to protect their eligibility for certain government benefits (first party trusts). Regardless of how these trusts have been created, the guiding principles to follow in the investment management process is to create, monitor and change an investment portfolio to comply with the purposes, terms, distribution requirements and individual circumstances of each beneficiary. With an elder or disabled beneficiary, investment managers need to look beyond their model investment portfolios to the unique needs of the individual.

A good starting point in the process is to collect, analyze and review information or documents that pertain to the establishment and management of each trust account. The second step is to identify and establish the specific goals and objectives of each trust and the needs of the beneficiary. These goals and objectives should be determined by (but not limited to) the following factors:

  1. Income needs for short term, mid term and long term expenses
  2. Current and potential future assets to be added to the trust from future gifts, inheritances, settlements, etc.
  3. Income of beneficiary derived by all sources, including SSI, SSDI, Pensions, Child Support, etc.

  4. Government benefits currently being received by beneficiary such as Medicaid, Section 8, etc.

  5. Future potential government benefits, such as Medicare, etc.

To achieve these goals and objectives the portfolio must be invested across multiple investment classes. In addition, attention to fees and expense ratios of investments need to be considered and monitored. Overall, the account should be managed to pursue the needs of each specific beneficiary. One of the most important factors in determining the investment strategy of each account is the time horizon for the beneficiary. This is necessary to determine the most appropriate asset allocation including cash that must be available to help address the needs of each beneficiary. In situations where the trust assets are not adequate to provide for the lifetime needs of the beneficiary, a specific spend-down strategy should be followed. Since investing and planning is an art as well as a science, there are frequently various options and strategies to be considered. It is imperative to document the reason for each strategy and to identify the pros and cons of the various options.

Distributing Trust Assets: A Fiduciary Balancing Act

Paramount to the role of the investment manager and all of the strategies, suitability, and risk versus return analysis they are required to do is the role of the Trustee. The Trustee will dictate the specific distributions of the trust and needs of the beneficiary.

The Trustee looks at the portfolio from a fiduciary point of view, executing the provisions of the Trust document to meet the needs of the beneficiary and successors. It is their role to protect the integrity of the terms of the trust document.

 There are also times when a document is very flexible with distributions and other times that documents are very strict. In the end, the trustee must adhere to the legal requirements of the trust with the best interest of the beneficiary.

Another layer of complexity is added when the beneficiary is someone that has special needs and may not be able to communicate or understand their overall situation. Family members may or may not be involved in the life of the beneficiary. There may or may not be a written Letter of Intent to help the trustee get to know the beneficiary. The trustee is further challenged to maintain the values of the family and the spirit of the grantor when they may never have met the beneficiary prior to be appointed in the role of the trustee.

Balancing Together

A primary focus for meeting the needs of the beneficiary is a balance between the roles of the trustee and the investment manager. It is in working together that the strengths and viewpoints of each professional compliment one another. For example, the trust may indicate a certain percentage of interest and/or principal must be distributed. From an investment management perspective, this may be considered an excessive distribution rate that cannot be sustained. The Trustee will interpret the provisions within the trust. The role of the investment manager is to maintain a proper asset allocation and provide adequate cash required to meet the direction of the trustee.

 The key is in having effective communication between all parties working together as a team.

To learn more:

 How We Serve Trustees 

 Contact Us.

 

Tags: A Team to Carry On

Tomorrow's Affordable Housing Presentation Rescheduled to April 13

Posted by Patty Manko on Mon, Mar 13, 2017 @ 01:40 PM

The Special Needs Financial Planning Team  Cynthia Haddad, CFP | John  Nadworny, CFP | Alexandria Nadworny, CFP

Workshops Calendar

Due to the winter storm predicted for tomorrow, we are postponing our workshop, Affordable Housing for People with Disabilities Beyond Section 8, for exactly one month from today. Please join us on Thursday, April 13, same place and time; see the flyer below for details!

RSVP: Alex Nadworny@shepherdfinancialpartners.com

Screen Shot 2017-03-13 at 1.13.07 PM.png

Tags: Housing

This Tuesday, March 14: Affordable Housing for People with Disabilities Beyond Section 8

Posted by Patty Manko on Sat, Mar 11, 2017 @ 08:04 AM

The Special Needs Financial Planning Team  Cynthia Haddad, CFP | John  Nadworny, CFP | Alexandria Nadworny, CFP  We are committed to offering educational workshops to organizations and parent  groups.  Please call Alex or click here to attend a workshop or discuss a presentation  to your group.

Workshops Calendar

We have a housing afforability problem in Massachusetts because we have a housing supply problem. Learn how to navigate and evaluate the options available for affordable housing: JOIN US for affordable housing research and tips from Eric Shupin, Director of Public Policy for the Citizens Housing and Planning Associaiton (CHAPA).

 RSVP : Alex.nadworny@shepherdfinancialpartners.com 

CHAPA flyer.jpg

 

 

Tags: Housing

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