According to statistics from the 2017 Disability & DVR Statistics Report by the Washington State Division of Vocational Rehabilitation, about 908,818 individuals with disabilities live in the state of Washington. Of these, approximately 7% are under 18 years of age. Through a special needs trust, you can protect your child’s financial future and leave assets behind for a disabled child while ensuring that they remain eligible for public benefits.
If you are trying to create a special needs trust for your disabled child, it is important that you speak with a knowledgeable Washington State estate planning attorney for detailed guidance. Attorney Robert Taylor-Manning is committed to offering comprehensive legal guidance and strong advocacy in estate planning matters. As your legal counsel, he will help you understand your unique situation and explore your available options. He can also help you establish the special needs trust for your child and draft other necessary estate planning documents.
The Law Offices of Robert Taylor-Manning proudly serves clients across Kennewick, Pasco, Richland, Washington, Portland, Oregon, and the surrounding areas.
When your loved ones read over your will during the probate process, they will distribute your assets to your intended beneficiaries almost immediately. If you have a special needs adult child, this means that they will receive any money you leave them in one lump sum. That lump sum, however, can hinder their ability to qualify for social security disability benefits.
A special needs trust can be described as a fiduciary relationship and legal arrangement which makes it possible for a chronically ill person or someone who is physically or mentally disabled to receive supplementary income without hindering their eligibility for government benefits and other public disability benefits.
A special needs trust is designed to improve the quality of life of a physically or mentally disabled person by maximizing the resources that are made available to them. Special needs trusts preserve eligibility for Medicaid (which pays for food, medical care, and shelter) and Supplemental Security Income (government benefits for disabled persons). With this, the special needs trust can make provision for other additional needs to improve the person’s quality of life. Some other benefits of a special needs trust include:
It allows you to earmark assets to support the disabled person when you’re no longer available
It allows you to appoint a successor trustee to manage investments, finances, and assets placed in the trust
It helps preserve a disabled person’s government aid
It helps protect assets and property from creditors or assets distribution in a divorce
It helps preserve family wealth
Also, funds and assets held in the special needs trust can be used for needs that are not covered by government benefits, including education, travel, and entertainment.
When establishing a special needs trust, there are two options to choose from.
This is “self-settled” trust. It is often used when a disabled person inherits money, assets, or receives a court settlement. Self-settled special needs trusts may also be established by someone who has no prior disability but later becomes disabled. The person will still remain eligible for public benefits for disabled persons who have asset or income limitations.
A third-party special needs trust is usually created by someone planning in advance for a family member with special needs. It may be created by the parent of a disabled child, siblings, grandparent, or anyone else apart from the beneficiary.
Any of the following individuals can benefit from a special needs trust:
Someone who is physically or mentally disabled
Someone who is chronically ill
Someone with permanent, ongoing special needs
Someone with temporary special needs
Someone who may need benefits in the future
Someone who receives low payments through Medicare or SSDI even though they are eligible
Someone incapable of managing their own finances
An ABLE account is a tax-advantaged savings account that can be created for individuals with disabilities and their family members. Some key provisions of the Achieving a Better Life Experience Act of 2014 (ABLE Act) include:
The beneficiary of the account is the account owner
Any income earned by the account will not be taxed
Contributions to the account can be made by any person, including the account beneficiary, family members, siblings, friends, or through a special needs trust
Contributions to the account must be made using post-taxed dollars
Contributions to the account will not be tax-deductible for federal tax purposes
Special needs trusts and ABLE accounts both offer similar advantages, but they differ in a few key ways. Consider these points before you choose one over the other:
Taxes: Any funds you use to create a special needs trust are tax-deductible and unavailable to creditors. Still, you can run into high trust tax rates if new money isn’t paid out to the beneficiary in a timely matter. ABLE accounts remain tax-free without a time limit.
Age: In order to qualify for an ABLE account, your child must have lived with their disability since they were at least 26 years old. If your child became disabled later in life, a special needs trust is a better option.
Legacy: Your child’s special needs trust can be passed down to their children. If they owned an ABLE account at the time of their passing, any money left over in it would most likely be taken by the government.
Special needs trusts and ABLE accounts are ways to set aside assets for your adult child without hindering their ability to receive government benefits. A knowledgeable Washington estate planning attorney can help protect your assets, your child’s financial future, and help choose the ideal estate planning options that best fit your unique needs.
Attorney Robert Taylor-Manning is passionate about representing clients in estate planning matters and guiding them throughout every step of the estate planning process. Whether you are trying to set up an ABLE Account or special needs trust, he can review your unique situation and help you understand your available options. Attorney Robert Taylor-Manning can offer you the comprehensive guidance you need and help you make informed decisions for your family and your child’s future. He will work diligently and compassionately to address your needs and concerns and those of your loved ones.
If you’re wanting to establish a trust for a child with special needs, contact the Law Offices of Robert Taylor-Manning today to schedule a one-on-one consultation. Attorney Robert Taylor-Manning can offer you the comprehensive legal counsel and advocacy you need to navigate key decisions. He is proud to serve clients across Kennewick, Pasco, Richland, Washington, Portland, Oregon, and the surrounding areas.