Category: ABLE accounts

Including Siblings in Estate Planning for a Child with Special Needs

Including Siblings in Estate Planning for a Child with Special Needs

When parents plan for the future of a child with special needs, they often focus on legal and financial tools, like special needs trusts and government benefits. However, one crucial group is usually left out of the conversation: the siblings. Siblings may one day step into caregiving or advocacy roles, formally or informally. They may be expected to help manage a trust, ensure their brother or sister receives appropriate care, or provide emotional support. Including siblings in the estate planning process for a child with special needs creates a foundation for smoother transitions, reduces misunderstandings and gives everyone a clearer sense of their role.

Why Siblings Matter in Long-Term Planning

Siblings are likely to be the longest-standing relationships in a person’s life. As parents age or pass away, brothers or sisters often remain. Even when a sibling won’t serve as a primary caregiver or trustee, they will likely be involved in day-to-day support, communication with care providers, or an emotional anchor.

Nevertheless, siblings are often unaware of their parents’ intentions. They may not understand the purpose of a special needs trust or how decisions will be made after the parents are no longer involved. This lack of clarity can lead to confusion, resentment, or even legal conflict, particularly if siblings are also beneficiaries of the estate.

Opening the Conversation

Including siblings starts with honest communication. Parents should share the basics of their estate plan, explain how decisions have been made and invite questions or concerns. Topics may include:

  • Who will serve as the trustee or successor trustee of a special needs trust
  • How resources will be allocated among siblings
  • What expectations (if any) exist for caregiving or advocacy
  • How government benefits are being protected through legal planning

This conversation doesn’t need to happen all at once. Instead, family discussions can gradually unfold as siblings mature and understand each other’s needs. The key is ensuring that they feel informed and supported, not burdened.

Legal and Financial Education for Siblings of Special Needs Children

Parents should also ensure that siblings have access to the legal and financial information they may need someday for the family or the child with special needs. This may include providing copies of estate planning documents, explaining the function of the special needs trust, or walking them through how public benefits, like Medicaid or SSI, are affected by financial support.

Naming a sibling as a future trustee, power of attorney, or healthcare proxy without adequate preparation sets them up for stress and potential failure. Parents should consider naming a professional fiduciary or co-trustee to provide support if a sibling is unwilling or unable to serve in these roles.

Creating a Team Approach in Special Needs Planning

Planning doesn’t have to fall on one person’s shoulders. Families often succeed by creating a “care team” approach that includes parents, siblings, professionals and close family friends. Roles can be shared or divided—for example, one sibling might handle legal decisions while another provides social support.

Clear documentation of these roles within estate planning documents and written letters of intent helps ensure consistency if multiple people are involved in the care or oversight of a sibling with special needs.

Strengthening Family Bonds Through Inclusion

Including siblings in the estate planning process for a child with special needs isn’t just a practical decision—it’s an emotional one. It signals trust, values their role and lays the groundwork for cooperation. It also honors the future relationship between siblings, ensuring that love and respect continue even after the parents are gone.

Planning with siblings in mind helps prevent conflict, confusion and unintended consequences. Most importantly, it ensures that people with special needs receive the lifelong support they deserve. If you would like to learn more about special needs planning, please visit our previous posts. 

Reference: MassMutual (July 19, 2023) “Living with special needs: The sibling perspective”

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Many Services a Special Needs Trust can Fund

Many Services a Special Needs Trust can Fund

A special needs trust (SNT) is a financial tool designed to provide for individuals with disabilities without affecting their eligibility for government benefits such as Supplemental Security Income (SSI) and Medicaid. These programs have strict asset and income limits, meaning direct financial gifts or inheritances can disqualify beneficiaries from receiving essential support. However, there are many services an special needs trust can fund. By placing funds in an SNT, families can ensure that their loved one’s financial security while maintaining access to necessary benefits.

Allowable Expenses for a Special Needs Trust

Trust distributions must follow specific rules to avoid impacting eligibility. Understanding what an SNT can and cannot pay for helps trustees manage funds appropriately and ensure that they enhance the beneficiary’s quality of life. As such, planning should use special needs trust funds to supplement government benefits, not replace them.

How to Support Housing and Living Arrangements

While an SNT can pay for housing costs such as rent or mortgage payments, doing so may reduce SSI benefits because the Social Security Administration considers it “in-kind support.”

You can avoid reducing cash benefits by paying for housing-related expenses instead. These include accessibility modifications, utilities, taxes and insurance.

Paying for Medical and Health-Related Expenses

Medicaid covers many healthcare services. However, an SNT can pay for additional medical care not covered by government programs. Some of these gaps in Medicaid that an SNT can cover include:

  • Out-of-pocket medical costs and copayments
  • Specialized therapies (occupational, speech, physical)
  • Dental and vision care
  • Alternative treatments (acupuncture, chiropractic care)
  • Medical devices and equipment (hearing aids, prosthetics)

Funding Personal Care and Support Services

An SNT is broadly clear to fund personal assistance that improves daily living for the beneficiary. Among the many services an special needs trust can fund, are in-home caregivers and companions, respite care, meal delivery and transportation services.

Recreation, Travel, and Social Activities

Quality of life extends beyond necessities. A special needs trust can pay for activities that promote personal enjoyment and social engagement, including:

  • Vacations, travel expenses and accommodations
  • Membership fees for gyms or clubs
  • Hobbies such as art, music, or sports lessons
  • Concert, theater and event tickets

Education and Vocational Training

Many individuals with disabilities benefit from continued education and skill development. SNT funds can cover

  • Tuition for private schools or specialized education programs
  • Job training and certification courses
  • Tutoring and life skills coaching
  • Assistive technology for learning

Transportation and Vehicle Expenses

Reliable transportation is essential for independence. SNT funds can be used to:

  • Purchase or modify a vehicle for accessibility
  • Cover gas, insurance and maintenance costs
  • Pay for rideshare services, taxis, or public transportation passes

Assistive Technology and Communication Devices

Technology plays a significant role in supporting individuals with disabilities. SNTs can fund:

  • Computers, tablets and adaptive software
  • Wheelchairs and mobility aids
  • Smart home devices for accessibility (voice-activated systems)
  • Cell phones and internet services

What a Special Needs Trust Cannot Pay

Some expenses can jeopardize government benefits if paid directly from an SNT, including:

  • Cash gifts to the beneficiary: Direct cash withdrawals may be counted as income and reduce benefits.
  • Groceries and food expenses: SNTs can only cover these costs in specific circumstances.
  • Direct rent or mortgage payments (reduces SSI benefits if improperly structured)
  • Basic medical care covered by Medicaid

Trustees should work with a special needs planning attorney to avoid penalties and ensure that funds are managed appropriately.

Structuring SNT Distributions Properly

Because direct payments to the beneficiary can affect government benefits, funds from an SNT should be paid directly to service providers, vendors, or businesses instead of being given in cash to the individual. For example, rather than providing the beneficiary money for a new wheelchair, the trustee should pay the wheelchair provider directly.

Why Proper Management of an SNT Matters

Managing an SNT incorrectly can lead to Medicaid disqualification, SSI benefit reductions, or unnecessary taxation. To ensure compliance, trustees should:

  • Keep detailed records of all trust transactions.
  • Consult an estate planning attorney before making large purchases.
  • Work with a financial advisor to maximize the trust’s longevity.

Protecting a Loved One’s Financial Future

A special needs trust is one of the most effective ways to provide long-term financial security for individuals with disabilities. There are many services an special needs trust can fund. By ensuring that funds are appropriately used and distributed wisely, families can enhance their loved one’s quality of life while safeguarding their eligibility for critical government benefits. If you would like to learn more about special needs planning, please visit our previous posts. 

Reference: Special Needs Answers (Oct. 30th, 2024) What Can My Special Needs Trust Pay for Without Affecting My Disability Benefits?

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Understanding the differences between ABLE Account and Special Needs Trust

Understanding the differences between ABLE Account and Special Needs Trust

Planning for the financial future of a loved one with special needs is crucial. Two essential tools in special needs planning are ABLE accounts and Special Needs Trusts (SNTs). Understanding the differences between an ABLE Account and Special Needs Trust will help you make the right choice.

An Achieving a Better Life Experience (ABLE) account is a valuable tool for people with disabilities. As Special Needs Answers reports, they can use it to save up to $18,000 annually starting in 2024. Unlike other accounts, this doesn’t deprive people of means-tested benefits.

ABLE account holders can save up to $100,000 tax-free and spend the funds on disability-related expenses. This covers assistive technology, transportation, education and even leisure activities. Account administration occurs at the state level, and eligibility is set to expand. While anyone disabled before age 26 qualifies now, the threshold will increase to 46 in 2026.

Likewise, individuals can open and manage their ABLE accounts. This provides much more financial independence than a Special Needs Trust (SNT).

A Special Needs Trust (SNT) is a legal document that provisions funds for disabled loved ones. Like the ABLE account, these funds don’t impact eligibility for Medicaid or SSI. An SNT can pay for items that government benefits don’t cover, including therapy, medical care, recreation and travel.

However, there are some limits. Without affecting benefits, SNTs generally can’t be used for essentials, like food and shelter. A Special Needs Trust also can’t cover cash payments or gift cards. Unlike an ABLE account, a trustee manages the SNT. This trustee works with special needs planners to maximize the trust’s value.

One of the main differences between ABLE accounts and Special Needs Trusts is their contribution limits. ABLE accounts are capped at $18,000 annually, with a total savings limit of $100,000. SNTs have no set contribution or savings limits but have tighter controls.

An individual manages their ABLE account. In comparison, a trustee manages an SNT in the name of a disabled individual.

Another critical difference is eligibility of the disabled person. For now, ABLE accounts are only available to people who became disabled before age 26. This is in contrast to SNTs, which have no age restrictions. An SNT is ideal for long-term asset management, while ABLE accounts offer flexibility.

Consult with an elder law attorney to have a full understanding of the differences between an ABLE Account and a Special Needs Trust. Choosing between the two depends on your family’s goals and needs. If you’re looking for a quick, easy, flexible way to save for a loved one’s disability-related expenses, an ABLE account might be ideal. However, a Special Needs Trust is better for long-term planning with no savings limits.

Key Takeaways:

  • ABLE Account: Offers flexibility and direct control for disabled individuals, with a $100,000 savings limit.
  • Special Needs Trust: Offers greater flexibility and long-term security but requires a trustee for oversight.
  • Planning is a Must: An ABLE Account or SNT may better fit your situation. Either way, you should begin planning sooner rather than later to protect your loved one.
  • Plan Ahead: Work with an estate planning attorney to decide which tool is best for your family.

If you would like to learn more about special needs planning, please visit our previous posts.

References: Special Needs Answers (Nov. 13, 2023) “ABLE Accounts in 2024: Save Up to $18,000 Annually”

Special Needs Answers (February 12, 2019) “What Can a Special Needs Trust Pay For?”

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The Estate of The Union Season 4|Episode 3

The Estate of The Union Episode 10

The Estate of The Union episode 10 is live!

In the newest installment of The Estate of The Union podcast, Brad Wiewel is joined by Melissa Donovan, Certified Elder Law Attorney and Director of Elder Law and Special Needs Planning to discuss ABLE accounts and how they work to protect the financial well-being of your special needs family member.

Families with loved ones with Special Needs have stresses and challenges that are difficult to measure. ABLE Accounts are a relatively new and innovative tool to use that can provide Special Needs loved ones with additional resources and help maximize their life style. The accounts allow eligible individuals to save money without putting their eligibility for government benefits at risk. The income from the account is not used for means testing for Social Security Income or Medicaid.

In each episode of The Estate of The Union podcast, host and lawyer Brad Wiewel will give valuable insight into estate planning, making an often daunting subject easier to understand.

It is Estate Planning Made Simple!

The Estate of The Union episode 10 can be found on Spotify, Apple podcasts, or anywhere you get your podcasts. Please click on the link below to listen to the new installment of The Estate of The Union podcast. The Estate of The Union Episode 9 out now. We hope you enjoy it.

The Estate of The Union Episode 10 out now

Texas Trust Law/Texas Trust Law focuses its practice exclusively in the area of wills, probate, estate planning, asset protection, and special needs planning. Brad Wiewel is Board Certified in Estate Planning and Probate Law by the Texas Board of Legal Specialization. 

Estate planning for couples with big age differences

Estate Planning for Couples with Big Age Differences

Estate planning becomes more complicated for couples with big age differences. Seniors who are married to younger spouses have a special situation for estate planning, a situation that’s become more common, according to Barron’s recent article “Couples with Big Age Gaps Require Special Attention.”

This kind of family requires planning for the older spouse’s retirement needs and healthcare costs, while determining how much of the older spouse’s wealth should go to the children from any previous marriages while balancing the needs of a future child with a younger spouse. Beneficiaries for all financial accounts, last wills and all estate documents need to be updated to include the new spouse and child. The same goes for medical directives and power of attorney forms.

Social Security and retirement account considerations differ as well. The younger spouse may begin receiving their own Social Security at age 62, or a portion of the older spouse’s Social Security, whichever is greater. If the older spouse can wait to file for Social Security benefits at age 70, the younger spouse will receive more spousal benefits than if the older spouse claims earlier. Social Security pays the survivor’s benefit, typically based upon the older spouse’s earnings.

Pension plans need to be reviewed for a younger spouse. If the pension plan allows a survivor benefit, the surviving spouse will receive benefits in the future. IRAs have different beneficiary distribution rules for couples with significant age differences. Instead of relying on the standard Uniform Lifetime Tables, the IRS lets individuals use the Joint Life and Last Survivor Expectancy Table, if the sole beneficiary is a spouse who is more than ten years younger. This allows for smaller than normally Required Minimum Distributions from the IRA, allowing the account a longer lifetime.

Families that include children with special needs also benefit from trusts, as assets in the trust are not included in eligibility for government benefits. Many families with such family members are advised to use an ABLE Savings Account, which lets the assets grow tax free, also without impacting benefit eligibility. There are limits on the accounts, so funds exceeding the ABLE account limits may be added to special needs trusts, or SNTs.

A trustee, who may be a family member or a professional, uses the SNT assets to pay for the care of the individual with special needs after the donor parents have passed. The child is able to maintain their eligibility.

For same sex couples, revocable or irrevocable trusts may be used, if the couple is not married. Nontraditional families of any kind with children require individual estate plans to protect them,  which usually involves trusts.

Trusts are also useful when there are children from different marriages. They can protect the children from the first marriage and subsequent marriages. Estate planning is more complicated for couples with big age differences. A wisely constructed estate plan can do more than prevent legal battles among children—they can preserve family harmony in the non-traditional family after parents have passed.

If you would like to learn more about estate planning for older couples, or those in second marriages, please visit our previous posts. 

Reference: Barron’s (July 27, 2021) “Couples with Big Age Gaps Require Special Attention”

Episode 8 of The Estate of The Union podcast is out now

 

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Information in our blogs is very general in nature and should not be acted upon without first consulting with an attorney. Please feel free to contact Texas Trust Law to schedule a complimentary consultation.
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