Your Child is Turning 18?  Important To-Do's

Posted by Haddad Nadworny on Sat, Jun 19, 2021 @ 07:00 AM

The Special Needs Financial Planning Team at Affinia Financial Group John Nadworny, CFP, CTFA | Cynthia Haddad, CFP, ChSNC | Alexandria Nadworny,  CFP, CTFA

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Turning 18 - Important To-Do's

Congratulations on your child's upcoming 18th birthday!   This is an opportune moment to work on planning for your child's future for when they turn 18, they are no longer legally considered a "child".

It is now time to formulate plans for: 

  • Implementing guardianship or a less restrictive alternative to guardianship.
  • Maintaining eligibility for government benefits, whether you plan to use them or not.
  • The future transition from school to adult services. 

Here are some specific suggestions for parents to consider once guardianship has been finalized. 

  1. Begin implementation of Guardianship or an Alternative to Guardianship. 

    1. To read about determining capacity and more information about Guardianship and Alternatives to Guardianship, you may want to review 10 FAQs about Guardianship.  Be careful that the guardian will not want to also take on the role of Adult Family Care provider.

    2. Depending on your child's situation, Supported Decision Making (or SDM) may be an option. Helping a person learn decision-making skills by making her own choices with help and guidance is supported decision-making. Many families, support staff, and other advocates are already having conversations and using SDM in their everyday lives. For more information, please take a look at https://supporteddecisions.org/.

    3. If your child is capable of establishing their own legal documents, including a health care proxy, HIPPA documents, Power of Attorney and Power of Advocate, please consult with an experienced special needs attorney to help create these documents. They should be drafted with the same standard of care you would require for your own legal planning documents.

  2. Be sure there is less than $2000 in your child’s name before applying for government benefits.

    1. Depending on the level of assets your child has, you may choose to utilize an ABLE account or a first-party special needs trust to hold these assets and avoid a future spend-down scenario.

  3. Apply for Supplemental Security Income (SSI ) benefits for your child.

    1. Here is a link to the SSI resources on the Social Security website for more information about applying for SSI.  If a parent is currently receiving SSI or SSDI, your child may be eligible for Childhood Disability Benefits (formerly known as Disabled Child -DAC Benefits) and receive SSDI based upon a parent's earnings. More information may be found in this helpful booklet from the Social Security Administration,  Benefits for Children with Disabilities. 

    2. Set up a bank account with a parent or guardian as the Representative Payee.

  4. Apply for MassHealth premium reimbursement.

    1. In Massachusetts, SSI recipients are automatically enrolled In MassHealth.

    2. If your child is covered under private health insurance, check to see if you are eligible for premium assistance reimbursement .

  5. Apply for Housing Assistance.

    1. Place yourself in the queue by filing an application for a Section 8 housing voucher. 

  6. Review your estate planning documents.

    1. Be sure your beneficiary designations are correct and consider naming a nominee to act as a successor and/or standby guardian.

  7. Consult with your professional team- your financial planner, attorney, accountant.

    1. Determine if there are additional actions to be taken now or to think through for the future. Send us a note
Additional resources you may find helpful: 

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Please contact us to determine if we may be of help in your specific situation. 

 

Tags: caregivers for special needs, guardianship, government supports, Social security income

ABLE Account Contributions and Social Security Income (SSI)

Posted by Haddad Nadworny on Sat, Aug 18, 2018 @ 08:00 AM

The Special Needs Financial Planning Team John Nadworny, CFP, CTFA | Cynthia Haddad, CFP, ChSNC | Alexandria  Nadworny, CFP, CTFAWorkshops Calendar

Updated June 29, 2021

Protecting Social Security Eligibility

social_security_logoAdults 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.  To read a summary of SSI policies regarding the ABLE account, see the Social Security website..

Prior to your child's turning age 18, and before applying for SSI, make certain that they meet 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.

Case Study 1: When an SSI recipient receives an inheritance.

The Situation:

inheritance_pexels-cottonbro-6851698During the settlement of an estate, the personal representative (PR) - also known as the executor - of the estate discovered one of the beneficiaries, whom we will call Katie, was receiving government benefits. The PR was required to distribute $33,000 to Katie prior to the projected closing of the estate in February of the following year. While Katie could definitely use the funds to pay for furnishings in her home and some much- needed dental work, receiving the inheritance directly would  bring her above the $2,000 asset limit and disqualify her from the important benefits she was receiving. 

The Options Considered:

In discussing the current situation with Katie 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 (2021 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, Katie 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.

Case Study 2: SSI Impacted by an ABLE account

Source: ABLE National Resource Center

Mario has $101,500 in his ABLE account and $1,500 in his checking account. Since his countable resources are now $3,000 ($1,500 overage from ABLE account + $1,500 from checking account), his ABLE account has caused him to exceed the resource limit and his SSI payments are indefinitely suspended.

Mario continues putting money in his ABLE account for 24 more months and his indefinite suspension continues. Then, with the account balance standing at $107,000, he takes a $21,000 distribution to purchase a new car (a Qualified Disability Expense), dropping his account balance to $86,000 at a time when his checking account balance stands at $850. Since the ABLE account balance is below $100,000 it is once again exempt and his only countable resource is the $850 in his checking account. Mario’s SSI payments will be restored without the need for a new application. Mario had Medicaid eligibility continue when his SSI payments were suspended for 24 months based on excess resources caused by the ABLE account.

To read additional information visit our webpage or download our E-Book, The ABLE Account and Special Needs Planning

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: disability supports, government supports, ABLE Account, Social security income