Special needs planning essentials

Who can benefit from opening an ABLE account?

Member for

1 year 9 months
Submitted by Matt Stagner on Sun, 12/13/2020 - 09:26

ABLE accounts: a versatile tool for Achieving a Better Life Experience for people with disabilities and special needs

Want to help your child save for their own vision of the future, while maintaining eligibility for government benefits? Looking for a way to teach them about budgeting and managing their own investments? An ABLE account could be the financial tool that helps makes it possible.

What is an ABLE account?

Established under recent legislation, ABLE accounts are tax-advantaged investment and savings accounts that can be used for any disability-related expenses. Perhaps the most important feature of ABLE accounts is the fact that money accumulated for a person with special needs or disabilities in an ABLE account is not counted as an asset when determining eligibility for needs-based government benefits like Medicaid or SSI (subject to limitations).

Many families open 529 educational savings accounts for their children at birth, but sometimes a child receives a diagnosis that changes the family’s plans regarding post-secondary education. Because ABLE accounts are not limited to use for educational expenses and can be used for a broad variety of costs related to a person’s disability, they now offer an alternative to traditional 529 savings accounts. Parents and caregivers can open an ABLE — and even transfer funds accumulated in other 529 accounts to an ABLE — to save for the future, whatever the specific goals may be.

As children with disabilities or special needs approach age 18, means testing for government benefits eligibility is based on their own resources, not the resources of the family. Moving funds into an ABLE account prior to an 18th birthday is an opportunity to ensure savings continue to grow for the future, while eligibility for crucial benefits can be maintained.

Who is eligible to open an ABLE account?

ABLE accounts can be opened for people of all ages, as long as the disability started prior to age 26. So, even adults with disabilities and special needs can use ABLE accounts for the tax advantages that may be available, including tax-free withdrawals, state tax deductions (in some states) and even the federal “Saver’s credit.”

For too long, individuals with disabilities who enter the workforce have been discouraged from fully participating in available employee benefits for fear of jeopardizing the benefits that help with housing, health care, and other important needs. Now, working people with disabilities or special needs can open their own ABLE account to save for the goals most important to them. Many ABLE accounts allow direct deposits and even employer contributions, making it easy to fund and grow an employed person’s account.

How can an ABLE account work for you?

ABLE accounts are a powerful tool for individuals saving to become a homeowner, build an emergency fund, take a dream vacations, go to school, retire or any number of other goals.

Access to savings can be as easy as a debit card. For people who need a little extra help, ABLE accounts allow an Authorized Individual, like a parent, guardian, conservator or power of attorney to assist in managing the money and ensure that funds are available for qualified disability-related expenses.

Housing can be one of the most important areas of concern for people with disabilities and special needs, and ABLE accounts offer a unique feature that can help with housing costs. Typically, funds received for basic expenses like housing and food are considered “in-kind support and maintenance” and may result in a reduction of Supplemental Security Income (SSI) payments. But, money from an ABLE account can be used for housing and other basic living expenses without reducing SSI eligibility.

While one of the key benefits of ABLE accounts is the fact that assets are exempt from government benefits means testing, ABLE accounts can also be a great option for those individuals who aren’t currently receiving benefits. The ability to save in a tax-advantaged way for disability-related expenses can be a benefit for anyone who is eligible. Ask your financial professional for more information, and access Voya Cares resources below.

Subtitle
ABLE accounts can be a difference maker for parents and individuals with disabilities.
Compliance Code
CN1468293_0123
Business Owner
Mathew Stagner
Expiration Date
Portrait of smiling girl using digital tablet in classroom
Individuals Employers Financial Professionals Special needs planning essentials Special needs planning essentials Special Needs Planning For use with your employees Retirement

Products and services are offered through the Voya® family of companies.

Short Title
Who can benefit from opening an ABLE account?

ABLE accounts at a glance

Member for

1 year 11 months
Submitted by smoses on Fri, 11/20/2020 - 17:12
Subtitle
Achieving a better life experience
Compliance Code
CN956858_0920
Business Owner
Mathew Stagner
Expiration Date
Family of four walking and paying along beach
Individuals Employers Financial Professionals Special needs planning essentials Special needs planning essentials For use with your clients For use with your employees
Short Title
ABLE accounts at a glance

Add an HSA to a Special Needs Financial Plan

Member for

1 year 11 months
Submitted by smoses on Fri, 11/20/2020 - 16:36

What is an HSA?

A Health Savings Account (HSA) is a way to increase your spendable income and save money on taxes. HSAs work with a high-deductible health plan to help you invest for future expenses while paying for everyday costs like copays, prescriptions and more. You can use the account for all eligible out-of-pocket medical expenses, including those for your covered spouse and dependents.

How does an HSA work?

The IRS sets an annual per-person or per-family limit that you and your employer can agree to meet. Then, your pre-tax dollars are transferred into the account every month. If you contribute the maximum amount allowed each year, you’ll fully benefit from the tax savings, withdraw funds anytime you need them, and continue to save for the future.

Should I assign beneficiaries?

If your loved one with disabilities qualifies for government benefits, an HSA under their name can disqualify them. Consider a Special Needs Trust (SNT) or an ABLE account for your loved one, as it can stand in as the beneficiary for your HSA and any other financial assets, without putting government benefits at risk.

Am I eligible for an HSA?

You may be a great fit for an HSA if you have:

  • Qualifying High-Deductible Health Plan (HDHP) coverage.
  • Medical expenses to plan and pay for, like copays.
  • A desire to save and invest for your retirement.
  • A plan for your own or a loved ones’ future care.

Plan for special needs with an HSA

HSA benefit: Triple-tax advantaged.

Special needs application: Your HSA grows with you, tax-free. Pre-tax contributions reduce your taxable income, and withdrawals for eligible expenses are not taxed. When it comes to means-tested government benefits, however, contributing to an HSA doesn’t reduce your countable income, and HSA funds will count as resources, so plan accordingly. An HSA in the name of a caregiver can be a valuable planning tool for expenses related to a covered dependent. Always consult with your specialist advisor and attorney to understand the rules related to government benefits.

HSA benefit: Works well with others.

Special needs application: Pair with a Flexible Spending Account (FSA). If you’re not eligible for an HSA or you want to complement one, a tax-advantaged FSA allows you to save and spend money on eligible medical expenses and dependent care throughout the year. But unlike an HSA, the funds don’t roll over — so they’re not accruing interest or available over time. You can use your FSA for shorter term expenses, and build up HSA investments for the long term.

Pair with an ABLE account. An ABLE account is another way to save and spend for disability-related expenses, similar to a special needs trust. Like an HSA, an ABLE account has some tax advantages and can be used for short-term spending or long-term investing. The main difference in taxation is that the HSA is funded with pre-tax funds, while the ABLE account is after-tax. Of course, the allowable expenses are different, and ABLE accounts are not counted as assets for means-tested benefits. Used properly, ABLE and HSA accounts can work together as you manage your cash flow now and in the future.

HSA benefit: Supplement health insurance benefits.

Special needs application: Your health insurance plan may cover your minor children and adult dependents with disabilities, but the deductible and copays might make cash flow difficult. And, your health insurance coverage might exclude some necessities for your loved one with disabilities or special needs. An HSA is there to help fill in the gaps.

An HSA can be used to pay for emerging technologies, experimental drugs and other medical related expenses that your insurance may not cover. If your doctor orders or prescribes it, you should be able to pay for it with an HSA. This can include things like home modifications, ABA therapies, special diets, vitamins, autism programs and more.

HSA benefit: Rollover funds.

Special needs application: You may not know what the future holds in terms of expenses for your loved one with special needs or disabilities, so accumulating savings in an HSA is a great way to stay prepared. Your HSA account and funds stay with you, even if you change jobs. Funds can be rolled over, so you’ll never have to “use-it-or-lose-it.” In a special needs situation this is especially helpful, because dependents may be able to stay on a parents’ plan beyond typical ages, so the benefits may span multiple jobs for the covered worker. This feature makes your HSA another source of resources for a lifetime of care.

HSA benefit: Save into retirement.

Special needs application: An HSA can be a valuable retirement savings vehicle since unused funds can be invested and grow for the long term. Caregivers who are trying to balance saving for their own retirement with providing care may find this option helpful.

If you or your covered dependent is on Medicare, you’ll be able to use HSA funds to help pay for the premiums, as well as for long-term care policies.

Plan ahead by saving your receipts. If you don’t need the reimbursements now, or at the time of the medical care — you can take them out later, even well into your retirement years.

HSA benefit: Debit card and/or easy online access.

Special needs application: If you’re an individual with special needs or a caregiver for a person with a disability, you know that keeping good records is key. HSAs help you keep track of every penny saved and spent with online profiles and debit cards that are simple to access and use.

Action steps:

Learn more

Subtitle
Learn how to use an HSA within your financial plan, especially if you’re a caregiver for a person with a disability.
Compliance Code
CN#1376647
Business Owner
Mathew Stagner
Expiration Date
Father facing and engaging baby who is sitting on bed
Employers Financial Professionals Individuals Maximizing employer benefits Special needs planning essentials Special needs planning essentials For use with your employees For use with your clients
Short Title
Add an HSA to a Special Needs Financial Plan

Special needs planning for life’s milestones

Member for

1 year 11 months
Submitted by smoses on Thu, 09/03/2020 - 10:17

When a family member has a disability or special needs, life demands more from you, as caregiver — emotionally, physically, intellectually and financially. Developing a holistic plan can help you prepare for the predicted and navigate the unexpected.

What does it mean to create a holistic plan?

A holistic plan is created for the lifelong care of your family member with a disability or special needs — especially after the caregiver is no longer able to provide care — and looks at all aspects of life from a personal, legal and financial perspective. Developed over time, it changes to adapt to new circumstances and needs. While the plan focuses on your loved one with a disability or special needs, it will benefit your entire family, as well.

The plan addresses five life stages that may require important planning decisions for both caregivers, and individuals with disabilities or special needs.

  1. Birth to age three: foundation
  2. Age three to 22: childhood and transitioning to adulthood
  3. Age 22 and older: adulthood
  4. Retirement
  5. Later in life and beyond caregivers' lifetimes

Beginning the planning process

After receiving a diagnosis of a loved one’s disability or special needs, families may require considerable time to accept and adjust to their new reality. However, once your family is ready, referencing the five life stages will help you evaluate your current financial picture and set goals to meet future needs.

Think about how your loved one’s needs might transition over their lifetime. Examine your spending habits, create a budget, anticipate how expenses will change, and establish an emergency fund account. Review all your accounts and policies that have beneficiary options and ensure beneficiaries are appropriately designated. Naming your loved one with a disability or special needs may jeopardize their eligibility for needs-based government benefits, so consider a special needs trust.

Create your plan with professionals — such as a special needs attorney, financial advisor and accountant — who are experienced working with the disabilities and special needs community. They will know the laws affecting you and the financial options available. They’ll also help ensure that all the elements of your plan work together, with legal documents drafted properly, so one doesn’t invalidate another.

Here are five life stage considerations to help you create your plan.

Stage 1

Birth to age three: foundation

Build a network

Benefit from the experience, information, resources and support you’ll find in the community. Reach out to friends, family, other families facing similar situations, your school’s special education staff and special education advocates, medical professionals, spiritual advisors, social services case workers, and organizations such as the Caregiver Action Network.

Caregivers' employment

Some adult caregivers who have a partner may find it more practical for one to stop working to care for their loved one, rather than hiring professionals and managing time off from work for emergencies and medical appointments. Be sure to adjust your budget to a single-income household, if this is your goal. Consider available employee benefits that support caregivers, including flexible paid time off and caregiver coordination services, health savings accounts (HSA), legal services, medical coverage, and support services such as Employee Resource Groups and Employee Assistance Programs.

Learn your rights

Knowing your rights makes you better able to achieve your goals. Begin with these:

Early Intervention

Research your state and county early intervention and disability programs and services including physical and speech therapy, counseling, assistive devices and more. Caregivers of children under age three who have concerns about their children’s development can ask their pediatrician for a referral to an early intervention program for evaluation. If eligibility for early intervention is established, an Individualized Family Services Plan (ISFP) will be prepared.

Letter of intent

The Letter of Intent (LOI) is a guidebook-like reference for future guardians and caregivers of your loved one that compiles personal, medical, financial and social information about your loved one and provides practical and vital information for when the original caregiver no longer is able to do so. As things change in your loved one’s life, regularly update the LOI to keep the information current. An LOI also allows families to capture the vision for their loved ones’ future. Get started by downloading the Voya Cares template.

Life insurance

Life insurance policies can be a fundamental part of a holistic plan. Life insurance policies can be used to fund a special needs trust or leave a legacy for other children, family members and charitable organizations. Pay particular attention to titling and ownership of policies, and especially who are named as beneficiaries.

Government benefits-entitlements

Many government benefit programs based on your work history may benefit your family, such as Social Security Survivor Benefits, Social Security Disability Insurance (SSDI), Medicare, Childhood Disability Benefit (CDB) and more. Take the Benefits Eligibility Screening Test to determine eligibility.

Retirement savings

Caregivers’ retirement savings should be kept separate from the savings for your loved one’s future life plan (if possible). A carefully crafted life plan that addresses each of the life stages will help ensure that a loved one’s living expenses are covered by their own earnings, savings, investments or retirement account, rather than the caregivers’ retirement savings.

Legal instruments

Meet with a special needs attorney to create new or review existing legal documents including wills, medical directives, powers of attorney and trusts. Be sure any inheritance bequeathed to a person with a disability or special needs does not put at risk the financial strategy created for them.

Stage 2

Age three to 22 childhood and transitioning into adulthood

Education

Public schools are mandated to provide education and accommodations for children with disabilities and special needs. Parents should collaborate closely with special education professionals in their school district to develop an Individualized Education Program (IEP) to help their child succeed in school. It’s reviewed and updated throughout the years and includes services for transitioning into adulthood. Private school costs may be eligible for tax deductions, consult a tax professional to see what expenses you can deduct.

Guardianship

Adult children who lack decision-making capacity may need a legal guardian when they reach the age of majority—which is age 18 in many states. Also consider who you’d want as successor guardians to would assume guardianship, when original caregivers no longer able to. You can document these wishes in your letter of intent or in your will. However, guardianship isn’t the only option for those who may need help making life decisions, consider a less restrictive choice, like Supported Decision Making or Powers of Attorney.

Stage 3

Age 22 and beyond: adulthood

Socialization and recreation

Socializing enriches lives. Social and recreational opportunities may come naturally during the school years but take conscious thought and planning during adulthood. Building recreational costs into the budget for the entire family, including for a loved one with a disability or special needs throughout their lifetime.

Housing

Depending on the degree of independence, planning should begin concerning where adults with special needs will live. Options include an apartment added to the family home, a separate apartment or home, an assisted living residence or a home established with other adults with disabilities and special needs. Residential needs can vary during a person’s lifetime, and options for persons with disabilities and special needs continue to evolve.

Employment

Many adults with disabilities or special needs may want to work when they are old enough. Investigate state and local nonprofit organizations and businesses offering programs to help adults with disabilities or special needs find and keep jobs, including job coaching and on-the-job support.

Transportation

Consider transportation needs for school, employment or recreation over the course of a lifetime and build a plan that will help cover the costs.

Government benefits- public assistance

Supplemental Security Income (SSI), Children’s Health Insurance Program, Extra Help prescription program and Medicaid are a few of the programs that may be available for individuals and families with limited financial resources.

If an adult receives needs-based government benefits like Supplemental Security Income (SSI) or Medicaid, accumulating assets of $2,000 or more may jeopardize eligibility for those benefits. There also are income limitations for each government benefit program that need to be considered. Tools like ABLE accounts and special needs trusts can help maintain eligibility, in the event government benefits are needed, now or in the future.

While the family’s assets and income are considered while a child is considered a minor, when they reach age 18 (in most states), eligibility is based solely on their own income and assets. This means that many more individuals can access income and services after their 18th birthday, even if still living in their family’s home.

Stage 4

Retirement

Social Security decisions

Deciding when to claim Social Security retirement benefits is one of the most important decisions many people make in their later years. When a caregiver claims Social Security retirement (or benefits begin due to disability or death of the worker), additional benefits may be available for their dependent adult with a disability. The Childhood Disability Benefit (CDB) can provide income that is approximately 50% of a worker’s full Social Security retirement payment during their life, and up to 75% as a survivor benefit after the worker passes away.

Retirement accounts

Saving for retirement is one of the most important financial goals for nearly all Americans, but for the disabilities community it may take on additional significance and challenges. Caregivers may need to save more for retirement to cover the additional costs associated with providing care during their retirement. People with disabilities who have employer-sponsored retirement plans, like 401(k)s, profit sharing plans or pensions, may have to reposition those assets upon retirement to preserve government benefits eligibility. Meet with a financial professional to make sure your retirement plans are in order.

Housing

Before a loved one finishes high school, consideration should begin concerning where they will live during adulthood. Options include an apartment added to the family home, a separate apartment or home, an assisted living residence, a home established with other loved ones of adult children with disabilities and special needs and more. Residential needs can vary during a person’s lifetime, and options for persons with disabilities and special needs continue to evolve.

An adult loved may want to work when they are old enough. Investigate local organizations and businesses offering programs to help adults with disability or special needs find and keep a job, including job coaching and on-the-job support.

If an adult receives needs-based government benefits, accumulating assets of $2,000 or more may jeopardize eligibility for those benefits. There are also income limitations for each benefit program that need to be considered. Even if a family hasn’t applied yet, planning ahead is advised, just in case government benefits may be needed in the future.

Stage 5

Later in life and beyond caregivers’ lifetimes

Housing

As we get older, the need for care — and for housing arrangements that provide the proper level of care — can increase. Make sure your plans include the cost of your own housing needs, as well as the unique needs of the loved ones for whom you provide care.

Health care

Given the rising cost of health care, choosing the right coverage is among the most important decisions to be made in and around retirement. This decision may include enrollment in Medicare and Medicare supplemental plans, employer plans or purchasing your own coverage through the health care exchange. If you choose a high deductible health care plan, and Health Savings Accounts (HSAs) may also be available.

What happens after the caregivers’ death

It’s difficult to think about what happens to our loved ones after we’re gone, but it’s critical to plan for continuity of care and resources that can provide the quality of life they deserve. Work with a well-qualified attorney to make sure your estate plans — including ownership and beneficiary designations — are up-to-date and will help ensure your wishes are carried out after your death. Creating a letter of intent and naming a successor caregiver can help secure your loved one’s care.

Special needs trusts (SNT)

SNTs can pay for certain living expenses that a loved one with a disability or special needs will have during their lifetime. There are different types of SNTs, and they have many sources of funding: gifts from friends and family, as well as inheritances from wills, life insurance policies, or other accounts or policies that are directed to the trust. Funds in a special needs trust typically won’t be counted when qualifying a person for needs-based government benefits. Unused funds, depending on the trust chosen, may be bequeathed to other heirs. A special needs attorney can explain the benefits of having an SNT.

Plan well, live better

A holistic plan developed taking into consideration each of the stages in a child’s life who has a disability or special needs can maintain and improve a family’s lifestyle and give loved ones with a disability or special needs a lifetime of support and financial security.

Subtitle
Prepare well, live better
Compliance Code
CN1741686_0823
Business Owner
Mathew Stagner
Expiration Date
Harmon family son outdoors with basketball
Individuals Planning for life’s milestones Special needs planning essentials Special Needs Planning Retirement

This material is provided for general and educational purposes only; it is not intended to provide legal, tax or investment advice. All investments are subject to risk. Please consult an independent legal or financial advisor for specific advice about your individual situation.

Products and services offered through the Voya® family of companies.

Short Title
Special Needs Planning for Life’s Milestones

How to talk to your family about your special needs trust (SNT)

Member for

1 year 11 months
Submitted by smoses on Thu, 09/03/2020 - 10:14

Setting up a special needs trust (SNT) for your loved ones with a disability or special needs is a good way to protect their government benefit eligibility after you are gone. But if your family members aren’t aware of your good financial and legal planning, an inheritance or other gift from them may impact your loved ones’ future.

Bring everyone to the table

Whether your family is very open about money, or they keep to themselves about finances, it’s important to have an open conversation. If people are comfortable, forming and managing an SNT can be a family process. Once you have contacted your special needs attorney and set the plan in place, sit down with your family members, communicate plans and get them involved.

Talk about why

It’s important that everyone understands very clearly that any inheritance or gift of money that goes directly to a person with disabilities who is receiving government benefits could be devastating. List the government benefits your loved one receives or will receive, and let your family know that your loved one could lose those government benefits, if he or she receives other income or assets.

Talk about what

Explain that you’ve found a way they can still leave an inheritance or gift money to your loved one. Let them know that simply designating your loved one’s SNT as the beneficiary for any financial asset will avoid the problem of losing government benefits. Then, give your family members the title of the trust, so it can be named as a beneficiary.

Talk about how you feel

Your family may have questions and concerns. Try to be patient and responsive. For the process to work, everyone needs to feel heard and accepted and have a clear understanding of the importance of the SNT to the beneficiary.

Get organized

Make sure you store the trust information, along with guardianship documents, powers of attorney, wills and other important papers, in a safe place. You may need to access these papers occasionally, so having them in a central location — or as electronic copies in a digital vault — could make your life easier. In addition, your family members (especially those who may be successor trustees or caregivers) need to be able to find everything, in case something happens to you. Get everything organized and communicate where the family can find information, if needed. This step is often overlooked but can make a big difference.

Action steps:

  • Talk to a financial advisor to get started.
  • Find a special needs attorney.
  • Set up your special needs trust (SNT).
  • Give your family the title of the special needs trust.
  • Get organized.

Learn more:

 

Compliance Code
CN1376647_1022
Business Owner
Mathew Stagner
Expiration Date
Five diverse team members collaborating during a meeting.
Employers Financial Professionals Individuals Special needs planning essentials Special needs planning essentials For use with your clients For use with your employees

Neither Voya Financial® or its affiliated companies or representatives offer legal or tax advice. Please seek the advice of a tax attorney or tax advisor prior to making a tax-related insurance/investment decision.  

Products and services offered through the Voya ® family of companies.

Short Title
How to talk to your family about your special needs trust (SNT)

Questions to ask your special needs attorney

Member for

1 year 11 months
Submitted by smoses on Thu, 09/03/2020 - 10:10

Creating a special needs trust (SNT) is not only a legal process, it also can provide direction for future of your loved one with a disability or special needs. To choose the right attorney for the job, you’ll need to know whether he or she has the expertise and awareness to craft an SNT for your specific needs. Bring the following questions to your consultation, to make sure you’re in the right hands.

What’s your experience in this area?

It is very important to work with an attorney who specifically and regularly creates SNTs. No two situations are the same, and so a qualified SN attorney with a deep understanding of all the ins and outs is a must.

Are my loved one’s government benefits in danger?

Bring a list of all the government benefits your loved one currently qualifies for and think ahead about what he or she might qualify for in the future. Then, your special needs attorney can help you understand whether an SNT is recommended.

Have you dealt with Medicaid qualification and recapture?

First-party and pooled trusts are subject to Medicaid recapture, upon the death of the trust beneficiary, while third-party trusts are not. Alternatives to trusts include ABLE accounts and Powers of Attorney. Your attorney should have an understanding of all the benefits of each type of SNT and alternatives, so he or she can help you decide how to move forward.

How will you design the plan for my specific situation?

Explain the future goals you and your loved one have identified to the attorney and provide a list of what planning steps already have been completed. Once the attorney has this detailed picture, he or she will be able to come up with a plan that’s customized just for your loved one.

How often will you revisit my SNT?

The actual trust documents should be reviewed every five years to make sure the laws haven’t changed or the documents haven’t become outdated. If events in your life change, especially if you move from state to state, you also will want to make updates, accordingly. You may personally want to revisit your SNT annually, just to make sure everything is in order.

Action steps:

  • Talk to a financial advisor to get started.
  • Identify your and your loved one’s goals.
  • Make a list of all your assets.
  • Find a special needs attorney.
  • Bring your list of questions to your consultation.

Learn more:

Compliance Code
CN1376647_1022
Business Owner
Mathew Stagner
Expiration Date
Shot of a group of coworkers in a boardroom meeting
Individuals Special needs planning essentials Special needs planning essentials

Neither Voya Financial® or its affiliated companies or representatives offer legal or tax advice. Please seek the advice of a tax attorney or tax advisor prior to making a tax-related insurance/investment decision.

Products and services offered through the Voya® family of companies.

Short Title
Questions to ask your special needs attorney

Setting up a special needs trust (SNT)

Member for

1 year 11 months
Submitted by smoses on Thu, 09/03/2020 - 10:02

Setting up a special needs trust (SNT) for a person with a disability or special needs named as the beneficiary may be an important step to preserving your loved one’s government benefit eligibility. To get started, follow these steps:

  1. Contact a financial planner who is experienced in planning for special needs.
  2. Take inventory of your assets, including future inheritances your loved one might receive, property sales he or she may benefit from, or income that might be earned.
  3. Capture specific goals for your loved one by creating a Letter of Intent (LOI). An LOI gives you a big picture of your loved ones’ future care needs — for example the cost of housing, food and other expenses — and helps create a vision for their future.
  4. Calculate how much funding you will need for your loved ones’ SNT by balancing the needs of the present and the future — daily life, retirement savings, travel, college and life goals. Factor in taxes, inflation and administrative costs. Err on the conservative side, and round up.
  5. Enter a collaborative process as your financial advisor calculates numbers based on your and your loved ones’ goals and available assets. Confirm what’s realistic and comfortable for your family. As you go through the process, you’ll be able to fill in any gaps with life insurance benefits, potential earned income from your loved one and other funds.
  6. Meet with a qualified special needs attorney to draft the documents. Be sure to find a special needs attorney with specific experience planning for those with disabilities.
  7. Select a trustee or trustees to be responsible for filing the trust taxes, administrating the trust, and understanding what’s allowable for trust distributions, according to its documents. Often parents will name themselves as trustees, but they’ll still need to decide who will manage the trust, once they pass away, so the decision on successor trustees is critical. Name successor trustees from multiple generations to make sure the role is filled for the long term. While many people automatically appoint other family members as successor trustees, family dynamics may sometimes get in the way of clear financial decision-making. In many cases, a professional trust administrator is a good alternative.
  8. Consider assigning co-trustees [optional]. You, a family member and a professional trustee can be co-trustees of the SNT. For a fee, the professional can be sure all actions are compliant with the law and send out distributions, while the family member can look out for the best interest of your loved one. A trust protector — someone appointed to watch over a trust over time to ensure that it is not adversely affected by any changes in the law or circumstances — could also be added, to oversee all the work.
  9. Create an informal committee [optional]. The people who can be involved on your SNT committee include the trust protector, the trustee or co-trustees, your loved one’s doctor, your special needs attorney, other family members, the person who has power of attorney, your loved one and yourself. Each committee member will know the beneficiary well and will be able to guide the trustees in decision making that is in the best interest of your loved one with a disability or special needs.
  10. Make the SNT a beneficiary. Once the SNT is legally in place, simply add it to your financial assets that have your loved one with a disability or special need named as a beneficiary, such as life insurance and pension plans.

Action steps:

  • Talk to a financial advisor to get started.
  • Create a Letter of Intent (LOI).
  • Find a special needs attorney.
  • Appoint trustees, co-trustees and successors to the SNT.

Learn more:

Compliance Code
CN1376647_1022
Business Owner
Mathew Stagner
Expiration Date
Businesswoman using digital tablet at office desk
Employers Financial Professionals Individuals Special needs planning essentials Special needs planning essentials For use with your clients For use with your employees

Neither Voya Financial® or its affiliated companies or representatives offer legal or tax advice. Please seek the advice of a tax attorney or tax advisor prior to making a tax-related insurance/investment decision.

Products and services offered through the Voya® family of companies.

Short Title
Setting up a special needs trust (SNT)

Types of special needs trusts (SNTs)

Member for

1 year 11 months
Submitted by smoses on Thu, 09/03/2020 - 09:53

A special needs trust (SNT) is a legal document drawn up by an attorney with special needs experience. A properly drafted SNT can receive assets for the benefit of the beneficiary.

When it’s time for the assets to be distributed, your loved ones can receive the SNT funds without losing their government benefits in the process. The following information can help you choose the right SNT for your situation.

First-party trust

If you are a person with disabilities or special needs, you can set up a first party special needs trust. Add to it your unexpected inheritances, child support and even structured settlement money. This will protect your needs-based government benefits that provide funds for housing, medical care and food.

Keep in mind, if you’re receiving Medicaid, a payback provision to reimburse the money paid for your care will be required, at the time of your death. This may prevent secondary beneficiaries from receiving the remaining balance of SNT funds, as state programs will recapture the cost of Medicaid benefits paid.

Third-party trust

Caregivers and family members, this is an SNT you can set up for your loved one. Place money from parents, grandparents, or any other source into the trust for future use. Even if you don’t have money to put into it immediately, set up your third-party SNT now, refer to it in your will and beneficiary designations, and it will be funded upon your death.

With the SNT protecting your loved one’s government benefits, the money it contains can be spent on supplemental eligible expenses, such as hobbies, travel and quality of life. And, because it’s a third-party special needs trust, Medicaid cannot recapture assets from it.

Pooled trust

As an alternative to setting up your own trust, you can join with other people in special needs situations and have a shared trust. Pooled trusts can be either first or third party, so ask your advisor or a local nonprofit organization that may sponsor a pooled trust.

ABLE account

While it’s not actually a type of trust, an ABLE account is an additional option for accumulating assets. It’s a qualified savings account that receives preferred federal tax treatment. An ABLE account allows you to save for disability-related expenses like assistive technology, employment training, legal fees, living expenses and more. ABLE accounts may also be subject to Medicaid payback depending on your state.

To find out which ABLE accounts are best for you, contact a Voya financial advisor or log on to the ABLE National Resource Center at ablenrc.org.

Action steps:

  • Choose which type of SNT, if any, is the best choice for you.
  • Consider an ABLE account.
  • Find a special needs attorney.
  • Update your beneficiary designations to the SNT, where necessary.
  • Talk to a financial advisor to get started.

Learn more:

Compliance Code
CN1376647_1022
Business Owner
Mathew Stagner
Expiration Date
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Employers Financial Professionals Individuals Special needs planning essentials Special needs planning essentials For use with your clients For use with your employees

Neither Voya Financial® or its affiliated companies or representatives offer legal or tax advice. Please seek the advice of a tax attorney or tax advisor prior to making a tax-related insurance/investment decision.  

Products and services offered through the Voya ® family of companies.

Short Title
Types of special needs trusts (SNTs)

Beneficiaries with disabilities or special needs

Member for

1 year 11 months
Submitted by smoses on Fri, 08/28/2020 - 14:44

Whether you’re just starting out in life or you’re entering retirement, designating a beneficiary with disabilities or special needs requires some extra thought and planning ahead.

Assumptions affect families

Many people make financial decisions based on ideas like, “I will outlive that person,” or “Their sibling will take care of them, when we’re gone.” But taking the time to create a plan for everyone’s future will give you the peace of mind you deserve. Here are some tips to follow:

Designate the person whom you actually want to receive the funds. This may sound obvious, but it’s risky to designate someone else as beneficiary, with the hopes that they will take care of your loved ones. Designate the person you want to ultimately receive the funds, unless there’s a specific structure already in place for them, such as a trust or ABLE account. You also always should designate contingent beneficiaries for the funds, in case of a beneficiary’s death.

Accounts with beneficiary designations pass outside of your will. A will is an important document to capture your wishes for the distribution of your assets upon your death. But when there’s an account with a designated beneficiary, the specific assets in that account are not dictated by the terms of the will. If you name “estate” as your beneficiary, the will (and ultimately a probate court) may dictate who receives your assets. Any financial instruments or accounts that have named beneficiaries avoid probate, or the process where a judge interprets the will.

Review your beneficiaries as life changes. Be sure you’re up-to-date with your beneficiary designations throughout different life events, like marriage, divorce, childbirth, adoption or the death of a planned beneficiary.

Resources affect government benefits

If loved ones with disabilities qualify for government benefits, any type of income or assets they receive can reduce or disqualify them from those benefits. This includes:

  • 401(k) assets
  • Life insurance payouts
  • Inheritance money
  • Child support
  • Trust funds (unless designated as Special Needs Trusts)
  • Other assets

These types of income and assets can be very helpful to individuals with disabilities, but they rarely completely replace the government benefits they will need throughout their lives. Before you designate a beneficiary who has a disability or special needs on any financial document, ask if he or she has a Special Needs Trust (SNT), or recommend that one be considered.

A special needs attorney can help you protect your beneficiary from the loss of government benefits by creating a special needs trust where the funds won’t interfere with state or federal eligibility requirements.

Action steps:

  • Check your current beneficiary designations and account ownership structures.
  • Be sure your will and other legal documents are up to date.
  • Find a special needs attorney, and prepare a special needs trust, where applicable.
  • Talk to a financial advisor to get started.

Learn more:

Subtitle
What you need to know
Compliance Code
Business Owner
Mathew Stagner
Expiration Date
Aerial view of a clean hip desk with a smartphone and laptop on it
Employers Financial Professionals Individuals Special needs planning essentials Planning for life’s milestones Special needs planning essentials Special Needs Planning Retirement

Neither Voya Financial® or its affiliated companies or representatives offer legal or tax advice. Please seek the advice of a tax attorney or tax advisor prior to making a tax-related insurance/investment decision.

Products and services offered through the Voya® family of companies.

Short Title
Beneficiaries with disabilities or special needs
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