Kansas and Missouri Estate Planning

How do ABLE Accounts Work?

ABLE accounts are meant to help those with special needs.

Are you an American with special needs?

Do you have a family member with special needs?

If yes, you may be familiar with government assistance for food, housing, health care, and income.

Many benefits such as Medicaid and SNAP have financial eligibility requirements.

How can those with special needs become eligible for benefits without becoming destitute?

According to a recent nj.com article titled “ABLE accounts–A tax advantaged tool for special needs planning,” the Achieving a Better Life Experience Act (ABLE) may help.

What does it do?

It allows an individual who qualifies to set up an ABLE 529 account.

This allows the individual to save or invest to supplement government benefits.

Funds are contributed by the individual, family, or friends after-tax and can grow-tax free.

The funds must be then used for qualified expenses.

Is there a limit?

Yes.

You can only contribute $15,000 a year.

They are connected to the 529 education account for the individual so moneys contributed to one will impact the other.

If the individual has more than $100,000 in the account, SSI eligibility can be compromised.

If you are an ABLE account owner you can save an additional $12,140 from your earnings for retirement, if your employer does not have an employee sponsored retirement plan.

Another tool for special needs planning is a Special Needs Trust.

ABLE accounts are not meant to replace a Special Needs Trust.

Why?

ABLE accounts have greater restrictions and limitations with contributions and disbursements.

A Special Needs Trust may thus be more a desirable alternative, especially in the estate planning context.

What happens when to funds left in the ABLE account when the beneficiary dies?

The government will recover the funds to reimburse itself for any benefits provided during the lifetime of the recipient with special needs.

This will not be the result with a properly drafted Special Needs Trust.

Work with an experienced estate planning attorney to determine how and if an ABLE account can work for you or your loved one.

Reference: nj.com (April 20, 2019) “ABLE accounts – A tax advantaged tool for special needs planning”

What is Estate Planning for "Special Needs"?

Special needs require special planning.

You have a child with special needs.

This little one or full grown adult is dearly loved and brings joy to you and others each day.

You want to make sure loving care is provided for this child when you are no longer able to provide it yourself.

What should you do?

According to a recent Forbes article titled “Special Needs Kids Require Specialized Estate Planning,” you should work with an experienced estate planning attorney.

Discuss the prognosis, health, and capabilities of your child with your estate planning attorney.

Why?

An experienced estate planning attorney will be able to customize a plan to meet the specific needs of your entire family.

If your child will be eligible for government benefits without an inheritance, you will want to make sure you do not disqualify him or her from this aid with any inheritance you leave.

A solution may involve setting aside assets in trust, with a trustee to oversee the trust to benefit your child.

A special needs trust can be set up to "supplement" government benefits, not "supplant" them.

What if you are not yet certain whether your child would be eligible for government benefits?

You can arrange for a trustee to set up a special needs trust when both you and your spouse are deceased.

You can choose to begin funding the trust now or you can wait until you die.

Although you could "disinherit" your childs with special needs and set aside money to your other children to provide care for him or her, you will be unable to ensure that the inheritance will be used as you wish.

For example, if any of your other children were to be divorced or in debt, the money set aside for your child with special needs could be at risk.

Yikes!

Navigate your options with an experienced estate planning attorney to protect the financial security of your child with special needs.

Reference: Forbes (March 27, 2019) “Special Needs Kids Require Specialized Estate Planning”

What Team of Advisors Should I Assemble for Special Needs Planning?

Financial planning is important when special needs are in the picture.

Rearing children is expensive.

How much?

According to American College of Financial Services, rearing a child from birth to age 18 will cost $250,000 on average.

What if you have a child with special needs?

You can expect to double this number.

According to a recent WTNH article titled “Financial planning for families with children with special needs,” you will need to plan care and finances intentionally.

What should you consider?

Caregiver

You may not be available every moment of every day.

You may require help in providing care to your child with special needs.

Consequently, you will need to determine the amount and type of care required and budget accordingly.

Estate Planning Attorney and Accountant

Do not do your estate planning on your own.

Translation: this is not a DIY project.

Work with an experienced estate planning attorney to help preserve assets for your child.

For example, a supplemental needs trust can help you shield assets without disqualifying your child from government programs and support.

Create a will and perhaps a living trust, designating guardians and trustees to ensure care is provided according to your wishes when you are no longer around to do so yourself.

You may consider providing any caregiver with a letter of intent.

In this letter you can provide family history, medical history, information on what your child likes and dislikes, and any other wishes you may have.

A professional accountant will be able to help you take advantage of any tax breaks you may have as a caregiver for a child or dependent with special needs.

Financial Advisor

Selecting a financial advisor who specializes in helping families with children or dependents with special needs is important.

He or she can help you preserve and grow money for your child.

You may also find a friend in the government programs like Social Security Disability Insurance and Supplemental Security Income.

Employee benefits may also be an option.

What might these include?

These may include reimbursement for childcare or even insurance to replace your income should you pass away or become unable to work.

Being the parent of a child with special needs brings both joy and stress.

Minimize the latter with proper planning and the support of others.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: WTNH (August 7, 2018) “Financial planning for families with children with special needs”

What Legal Options are Available when My Child with Special Needs becomes an "Adult"?

Children with special needs will take specific planning.

You have a child with special needs.

As the parent, you know the joy these individuals bring to the world.

They have enriched your life.

You want what is best for them, even when you are not around for them.

According to a recent Effingham (IL) Daily News article “Teaching parents about guardianship of disabled children,” setting your child up for success as they get older takes planning.

As your child reaches adulthood, you will have to make some decisions.

When your child turns 18, you will no longer be his or her legal guardian.

Every situation will look different.

You will need to assess what kind of support your child requires.

If your child requires assistance in all aspects of living, a guardianship may be a wise choice.

Guardianships are designed to protect those who are incapable of making their own decisions or handle their own finances.

Your child will have far less control with a guardianship.

As such, it must be recommended by a report from a physician and tailored to be as non-restrictive as possible for the circumstances.

As a guardian, you would act on behalf of your child until a court determined it was no longer necessary.

Another option may be a power of attorney.

There are different kinds for health care and for finances.

A power of attorney authorizes an individual to make decisions on behalf of another.

A power of attorney does not give absolute control.

As a parent, you would be limited by the terms of the power of attorney.

With a power of attorney, your responsibility could be revoked by the individual granting you the authority.

If you are confused or concerned about what would be best for your family, work with an experienced estate planning attorney.

He or she can help you navigate this planning for your family.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: Effingham (IL) Daily News (April 15, 2018) “Teaching parents about guardianship of disabled children”

Do I Need an "Integrity Monitor" as Part of My Estate Planning?

An Integrity Monitor can make your special needs trust more effective.

You have a child or a loved one with special needs.

You want to ensure they are taken care of when you are no longer around to do so.

As a result, you created a special needs trust.

According to a recent Forbes article titled “Trusts, Special Needs Trusts, Family Offices All Need Integrity Monitors But Don't Know It,” you should also include an Integrity Monitor.

What is an Integrity Monitor?

An Integrity Monitor is third party with investment management forensic and industry expertise.

Their role is to protect the administration of the trust from mismanagement.

Without one, you and your loved one could be taken advantage of through the trust.

No one wants this.

Integrity Monitors are not uncommon.

In fact, many companies will enroll the help of such individuals to detect and prevent fraud or unethical practices.

Be proactive.

Although you will be paying for this service, the benefit will far outweigh the costs.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: Forbes (January 30, 2018) “Trusts, Special Needs Trusts, Family Offices All Need Integrity Monitors But Don't Know It”

What Special Estate Planning is Required for Family Members with Special Needs?

Those with special needs require specific estate planning to be in a better financial situation.

Do you have a loved one with special needs?

Whether physical or mental, special needs issues are very common.

In America alone, 58 million individuals over the age of five classify as having a disability.

Do you want your loved one to have financial security even when you are no longer around to provide care?

According to a recent CBS News article titled “’Special needs’ people need special financial planning,” this will require specific estate planning.

Why?

Simply giving money to a person with special needs can affect eligibility for important government programs.

To be eligible, a person with special needs should not have more than $2,000 in assets.

Then how do you leave them money?

There are a few options.

Special Needs Trust.

Setting up a special needs trust allows you to put away money to help supplement government benefits without losing the benefits.

You cannot do this on your own.

You will need an experienced estate planning attorney to create a special needs trust for you.

Also, the individual with special needs cannot be the owner of the trust.

ABLE (Achieving Better Life Experience) Account.

Was your loved one diagnosed with a disability before age 26?

If yes, then you could create and contribute to an ABLE account.

Contributions to the account are capped at $15,000 each year.

Only $100,000 can be in the account at any given time.

If these rules are broken, your loved one will lose government benefits.

How can you use this money?

These funds can be used for legal fees, funeral expenses, health care, job training, education, and other needs.

Letter of Intent.

Although a letter of intent does not help provide financial security for your loved one with special needs , it does allow you to provide instructions to a guardian.

You can outline the history of your loved one and the details of their care to be provided.

Now you know some key things to do.

What should you avoid?

Do not disinherit your special needs child.

Government benefits can help, but they are not enough.

Do not leave assets—including bonds or a 529 College Savings Plan— in the name of your child.

Your generosity will negatively impact government eligibility.

Do not assume siblings can care for your child.

They may not have the money, time, or ability to do so.

Do not leave money to a sibling to use for a child with special needs.

You cannot guarantee the money will be used as you desire and it could even be taken from the sibling through a divorce, lawsuit or bankruptcy.

The most important thing you can do is work with an experienced estate planning attorney.

He or she will be able to help you create a plan for the needs of your child.

So, how do you find an "experienced" estate planning attorney?

First, ask around. Friends, family and other professional advisors are trustworthy sources.

Second, conduct an "organic" search on "Google" for "estate planning" near you (e.g., "Estate Planning Anytown MoKan").

Third, either way, verify! Check out the education, experience, ratings and client reviews of any attorney before you contact him or her.

How?

Two helpful online resources are just a mouse click away to assist with your due diligence:  Avvo.com and Lawyers.com.

Check any Avvo ratings, client ratings/testimonials and attorney endorsements on Avvo.com and any "peer ratings" by judges/other attorneys and any client ratings/testimonials on Lawyers.com.

In fact, I use both of these services to thoroughly vett attorneys before referring members of our "client" family for legal help in other areas of law or for matters in jurisdictions outside Kansas or Missouri.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: CBS News (December 25, 2017) “’Special needs’ people need special financial planning”

How Can I Effectively Estate Plan for my Child with Special Needs?

When leaving money to a child with special needs, there are more factors to consider.

Your children are the light of your life.

So how do you take care of them after you have died?

As a parent of a child with special needs, this question may seem more daunting.

Where do you begin?

According to a recent Tickertape article titled “Estate Planning for Special Needs Children: Trying to Be Even-Steven?” you should start by determining what federal benefits your child can receive.

Why?

You will not want your estate planning to make your child ineligible for this support.

This includes Supplemental Security Income and Medicaid.

Often a person will qualify for Medicaid, if he or she qualifies for Supplemental Security Income.

Both of these take into account financial need.

The asset threshold for Supplemental Security Income is $2,000 for the individual seeking to qualify.

Why is this important to know?

If you leave an inheritance to this child, he or she could become ineligible.

They would no longer receive financial assistance from the government for therapy, housing or medical payments.

Does this mean you cannot leave any inheritance to support your child?

No.

One option you have is to set up a Special Needs Trust.

This can help your child qualify for government aid while receiving assets from your estate.

The trust serves as a third party to hold the assets and its trustee will distribute money to the child according to your instructions.

This trust may still be taxed on the income generated by the trust.

You should work with an experienced estate planning attorney to determine whether this is a viable tool.

He or she will be able to set up a Special Needs Trust to meet your goals.

Remember to discuss your plans with all of your children so they understand the reasons for your estate planning choices.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: Tickertape (June 14, 2017) “Estate Planning for Special Needs Children: Trying to Be Even-Steven?”

How Can I Maximize My Tax Breaks if I Have a Disabled Dependent?

Tax breaks are available to offset medical expenses.

Are you or a loved one living with a disability?

If so, you are in good company.

In 2015, the Centers for Disease Control and Prevention estimated about 20 percent of American adults live with a disability.

Medical expenses are high.

This comes as no surprise to you.

Are there ways to save on taxes?

According to a Yahoo Finance article titled“8 Tax Tips for People With Disabilities (and Their Caregivers),” there are.

What are they?

Use an ABLE accounts.

Were you or your loved one disabled before you turned 26?

If yes, then you can use an ABLE account?

How does it work?

Much like a 529 college savings plan.

The money in the account can grow tax-free and can be used on eligible expenditures.

The benefit is in tax-free growth.

Contributions are not tax deductible on a federal level.

Some states offer state-level tax benefits though.

These states?

Iowa.

Michigan.

Nebraska.

Take a higher standard deduction.

Are you or your spouse blind?

Taking a standard deduction may be a higher deduction for you.

The normal deduction if single or filing separately?

$6,300.

What if you are blind?

$7,850 if blind or over age 65.

$9,400 if blind and over age 65.

Get child or dependent care credit.

Are you working or seeking work?

Do you pay for day care or other care for a disabled dependent?

You could decrease your taxes by $3,000 per dependent.

The maximum credit is $6,000 for all dependents.

This could also include a spouse who cannot care for himself or herself due to mental or physical challenges.

You will need to itemize to qualify for this credit.

Collect disability credit.

Are you 65 or older?

Do you receive stable disability income?

Are you retired and on permanent and total disability?

If yes, you could qualify for the Credit for the Elderly or the Disabled on your own tax return.

How much is the credit?

It ranges between $3,750 and $7,500.

There are income limits to qualification though.

Claim a disabled person as a dependent.

The usual age limit for dependents are after age 19, or age 24 if the child is a student.

What if the child is disabled?

There is no age limit.

The only requirement is that you must pay for at least half of the support for the child.

Deduct medical expenses.

Itemize your tax returns.

Why?

If the medical expenses for your family are more than 10 percent of your adjusted gross income in a calendar year, then you can deduct the amount exceeding 10 percent.

If you or your spouse is 65 or older, the percentage is lower at 7.5 percent.

Adopt of a child with special needs.

Have you adopted a child with special needs?

These young ones can be such a joy.

Another benefit besides your sweet child?

You could be eligible for the maximum adoption credit in the year you finalize the adoption.

How much?

The current maximum is $13,460.

Your income limits will also factor into the amount.

The good news?

You could qualify regardless whether you had $13,460 in qualified expenses.

Declare disability payments.

Not all disability payments are considered taxable income.

You will want to research what is or is not subject to taxes.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: Yahoo Finance (February 15, 2017) “8 Tax Tips for People With Disabilities (and Their Caregivers)”

How Can the ABLE ACT Help Those with Disabilities?

The ABLE ACT was designed to provide financial support for those with disabilities.

Are you or a loved one disabled and receiving public assistance?

Do you worry about finances and medical care?

Do you live in Nevada?

If you answered yes to all of these questions, then the Nevada ABLE ACT could help.

This was recently reported in a Las Vegas Review-Journal article titled “Nevadans with disabilities will save money under ABLE Act.”

What is the ABLE ACT?

The ABLE ACT is the Achieving a Better Life Experience Act.

It was passed by Congress in 2014.

What does it do?

It allows those with disabilities to create special tax advantaged accounts for specific expenses, with their own financial resources.

What kind of expenses?

• Housing
• Education
• Health care
• Transportation
• Assistive technology
• Assistance in getting and holding a job
• Other approved expenses

Why are ABLE accounts particularly beneficial?

The ABLE accounts will not disqualify an individual from Supplemental Security Income or certain other government benefits.

Another benefit?

Friends and family can contribute up to $14,000 each year.

Who qualifies?

Nevadans who are under the SSI program on the basis of blindness or disability.

Nevadans can also qualify if they are under the Social Security disability, retirement and survivors program.

The fine print?

The disability must have occurred before the individual turned 26 years of age.

Who oversees the program?

In Nevada, the State Treasurer administers the ABLE ACT program.

The Nevada Aging and Disability Services Division are in charge of outreach and education.

The Nevada ABLE ACT program is administered by the State Treasurer, and the Nevada Aging and Disability Services Division will provide program education and outreach.

Either of these would be great places to learn more.

For Kansas residents, visit the official website of State Treasurer Ron Estes to learn more about Kansas ABLE accounts.

For Missouri residents, visit the official website of State Treasurer Eric Schmidt to learn more about Missouri ABLE accounts.

You can also contact an experienced estate planning or elder law attorney for guidance on whether this is a viable option for you or your loved one.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: Las Vegas Review-Journal (January 26, 2017) “Nevadans with disabilities will save money under ABLE act”

How Should I Plan for Retirement and the Care of My Special Needs Child?

Planning for both is complex, but not impossible.

You have a child with special needs.

You feel torn between providing for the needs of your child and your own retirement and aging.

Your child will likely outlive you.

What then?

How can you ensure he or she will be okay without you?

According to a recent Morningstar article titled “Retirement Planning for Special-Needs Families,” you are not alone.

One in every five Americans has a disability.

In fact, some 20 million families have at least one family member with a disability, according to the National Disability Institute.

These individuals face financial demands others do not face.

For example, the cost of caring for an person with autism ranges from $1.4 million to $2.4 million over a lifetime.

Costs are similarly high for other impairments.

Can government assistance programs help?

Yes.

But there are rules.

One set covers those who were disabled prior to age 22.

The other applies for those who acquired their disability later in life.

What should you consider when creating a plan for your family?

Quality of life

Vitally important is the safety of the child.

Other significant factors include work, learning and play.

Cash flow

Several factors will contribute to the cash flow needs of the child.

Like what?

• The specific disability of the individual.
• The capabilities of the individual.
• The level of care the individual requires.

Investments

Chances are you will need more cash readily available than families without disabled loved ones.

Be sure your retirement portfolio accounts for this.

Government benefits

If you qualify, government benefits like Medicare and Medicaid can be helpful.

You should also plan to maximize Social Security.

Special needs specific government rules

When it comes to disability, the government often has specific rules and guidelines regarding income and asset limits.

Special Needs Trust

This tool has helped many a family and is critical to your retirement plan.

Beneficiary designation

How your child receives his or her inheritance can jeopardize government benefits.

Be sure your estate planning protects your child.

Proper planning is not simple and should not be attempted alone.

Work with an experienced estate planning attorney who knows your families situation as well as the governing laws.

He or she will be able to create the best plan for your family.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: Morningstar (January 17, 2017) “Retirement Planning for Special-Needs Families”