Growing numbers of people with disabilities live in the United States, and planning for an adult child’s future well-being is a responsive, continuous process. A Journal of the American Medical Association reports the life expectancy of adults with Down Syndrome has increased from 25 in 1983 to 60 in 2020. The same study cites that those with cerebral palsy, the most common motor disability of US children, may often live into their 50s.

The ever-increasing life expectancies of adults with disabilities mean that comprehensive special needs planning requires short and long-term planning to lay the foundation of five key elements to ensure a successful support system:

Vision
Living Accommodation
Government Resources
Private Financial Resources
Legal Needs

Vision

How do you envision your adult child’s life after you’re gone? As you define and refine your vision to the extent possible, you should involve your child in the process. It’s important to focus on the strengths and abilities of the adult child, not just the challenges of their disabilities. This involvement helps promote self-esteem and independence to the highest degree possible.

Letter of Intent (LOI)

Although this letter is not a legal document, it provides key instructions and information about your child’s routines, preferences, and wishes. The LOI can and should be extremely detailed, including identifying caregivers, medical information and providers, and other individuals in their lives who may be a good fit to care for or support your child. Reviewing and updating the letter at least every two years or when significant changes occur is good practice.

Supported Decision-Making

If your adult child is capable and in charge of decision-making, selecting a team of trusted advisors is still important. This team may include family members, professionals, friends, and community services who all participate in your adult child’s success. The National Resource Center for Supported Decision-Making has information about the right to make choices by state.

Living Accommodation

Where your adult child will live depends on several factors, including their disability type and available financial resources. If your child currently lives in your home, don’t wait until you die to have them move into and experience a new home. Moving can be a tough experience while you are alive but catastrophic when you are gone.

Housing Options

Your home – It’s great if you can leave your residence to your child in a special needs trust as long as it also contains enough money to cover ongoing property maintenance, taxes, and other costs.
Another home – You might purchase a townhouse or condo for your child and hold the property in a special needs trust.
Section 8 vouchers – This federal program provides housing in the community to low-income people; however, wait lists can be long.
Group homes – Adults with disabilities can use private money or Medicaid payments to live in a group home. In some cases, this living situation also has counselors and other staff that can help residents live as independently as possible.
If assisted living is a requirement, a special needs attorney can help identify options.

Government Resources

Creating a schedule of the individuals, services, and organizations that have become your adult child’s support system and how they are financed makes your vision for your child a reality. You can be creative, and pair speech, physical, and occupational therapists, as your child’s abilities develop more fully. Much of your child’s resources throughout adult life will depend on the continuation of government programs that provide the support and services they need.

Government Assistance Programs

It’s wise to involve a special needs attorney to explain how to properly manage these resources to preserve your child’s access to government programs.

A person with developmental disabilities can often access the Supplemental Security Income (SSI) program, which guarantees a minimum income to qualifying low-income recipients. A representative payee can assist those individuals who are unable to manage their finances.

To be eligible for Medicaid benefits, the recipient must have a limited income and assets (assets not protected by ABLE or Special Needs Trust accounts) and covers a broad range of healthcare costs.

Maintaining eligibility standards and managing these benefits may be more than your adult child with disabilities can manage. Identifying a reliable candidate and creating the structure that legally permits them to facilitate these programs is crucial to your child’s future well-being.

Many US military personnel have experienced serious physical and mental health problems since serving in Iraq and Afghanistan. A large percentage of these service members are unmarried and under thirty. For parents of veterans with disabilities, look into the Veterans Disability Compensation program.

There is also a benefits program for veterans with permanent disabilities, which is needs-based. The Veterans Disability Pension has eligibility requirements based on your adult child’s assets and income. A veterans specialist or disability attorney can create a special needs trust to ensure your adult child can qualify.

Many other government programs are available to help your adult child with disabilities have a successful future. A special needs attorney can explain more about discrimination protections outlined in the Americans with Disabilities Act (ADA), the Affordable Care Act (ACA), the Ticket to Work Program, and more.

Private Financial Resources

Parents of children with special needs have additional planning requirements to ensure the safety and success of their child’s life when they are no longer alive to oversee that child’s well-being. Creating a realistic strategy is key to success. Begin with creating a general framework with a special needs lawyer and then fill in the financial details. Financial resources may include life insurance policies and other investment strategies, such as funding an Achieving a Better Life Experience (ABLE) account. The cash flow these accounts create will allow your adult child to continue living a life of safety, purpose, and impact after you are gone.

Additionally, your lawyer can create a special needs trust appropriate for your family’s financial situation and child’s needs. This trust type provides additional monies to your adult child without them losing eligibility for government benefits. There are various special needs trust types, including:

Third-Party Special or Supplemental Needs Trust (SNT)
First-Party Special Needs Trust or Self-Settled SNT
Pooled Special Needs Trusts

Legal Needs

There are several legal tools that parents can use to create a lifelong plan for their adult child with disabilities, including:

Guardianship
Conservatorship
Special Needs Trusts
Advance Health Care Directive
Durable Power of Attorney

It’s important to consult with an attorney who has experience with special needs and disability law to determine the best option for your adult child’s future specific needs and situation.

Conclusion

Planning for your child with special needs is customized to your family circumstances and your child’s unique needs. Legal guidance is critical because missteps can lead to ineligibility for crucial government benefits programs. To provide for your child’s future success after you are gone, speak to a special needs or disability attorney and begin your proactive planning.

We hope you found this article helpful. If you’d like to discuss your particular situation, please don’t hesitate to reach out. Please contact our Cincinnati office by calling us at 513-771-2444 and schedule a consultation. We look forward to the opportunity to work with you.

People with disabilities can save money tax-free through special needs trusts (SNT) and Achieving a Better Life Experience accounts (ABLE). Both options provide a mechanism for saving money and protecting resources that ensures the person with a disability (PWD) continues their eligibility for public benefits programs. Accumulating resources for the benefit of a PWD without jeopardizing key government benefits like Supplemental Security Income (SSI) and Medicaid can reduce monetary pressures and greatly enhance the lives of those with disabilities.

Deciding if a Special Needs Trust or ABLE Account is Best

There are significant differences between the saving rules of an ABLE account and SNT (also known as a supplemental needs trust), as well as different rules regarding the use of the savings. There are also different annual limits on the amount you can save. Your circumstances can directly impact each saving strategy type, and understanding how to set up and manage the best option for you is crucial. A special needs attorney or disability attorney can explain whether one or the other or both account types can work for your situation.

ABLE accounts tend to be easier to create and manage, yet they have some disadvantages. One of which is the limit on the contribution you can make annually. A special needs trust has no contribution limits but can be expensive to create and typically more complex to manage. The advantage of having both is an ABLE account can cover everyday expenses while an SNT can cover those larger purchases not covered by public benefits.

Third-Party Special or Supplemental Needs Trust (SNT)

For persons with disabilities, most assistance programs have asset and income restrictions. If a PWD has too much money in their savings or earns too much money, they will lose eligibility for these benefits. Using an SNT allows a workaround for these restrictions. The money put into the trust won’t count toward the eligibility qualification for public assistance. It is permissible for family and friends to contribute financially to the beneficiary’s SNT. However, if the PWD can financially contribute to a trust for themselves, the special needs lawyer will create a First-Party SNT (Self-Settled SNT).

A special needs trust is a legal arrangement and a fiduciary relationship with a person or entity acting on behalf of another to manage these assets. Establishing an SNT can benefit both parties beyond the protection of income-restricted benefits programs. The creator of the trust, called the grantor, has some reassurance that trust proceeds will go to the expenses as stipulated. Creditors and legal judgments can’t seize the trust assets as an SNT is irrevocable.

However, the money in an SNT can only fund a limited range of expenses. A special needs lawyer or disability attorney can make clear that the expenditures from the SNT won’t conflict with government eligibility regulations for benefits programs. These funds may not cover basic living expenses but can pay for the following:

Medical equipment and medication that Medicare does not cover
Insurance premiums (health, dental, life, etc.)
Therapy or rehabilitation services
Caretaker or personal assistance payments
Legal or guardianship expenses
Education (school) and job training
Home renovations that improve safety and accessibility
Case management or private counseling
Recreation or entertainment tickets
Home appliances, electronic equipment, and furniture
Clothing
School or camp tuition
Telephone service and internet access
Transportation, including a vehicle, ride share, or bus/rail pass
Travel/vacation (including the cost of a companion)
Funeral and burial expenses

The list excludes food such as groceries or restaurant meals, rent or mortgage payments, property taxes, homeowners insurance dues, homeowners insurance, and utilities like gas, electricity, and water.

Achieving a Better Life Experience account (ABLE)

This account type still provides a tax advantage for a PWD but is only available to persons with significant disabilities appearing before age 26. It is permissible for friends, family members, and the beneficiary to contribute to the account. The money accrued in an ABLE account won’t affect a person’s eligibility for public benefits programs.

While the ABLE account contributions are not tax-deductible, the funds that grow within the account are tax-free, as are their distributions. An ABLE account is a newer financial product in comparison to an SNT. The goal of its creation in 2014 was to give more people with disabilities access to more benefits that, up until then, were only available to those with a special needs trust. Additionally, the monies in ABLE accounts can pay for a wider range of costs than an SNT. These expenses are known as Qualified Disability Expenses (QDEs). Funds in an ABLE account can cover expenses, including:

Housing
Transportation
Education
Employment training and support
Assistive technology and its related services
Personal support services
Prevention and wellness
Health
Legal fees
Financial management and administrative services
Basic living expenses
Expenses for ABLE account monitoring and oversight
Funeral and burial expenses

There are three key differences between SNTs and ABLE accounts: eligibility, allowable expenses in each account type, and limits on the money you can save.

Eligibility

ABLE accounts are only available to persons with a disability onset before age 26 as determined by the Social Security Administration’s criteria. There are no age limits in creating a third-party SNT, but funding can’t include the beneficiary. A first-party SNT is self-funded by the person with a disability but must be created before the PWD reaches age 65.

Allowable Expenses

An SNT’s design is to pay for extra things that make life more comfortable, like vacations, pets, home furnishings, entertainment, etc. An SNT paying for basic living costs may reduce a person’s public benefits. ABLE account allowable expenses have a broader range. Anything that helps a PWD improve their independence, health, or quality of life is acceptable. QDEs can include basic living costs such as education, food, employment, technology, and more.

Account Limits

ABLE accounts have amount and contribution limits. Contribution amounts are finite for each year and are under federal tax code governance. Additionally, ABLE accounts have a maximum limit set by the states that manage them. Many states have a maximum limit set above $300,000, with only the first $100,000 exempt from impacting eligibility for Supplemental Security Income. A special needs trust has no such limits; however, they can be more expensive to create.

Every family has different needs and circumstances when assessing whether an SNT or ABLE account (or both) is the better option for their loved one with disabilities. It is best to use each option for different purposes despite having some common characteristics. The main reason to create an SNT is if there is substantial money, more than allowable in an ABLE account, to fund the trust without affecting public benefits or if you want to fund more than an annual ABLE account maximum. A special needs lawyer or disability attorney law can assess your financial situation and the needs of your loved one with disabilities to find the right solution.

Adult Children with Disabilities: Creating a Support System