Make Sure Your Estate Plan Doesn’t Put Your Child at Risk

Most parents of children with special needs are well versed when it comes to the government benefits like Medicaid or Supplemental Security Income (SSI) that their child receives. Most know not to give the child any money outright and to establish a standalone supplemental needs trust to protect their child’s assets, and they usually know all of the ins and outs of the SSI and Medicaid application processes. What many parents don’t often think about is the effect that their own estate plan can have on their child’s benefits.

The first thing for parents to keep in mind is that they must, without a doubt, have an estate plan. Parents who are often so good about getting their child’s plan in order can balk at creating their own estate plan for a variety of reasons. But by failing to put together your own plan, you are placing your child’s benefits at risk. If you pass away without a valid will (known as dying intestate), your assets will be distributed according to state law. These laws will often leave a sizable portion of your estate to your children. In the case of a child with special needs, receipt of these funds could eliminate benefits that the child relies on. Therefore, it is essential that you prepare an estate plan that will take into account your child’s unique circumstances.

The next thing to remember when assembling your estate plan is that, except in very limited circumstances, you should not leave anything directly to your child with special needs. Instead, your estate should flow through your own will into a special needs trust for your child’s benefit. A properly drafted special needs trust will protect your child’s benefits and allow your estate to be utilized as you intended without interference from outside sources. You will also have the opportunity to choose a guardian for your child in your will, another important decision that you should not leave up to chance or state law.

Sometimes parents will leave their entire estate to their children without special needs in the hope that those children will take care of their sibling with special needs. You should avoid the temptation to do this. While your motives and trust in your children are well placed, this arrangement often leads to bitter family disputes and should be avoided if at all possible. Typically, the better option will be a separate trust that can hold your child with special needs’ share of your estate and free up the shares for your other children to be spent as they see fit.

Another potential problem area is when parents name their children as beneficiaries of life insurance policies and retirement plans. These assets, which are not governed by the terms of your will, could easily pass to all of your children in equal shares if you are not careful about naming plan beneficiaries (this is a very common problem when your child develops a special need later in life, after you have had these policies in place for years). As you did in your will, you can place your child’s share of these important assets into a properly configured special needs trust. However, some complicated tax issues may have to be addressed first.

Finally, your estate plan may not be the only issue. Make sure to check with any relatives who may be leaving something for your children and make sure that they also speak with a qualified attorney before including your child with special needs in their estate plan.

If you don’t have an estate plan at all or are worried that your current plan is not appropriate, please call our office at (508) 421-4610 to schedule a complimentary consultation.

SSI’s Thorny Rules for “Deeming” a Parent’s Income to a Child

Supplemental Security Income (SSI) is a federal program that helps people with disabilities and very low incomes pay for food, clothing and shelter. But even more valuable than the SSI benefit itself is that, in most states, a beneficiary who receives even $1 from the program also qualifies for Medicaid health coverage.

To qualify for SSI benefits, the beneficiary’s income and assets cannot exceed certain limits. But the Social Security Administration (SSA) doesn’t look at just the child’s income and assets, but also may consider a portion of the parent’s income and assets as if they were available to the child. This is called “deeming.”

The logic behind the deeming rule is that parents have a legal duty to support their child, and because parents’ income and assets would be legally available to support that minor child, their income and assets may be factored in the determination of the child’s needs for purposes of SSI eligibility.

Unmarried children under the age of 18 seeking SSI benefits may be deemed with the income and assets of any parent with whom the child lives, and even a stepparent if the stepparent and parent live together. If the parents are divorced and the child lives with only one parent, the child is not deemed with the income or assets of the parent living in another household. If a parent receives her own SSI benefits, or if the child does not live with either parent — for example, a child lives with a stepparent or grandparents and no parent lives in the home — there is no parental deeming. The amount of deeming to the child is reduced if the child is living in a household with other children under the age of 21. Once a child reaches the age of 18, even if she is living with a parent, deeming of parental income ceases and only the child’s own income and assets are counted in determining SSI eligibility.

The SSA defines “income” as both “earned” income, like wages, and “unearned” income, like retirement and investment income, unemployment benefits, and gifts. Importantly, Social Security benefits are counted as unearned income. For example, in 2017 a child with special needs living with one parent earning less than $3,065 a month in earned income would qualify for SSI. If all the parent’s income is unearned, the monthly income limit would be $1,510. “Income” also includes non-cash items such as the value of food and housing one receives from others. These are more commonly known as “in-kind” items of income, and are considered unearned income.

Assets, or what SSA refers to as “resources,” include things like bank accounts, cash on hand, and investments. However, not all assets are counted. For example, a parent’s home, automobile, and most retirement accounts are excluded from counting. But while a retirement account itself may not be counted, any payment from the account to the parent is countable income and thus subject to being deemed to the child.

The calculation of the deeming of income is complex. The living arrangement of the child makes all the difference and it is not one-size-fits-all. SSA provides an annually updated Deeming Chart to help families make this calculation. However, there are many exceptions that would cause the chart not to apply to a particular family’s situation, one exception being if the family has a mix of earned and unearned income, which many do. A family’s best resource is the procedure, or formula, that SSA uses in the deeming calculation, and this can be found on SSA’s website.

If you have a minor child with special needs, SSI benefits – and by extension, Medicaid coverage — may be available to your child. It may be worth crunching numbers and reviewing SSA’s charts and formulas to see if your child may qualify. And if your child is already receiving SSI benefits, it is important to understand the basic workings of these deeming rules so that you do not inadvertently jeopardize those benefits.

But, as you now realize if you have read through the above, the rules are complicated. Your special needs planner can help you sort through them and determine if your child might qualify for SSI.

SSA To Expedite Disability Process For Veterans

Social Security Administration (SSA) has announced that effective March 17, 2014, it will expedite disability claims for veterans receiving VA service-connected compensation benefits and who have a rating of 100% “Permanent and Total” disability from the Veterans Administration.  This process does not apply to non-service connected pension benefits.  The VA disability only expedites the process, it does not guarantee an allowance for Social Security Disability benefits.  The veteran must still meet eligibility criteria similar to other claimants.  The veteran’s VA Notification letter indicating that the veteran’s rating of 100% Permanent and Total disability will be the required proof.

How You Qualify For Social Security Disability Benefits

For those who have recently become disabled, finding out how you qualify for Social Security Disability Benefits can become a pressing matter. SSDI benefits are designed to help those that qualify to pay for their everyday expenses and household bills. In many cases, Social Security Disability Benefits can make all the difference on making ends meet for those who are disabled for a year or more.

“Disability” Defined

The Social Security Disability Administration defines “disability” as an injury or condition that:

  • Prevents you from performing work required by your current profession
  • You cannot successfully adjust to other types of work because of your condition
  • Your disability will last at least one year or will result in death

Work History

The first qualification depends on whether or not you have ever had a job in which you paid into SSDI. Each pay period, your check stub will state your deductions and how much of your pay was deducted for SSDI. The percentage deducted is referred to as SSDI credits. For each $1200 you earn each year, you are given one credit toward SSDI. The law states that in order to qualify for SSDI, you must have 40 credits, 20 of which must have been earned in the last 10 years. The number of credits is subject to change depending on the age of the applicant.  If you do not meet the above criteria, you may still qualify for benefits under the Supplemental Security Income (SSI) program. [Read more…]

Obama Proposes Cuts To Social Security

The fiscal 2014 budget proposal released by President Barack Obama includes cuts to Social Security.  The budget plan would replace the way current Social Security and disability cost of living (COLA) increases are calculated, replacing them with a chained Consumer Price Index (CPI).  The result could potentially reduce Social Security and disability payments.  Other legislators, including Democrats, have opposed the cuts.  Senator Tom Harkin of Iowa proposed to increase Social Security benefits by about $70 per month by increasing the payroll tax.  That proposal, The Strengthening Social Security Act of 2013, would expand benefits by strengthing the program’s future and aiming to make retirement more secure.  It will be interesting to see how these proposals play out over the next year.

When Should I Apply For Disability Benefits?

I receive this question often and unfortunately the answer is, it depends.  If you have just stopped working, it may be to your benefit to wait some time before submitting your application for disability benefits.  To be approved for benefits, you must be out of work, or expected to be out of work, for at least 12 months.  If you file your application soon after you stop working, the disability examiner must not only determine if you are disabled, but also determine whether you will be out of work for at least 12 months.  Some examiners may be reluctant to approve benefits for younger individuals or borderline cases until they are certain you have met the durational requirement.  If you have been out of work for at least 6 months when the examiner is processing your case, they will be in a better position to determine if you will be out of work for the required 12 month period.

If you have an obvious long-term disability, it may benefit you to file your application as soon as possible.  As everyone’s medical situation is different, when to file your application should be made on a case by case basis.

Increase In Social Security Disability Benefits For 2014

Social Security Administration (SSA) has announced a cost of living adjustment of 1.5% for 2014.  As a result, monthly benefits for Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) beneficiaries will rise next year.

With the increase, the maximum federal benefit for an individual receiving SSI will rise from $710 per month to $721. The benefit for a couple on SSI will grow from $1,066 per month to $1,082. Many states add to SSI benefits for their residents meaning that actual payments could exceed these caps.  Massachusetts is one of the States that adds a supplemental benefit.

Sharry Law Office Offers Clients New Mobile App

Sharry Law Office is pleased to announce our new mobile app designed to Stay Connected with our clients.

We remain at the forefront of technology and innovation and we are committed to serving our clients with unparalleled legal representation and client service.  Our new mobile application provides clients with direct access to us as well as provides useful information, tools, and helpful resources such as an appointment scheduler, GPS directions, client alerts and updates, legal articles, and FAQ’s.

We encourage our clients, colleagues, and friends to download our mobile app to your phone and use it as a convenient way to stay connected.

Learn more about our mobile app:    www.sharrylaw.com 

Qualifying For SSI and SSDI Disability

If you are disabled and can’t work, there are numerous programs and assistance to help you.  Two of those programs at the federal level are Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI).  Although there are several differences between the SSI and SSDI disability programs, there is one similarity.  The definition of disability is the same and medical disability is assessed the same way under both programs.

Supplemental Security Income (SSI)

Supplemental Security Income (SSI) is the disability program for those individuals that have not worked or have not worked enough recently to be insured for benefits. It pays monthly cash benefits to people who are age 65 or older, those who are blind, or those who have a disability and have $2,000 or less in assets and have no or limited income. Both adults and children can apply for SSI.

[Read more…]

How does SSA determine disability?

The Social Security Administration (SSA) uses a 5-step evaluation process to determine if you are disabled:

1. Are you currently working?
If your earnings are above the substantial gainful activity (SGA) level, you may be disqualified for benefits.

2. Is you condition severe?
Your condition must prevent you from performing basic work activities for at least twelve (12) months to qualify for benefits. [Read more…]