The future contains many unknowns. Meeting them can be a challenge for anyone, but even more so for those with special needs. Regardless of whether the need stems from a congenital condition or one resulting from some catastrophic trauma, meeting financial necessities requires comprehensive planning.
There are various legal instruments available to address financial concerns. But determining the best way to employ them is something that can be tricky. To have confidence that you’ve adequately explored all the possible options, it’s wisest to work with an attorney who specializes in this area of the law.
ABLE Accounts And Special Needs Trusts
Two of the most common tools available for this kind of planning are Special Needs Trusts (SNT) and so-called ABLE accounts.
You probably have heard of the first. They’ve been around for years. ABLE accounts have only been available to Florida residents in the last several years. Both have pros and cons depending on the specifics of your case.
For example, all SNTs have three things in common. Each must have a source that funds the trust, someone to manage the assets, and a special needs beneficiary.
If you are the source of the funds, you can create a first-party trust. If the money comes from other sources, a third-party trust is possible. And there are further delineations of types under each of those forms.
Like an SNT, an ABLE account has tax advantages. It amounts to a savings account that can be replenished. Money could come from an inheritance or gifted by contributions from many individuals. However, there is a ceiling on how much can be held in the account before it infringes on eligibility for Medicaid or Supplemental Security Income.
One or the other of these tools could be most appropriate for you. in some instances, using both might be advisable to obtain optimal tax benefits while you ensure you don’t jeopardize possible government benefits based on income. It all depends on you getting a full and clear picture of your unique needs.