Sorting Out Financial Planning for Disabled Survivors

As part of growing older, it becomes more and more important to be certain that those left behind, who are our responsibility, be provided security. When you have a child who is now an adult, who has certain needs beyond their ability, it is important to be sure they are covered.

When many adults have come into this world handicapped or have had something happen in their lives to render them with this, they may have certain coverage for their basic needs. Speaking from the United States point of view, because I have no experience or established experience with other countries, typically, disabled adults receive Social Security Disability monthly payments. In many cases, there is also Supplemental Security Income added in a separate payment. This helps make up for the difference between how much the person has contributed into the Social Security system and how much they need to fill in the difference in order for basic needs to be met.

Many of these adults have jobs, often part time positions. These help them to supplement their disability income so they can have a better life. Also, this helps those who have some ability to work to be active and to challenge their own abilities. Growth as as much independence as possible can be established. In other cases, there are more profound handicapped adults who are not able to function and may require home or other care to function day to day.

Since the ability to manage day to day living may be a challenge, there are often guardians who act in various capacities. In some cases, the person on disability may have just a guardian payee who manages the financial end of things. Wrap around services, such as transportation and personal assistants may be set up, along with medical overseeing and such.

The guardian payee is often the parent of the adult but not always. When a parent dies, the guardian payee may become another relative or a guardian may be selected for the surviving adult. Planning for how this is to take place becomes vital for the well-being of the adult who becomes the beneficiary.

When a parent/guardian manages the financial matters of the recipient, they must make sure that money is distributed in a budget wise sense. All basic needs of the recipient must be covered. There are annual reports required by Social Security. This requires a break down of where the money that comes in for Social Security is distributed. Additionally, there is a limitation as to how much money can be saved and this must be reported. This includes other asset limitations, as well. There are resources for this information, for those interested. When the recipient works, a monthly report of the gross income must be provided to Social Security. This is what is used to establish how much SSI is allowed per each month. As one can imagine, this adjustment can happen frequently if the income varies a lot. Certain expenses related to helping the recipient to be able to work are allowable. Social Security can help with this determination and it can help adjust the total amount countable. If the recipient is in a group home or similar placement, the entire Social Security and SSI check will likely be surrendered for their care.

When a parent/guardian passes away a person has to be designated as the responsible person for the well-being of the surviving beneficiary. This can be very crucial in the sense that the beneficiary needs to have all basic needs met without delay. In all of the planning for the death of the parent/guardian, this is the most important.

Considering who is to be appointed, it is vital that this is as seamless as possible. A will would be one place to start, except that this is very timely. That is why it is important that someone who is to be trusted would manage this delicate transition. This person or persons would be entrusted with accounting information so that they can smoothly transition to caring for the survivor.

Looking at various ways to establish that the beneficiary is cared for, there are options such a Special Needs Trusts, typically created in cases where there is a rather large estate. This would most likely require an attorney to set this up and can be costly. There is another option, it is an ABLE account. I believe all states have this program. An ABLE account can be set up while the parent/guardian is still living for the benefit of the beneficiary. The beneficiary can actually access monies from the ABLE account for their living expenses that are beyond what is received from Social Security and SSI. Those two payments are often used up with housing, food, clothing, medical and other essential needs. The monies from ABLE accounts are used for expenses to complement those basic needs. There must be a responsible person to manage the account as the beneficiary has no management of this account any more than they do of their Social Security and SSI monies, if they have been deemed unable to do so. That may not always be the case.

Why would the money go into a trust or ABLE account? If a recipient has provided money to them, they must count it towards their income and this would count against their benefits. It is as if they are found to be capable of living without any assistance. Maybe some people can do this. But the protections that are put in place with these accounts help keep the beneficiaries safe.

If a beneficiary is left money and/or property in a will, this is more than likely going to be counted as income. If this happens, certain benefits may be affected and the beneficiary could lose all or a portion of their living costs. Of course, if there is enough left to the beneficiary, it may not matter as far as surviving, but in many or possibly most cases, the beneficiary may be put in a difficult situation with their income. If there is a significant enough increase that throws them out of ability to receive assistance and then down the road the money is depleted, the means test for assistance could have to be redone. That could be a long, difficult challenge, possibly impacting the recipient long term. In the meantime, they have a shortage of surviving income. Also, in cases where a person is unable to do their own accounting, there has to be a designated guardian to handle any inheritance. This is where the ABLE account could be an option, where the monies would go into the ABLE account and the beneficiary would be the beneficiary of the ABLE account instead of any money or property left for them. This would have to be stated in the will in order for this to happen. Also, if there is significant money to be left, the money could be placed in a Special Needs Trust for the benefit of the recipient, otherwise they would be countable assets.

Rather than go in depth anymore about Special Needs Trusts and ABLE accounts, I would suggest searching those options. Here is a link to give you an idea about what the money can be used for with an ABLE account: ABLE Qualified Expenses

This information is simply from my own experience as a parent who has these matters to consider. It does not in any way reflect knowledge about the details of the law. I would suggest consulting an attorney about these matters, as need indicates. And this writer takes no responsibility of any action that comes from reviewing this information. It is a simply a point of view based on research and experience. My best to you as you go through the journey of helping your loved one with any needs.

For more information about ABLE accounts visit: ABLE Account Information