A look at the role they can potentially play for families.
Parents raising a child with special needs can face financial stress. State and federal programs simply don’t address all the long-term financial demands of their households. Two intriguing financial options may provide help.
A special needs trust can serve as a resource. It can be created with family assets or money from a settlement or judgment. A trustee spends the trust funds on behalf of the beneficiary, paying for ongoing medical and lifestyle expenses. The beneficiary must be defined as “permanently and totally disabled” under the federal government’s Supplemental Social Income (SSI) standards. A disabled heir can receive an inheritance or other assets via a properly structured special needs trust without jeopardizing their chances at SSI, Medicaid, or state benefits.1,2
ABLE accounts are akin to state 529 college savings plans. The savings limits and tax advantages are similar. Currently, up to $15,000 a year can be directed into these state-run accounts for disabled children and young adults (the beneficiary must have become disabled before age 26). A five-figure sum may accumulate in the account (and be invested) without the child or adult losing eligibility for SSI or Medicare.3,4
To learn how you can utilize a special needs trust or ABLE account contact us for a complimentary appointment to review your options.
Kevin Foster, CFP ®
Comprehensive Wealth Manager | Tax Advisor
Chandler, AZ 85226