Estate planning poses several challenges for individuals and families, not least for those living with special needs, or those who have loved ones with special needs. The daunting task involves high stakes, tough decisions, and often a complex interplay of family dynamics. However, the process gets particularly intricate when it involves planning for special needs. Two primary instruments used in such scenarios are Special Needs Trusts and ABLE Accounts.
Special Needs Trusts are designed to manage resources for a person with a disability, allowing them to maintain eligibility for public benefits. On the other hand, ABLE accounts, a result of the Achieving a Better Life Experience Act of 2014, are essentially tax-advantaged savings accounts for individuals with disabilities and their families. They can contribute funds to such accounts without disqualifying the beneficiaries from certain means-tested government benefits.
The powerful combination of these two tools provides a strategic way for estates to cater to their loved ones with special needs, away from the fear of disqualifying them from necessary public benefits. Though they operate differently, their well-calibrated use can help tailor wealth management strategies that suit the specific needs of beneficiaries with disabilities.
However, navigating these financial instruments requires a deep understanding of their intricacies, careful balancing of benefits, and mindful adherence to legal requirements. Moreover, the potential sanctions for errors can be severe. Therefore, it is prudent for families dealing with special needs to seek expert legal advice on estate planning and financial management.
To delve deeper into Special Needs Planning, Special Needs Trusts and ABLE Accounts, Husch Blackwell’s LLP explores these topics.