According to the Disability Health Data and Statistics by the Oregon Office on Disability and Health, about 28.3% of adults in Marion County, Oregon report that they are living with a disability. Parents who want to take steps to protect their child’s financial future or leave assets behind for their disabled child can set up a third-party special needs trust. Through this type of trust, you can create supplementary income for your child without hindering their eligibility for public disability benefits.
If you are trying to establish a third-party special needs trust for your disabled child, consulting with an experienced Oregon estate planning attorney is important for proper guidance. Bearman Law is dedicated to providing detailed legal guidance and advocacy in legal matters involved with estate planning. Attorney David Bearman is available to discuss your situation and help you understand your available options. As your legal counsel, he can help you create the special needs trust for your child and draw up other vital estate planning documents.
Bearman Law proudly serves clients across Salem, Lake Oswego, Oregon, and other communities throughout the state.
A special needs trust is a fiduciary relationship (or legal arrangement) that allows a physically or mentally disabled person to get additional income while ensuring that they remain eligible for public benefits and other government disability benefits.
The purpose of a special needs trust is to improve the designated beneficiary’s quality of life by maximizing their available resources. Special needs trusts don’t hinder eligibility for:
Medicaid (which covers medical care, food, and shelter)
Supplemental Security Income (government benefits for disabled persons)
Some of the benefits of special needs trusts include:
Provision for other supplementary needs to improve the disabled person’s quality of life
Setting aside assets to support the disabled person when you’re unavailable
It allows you to choose a successor trustee to manage assets, finances, and investments placed in the trust
The disabled person may receive benefits from retirement accounts
Preservation of the disabled person’s government aid and benefits
Protection of property and assets from creditors
Preservation of family wealth and protection of property distribution in a divorce
Additionally, the designated beneficiary can use money and assets placed in the special needs trust for other needs not covered by government aid, such as entertainment, education, and travel.
Family members planning in advance to care for a child or loved one with special needs can create the third-party trust and leave assets in it through their estate plan. It may be set up by the disabled child’s parents, grandparents, siblings, or any other person besides the designated beneficiary. The following people may benefit from a special needs trust:
A physically or mentally disabled person
A chronically ill person
A person with temporary special needs
A person with permanent, ongoing special needs
A person who may need benefits later in life
A person receiving low payments through SSDI or Medicare
A person who is unable to manage his or her own finances
An ABLE account is an investment account or tax-advantaged savings account for persons with disabilities and their loved ones. The purpose of the ABLE account is to help the person save for disability-related expenses.
Established in 2014, the Achieving a Better Life Experience Act (ABLE Act) makes it possible for states to create tax-advantaged savings accounts and programs for eligible individuals with disabilities. Some key provisions of the ABLE Act of 2014 include:
The designated beneficiary of the account is the account owner
Any income earned by the account will not be taxed
Any person is allowed to make contributions to the account, including the account designated beneficiary, friends, family members, siblings, or through a special needs trust
Contributions to the account are not tax-deductible for federal tax purposes
Contributions to the account should be made using post-taxed dollars
ABLE accounts and special needs trusts offer similar benefits, but they are different in certain ways. To determine the one that is right for your family, you should consider the following:
Taxes: ABLE accounts remain tax-free, whereas funds used to create third-party special needs trusts are tax-deductible and unavailable to creditors.
Age: Qualifying for an ABLE account requires the designated beneficiary to have lived with their disability from the age of 26. As such, a special needs trust is a better option for a child who became disabled later in life.
Legacy: Upon the death of the designated beneficiary, money owned in an ABLE account will be taken by the government. Funds and assets in third-party special needs trusts can be passed down to their children upon their death.
Third-party special needs trusts and ABLE accounts allow you to preserve assets and funds for your disabled adult child without hindering their ability to get government disability benefits. An experienced Oregon estate planning attorney can help protect your assets and finances, safeguard your child’s future, and help determine the right estate planning options that best suit your unique needs.
Bearman Law is devoted to representing individuals and families in estate planning matters and guiding them through the complexities of special needs planning. Whether you are trying to establish a third-party special needs trust or an ABLE Account, attorney David Bearman can assess your unique circumstances and educate you about your available options.
As your legal counsel, David Bearman can offer you the experienced legal guidance you need to navigate key decisions in your estate planning and help you make informed decisions. Bearman Law will work diligently to address all your needs and concerns, as well as those of your family members.
If you’re planning to set up a trust for a child with special needs, contact Bearman Law today to schedule a one-on-one case assessment. Let attorney David Bearman guide you through the entire process and help you navigate key decisions. Bearman Law is proud to serve clients across Salem, Lake Oswego, Oregon, and other areas throughout the state.