Protecting Assets When a Loved One Has Special Needs
When you have a loved one with special needs, planning for the future is considerably more complicated due to federal and state regulations. This type of planning requires extensive financial foresight and an in-depth knowledge of the regulations that govern who does and does not qualify for Medicaid, SSI, and other state benefit programs. Working with an estate planning lawyer in Oklahoma is crucial if you want to both provide for your loved one and protect their access to life-saving benefit programs.
This type of planning takes time and careful strategizing, so your choice of estate planning attorney matters. Attorney Jeffrey Burton of Entz Burton and Associates has spent his career assisting clients with a wide range of estate planning needs and is a member of the Estate Planning Section of the Oklahoma Bar. Find out how our estate planning law firm can help you protect your loved ones by calling us at 800-633-7230.
How Ordinary Gifts Can Cause Problems
People give financial gifts to make life easier for their friends and family members, but when we’re talking about someone with special needs, that gift can actually complicate their ability to receive rent assistance, medical care, and need-based aid. SSI and Medicaid are crucial programs for those with limited assets, but they also have strict financial limits. Those who receive Supplemental Security Income cannot have more than $2,000 in resources. Resource caps for SoonerCare vary based on which group an individual fits into, but they are still low enough that even one well-intentioned large gift can affect eligibility.
This is how this scenario often plays out: a grandparent or close family friend leaves or gives their loved one $5,000 in cash, hoping that they can use it for enrichment activities, medical expenses, or other things that may otherwise stretch their limits. However, when the individual has that much money at one time, they are no longer eligible for SSI, SNAP, or Medicaid. They lose benefits that are worth thousands of dollars per month and that take months to qualify for again.
Careful planning helps avoid this scenario.
Special Needs Trusts
Special needs trusts are an important part of estate planning when you have a disabled loved one. An SNT holds assets for the benefit of a special needs individual without actually putting the assets in their name. Instead, a named trustee manages the funds and uses them to improve the beneficiary’s quality of life. There are several types of SNTs to consider, including a first-party SNT, third-party SNT, or pooled trust. First-party SNTs are ideal for individuals who receive a large inheritance or injury settlement that they cannot own in their own name, while third-party SNTs are funded by someone else. Pooled trusts are managed by nonprofits that hold multiple beneficiaries’ funds in one pooled trust.
ABLE Accounts
ABLE accounts provide support for individuals who became disabled prior to the age of 26. In Oklahoma, this program is known as the Oklahoma Able Program. Individuals enjoy tax-free savings for their disability-related living expenses, and the growth from their investments does not affect their eligibility for benefits. Funds may be used for housing, education, transportation, medical expenses, and other qualified expenses. Multiple parties can contribute.
Coordinating an Oklahoma Estate Plan Around Special Needs
A strong estate plan that centers an individual with special needs often integrates both a special needs trust and an ABLE account. You may fund the SNT with a larger lump sum while contributing to the ABLE account over time to provide more flexibility for routine expenses, although the specific solution that’s best for you depends on the recommendations of your estate planning attorney. This makes it easier for the individual to access funds as needed, rather than waiting for the approval process for a withdrawal from the trust.
Working with an estate planning lawyer from the beginning can help you create and modify your plan as needed. You can make changes to your trustee if needs or family roles change as time passes, review laws and benefit thresholds regularly to see if you need to change your plan, and account for new expenses or diagnoses.
Discuss Your Concerns With Entz Burton and Associates Estate Planning Lawyers!
Wondering how you can use your assets to support your loved one with special needs? Let’s talk more about your options and next steps. Schedule a consultation at our estate planning law firm by calling us at 800-633-7230 or reaching out to our team online.
Attorney J. Michael Entz at Entz Burton & Associates is an experience lawyer in estate planning law, business formation and asset protection serving the families in Oklahoma City and Weatherford office.
