ABLE ACCOUNTS: A NEW PLANNING TOOL

ABLE accounts are a relatively new planning tool available to individuals with disabilities.  The Achieving a Better Life Experience (ABLE) Act, signed by President Obama in 2014, allows individuals who meet certain criteria to open and hold assets in an account that will not be counted as a resource for the purposes of public benefits.  At the same time, the account beneficiary has more control and access to the funds than with a traditional special needs trust.

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Imagine a scenario where your elderly parent urgently needs skilled nursing care to maintain his or her health condition.  In this case, the doctors believe your parent’s condition probably won’t improve, but with proper care, could maintain the current condition or, at least, slow any decline.

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Say you or a loved one with special needs just won a multi-million-dollar lawsuit award or settlement.  While the case was pending, Medicaid was paying the medical bills.  By setting up a special needs trust, you can preserve the beneficiary’s eligibility for Medicaid and other government benefits.  However, many newly “wealthy” clients ask what the value is of staying on Medicaid.  After all, shouldn’t millions of dollars be sufficient to pay for health care?  Wouldn’t it be nice to forget about income and asset limits?  Why do we need a special needs trust?

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As February brings heart-shaped chocolate boxes and roses by the dozen into your imagination, seize the moment to learn about the drawbacks of “I love you” Wills and introduce yourself to the estate planning move that’s actually going to ensure you do well by your loved ones: a lifetime beneficiary trust.

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Although the following is not a favored practice in the State of New York, this article illustrates the current climate and foreclosing planning opportunities.

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One of the first questions clients ask when discussing a special needs trust is how the money can be used for the beneficiary.  It is crucial to be careful when making distributions for the benefit of the trust beneficiary.  This is particularly true if the beneficiary receives Supplemental Security Income (SSI) because any distribution could potentially violate Social Security’s rules regarding unearned income for SSI recipients. If a distribution runs afoul of these rules, the Social Security Administration will treat the distribution as unearned income on behalf of the beneficiary and reduce the beneficiary’s income dollar-for-dollar after the first $20 of the distribution.

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For many Americans, the majority of our wealth is held in retirement accounts. When it comes to inheritance and estate planning, special considerations are necessary to ensure that these assets are protected and distributed according to your wishes. It is critical to have knowledge of all the options available for retirement asset transfer, in order to best serve your needs.

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Seniors face complex legal concerns that are different from what they faced when they were younger.  Certain actions that you take may have unintended legal effects.  As a senior or someone who’s helping make decisions for a senior, it’s important that you work with an attorney who is knowledgeable in Elder Law.  You will want to hire the attorney who regularly handles matters in the area of concern in your particular case and who will know enough about the other fields to question whether the action being taken might be affected by laws in any of the other areas of law.  To avoid Substantial Avoidable Penalties, you should contact an experienced Elder Law attorney to address those issues.

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Suitable housing is a critical issue for many clients with disabilities.  Frequently, the client’s disability requires modifications to their residence.  However, if the individual is the beneficiary of a special needs trust (SNT) and trust funds might be used to pay for modifications or repairs to a home that the beneficiary doesn’t own, things can get complicated.

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Many of us labor a lifetime to build up our assets and fight for causes that matter to us. Few things are more fulfilling than the thought of sharing wealth and legacy with our family.

Of course, it’s impossible to plan for every eventuality, but careful planning can mitigate against the two primary risks.

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