Typically, to receive government benefits like Medicaid and Supplemental Security Income (SSI), an individual must remain below a certain asset and income level. If a loved one were to provide assets to someone receiving these benefits, they could lose their eligibility. However, funds that are transferred into a special needs trust do not count for government benefit purposes, and thus will not jeopardize their eligibility.

There are two types of special needs trusts in Colorado: self-funded trusts and third-party created trusts. A self-funded trust can be established for any disabled person under 65 years old by their parent, grandparent, or guardian, or even created by the beneficiary himself. These trusts are established with assets belonging to the person with special needs, such as inheritances or personal injury settlements. A third-party trust is funded by someone other than the beneficiary, and does not include assets they own. A typical example of a third-party trust is a trust created for a disabled child by his parents during their lifetime, to enhance his standard of living while not endangering his eligibility for benefits. A parent could also create a third-party trust by including language in their will, which would then be funded upon the death of the parent.

When focusing on creating a special needs trust, it is essential to pick a reliable person to be the trustee, since they will be required to make decisions during the entire lifetime of the loved one. Additionally, the trustee must be given sole discretion on how to make distributions to the special needs trust, without input from the beneficiary. The funds from the trust also cannot be used to pay for items covered by the public benefits, such as rent and payment for groceries.

Because special needs trusts can be very complicated, in order to comply with federal and Colorado law, it is essential to consult a Colorado estate planning attorney who has experience working with these instruments. Preplanning by creating a special needs trust is an excellent option to ensure the comfort and well-being of a loved one throughout their life.

Contact a Colorado Estate Planning Attorney

If you or someone you know has estate planning questions or concerns, contact the skilled attorneys at Braverman Law Group. We have extensive experience handling Colorado special needs trusts, and we provide clear explanations of complex legal issues, so you are certain about your future plans. To discuss your legal matter and to schedule a free consultation, call us at 303-800-1588 today.

Medicaid helps many individuals living with disabilities to cover some of these costs. In addition, Supplemental Security Income (SSI) benefits provide individuals with monthly assistance. However, once a person is receiving Medicaid/SSI benefits, they must remain below specific asset and income levels. If a loved one provides cash to someone receiving SSI or Medicaid benefits, it can reduce the level of benefits and may result in benefit ineligibility. In practice, this makes it difficult for loved ones to provide any meaningful support, because doing so could jeopardize these benefits.

A Colorado special needs trust (SNT), also referred to as a supplemental needs trust, is an excellent way to provide support to someone with a disability without jeopardizing their benefits. An SNT can either be “self-funded” or opened by a third party. A third-party special needs trust is one opened by anyone other than the person who is named as the beneficiary. Funds that are transferred into an SNT do not count as “assets” for Medicaid eligibility purposes. The same goes for income that is assigned to the trust. Thus, family members can open a trust in the name of a loved one living with a disability, and can transfer money into the account for their loved one to use.

Funds in an SNT can be used for a variety of nonsupport items. For example, a beneficiary can use the trust funds to pay for any of the following things:

• an automobile,
• academic or recreational classes,
• fitness equipment,
• public transportation costs,
• home improvements or furnishings,
• over-the-counter medication,
• a cellular phone (as well as the monthly service bill),
• vacations, and
• pets and related expenses

However, a beneficiary cannot use funds in the trust to pay for the basic necessities, including food and shelter. This includes paying for rent or a mortgage, property taxes, and most necessary bills. Trustees overseeing an SNT should keep in mind that it is essential not to pay for something with trust funds that have already been paid for by another source.

Are You Considering a Colorado Special Needs Trust?

If you have a loved one living with a disability, and have been told that you cannot provide support to them without jeopardizing their public benefits, contact a dedicated Colorado special needs planning attorney at the Braverman Law Group for immediate assistance. At the Braverman Law Group, we work with individuals and families to come up with solutions to the common – and less common – issues that surround special needs planning. To learn more, and to schedule a free consultation with one of our knowledgeable estate planning lawyers, call 303-800-1588 today.

A person living with a disability incurs many costs throughout their life related to their disability. Indeed, it is estimated that, while the average cost of raising a child is approximately $233,000, the cost of raising a child with a serious disability can exceed $2.4 million. The government helps those experiencing disabilities through various public assistance programs, including Supplemental Security Income (SSI) and Medicaid. However, both SSI and Medicaid are needs-based programs, meaning that there are asset and income limits that must be met before an applicant can receive benefits. Historically, this has made it very difficult for family members to provide financial support to loved ones living with disabilities.

In 2017, Colorado joined many other states in offering a tax-advantaged savings plan for individuals living with disabilities. The program, entitled Coloradans Achieving a Better Life Experience (ABLE), allows account holders to save money in a tax-deferred status while keeping their needs-based benefits. In this way, an ABLE account is an additional tool that families can use in creating a comprehensive plan for a loved one living with a disability.

To be eligible for a Colorado ABLE account, an applicant must 1.) demonstrate that they live with a qualifying disability, and 2.) provide evidence that the disability began before the age of 26. Those who are blind or who have a written disability diagnosis signed by a physician qualify. Alternatively, an applicant can show that they have a “physical or mental impairment with marked and severe function limitation that has lasted, or is expected to last, at least 12 continuous months or result in death.”

The primary benefit of an ABLE account is that it allows account holders to save money that will not be counted toward their asset limit when it comes to determining eligibility for needs-based programs. Specifically, the first $100,000 will not be considered by the Social Security Administration. Any amount over $100,000, however, will count toward the asset limit and may result in SSI benefits being suspended.

Below are some other important facts about Colorado ABLE accounts:

• Funds in an account can be placed in a variety of investment options;
• Anyone can make a deposit into an ABLE account;
• Up to $15,000 per year can be deposited into the account, unless an account holder is working, in which case they can contribute more;
• The minimum deposit to open the account is $25.

Colorado ABLE accounts offer families a great option for providing for a loved one living with a disability. However, an ABLE account is just one aspect of a comprehensive special needs plan, and other measures may be necessary.

Do You Have Questions About Special Needs Planning?

If you are curious about how you can help a loved one living with a disability plan for their future, contact the Braverman Law Group. At our Colorado law firm, we help families navigate the complexities of the state and federal needs-based assistance programs, working to create comprehensive and effective special needs plans. To learn more, call 303-800-1588 to schedule a free consultation today.

There tend to be misperceptions about these programs because individuals apply for both benefits through the Social Security Administration (SSA). Further complicating matters, many individuals apply for both benefits simultaneously. However, there are key differences regarding eligibility based on a person’s earning history, income, resources, and age.

Supplemental Security Income is a needs-based program that provides financial assistance to disabled, low income, blind, or older adults. The program is funded through general tax revenues and not the Social Security trust fund. To qualify for SSI benefits, the individual must be at least 65 years old, blind, or disabled. Additionally, a single individual’s income cannot exceed $771 a month or $1,157 for a couple. Qualifying recipients will receive that amount per month in addition to the $25 Colorado state supplement.

Social Security Disability Income Benefits is a program that provides financial assistance to disabled or blind individuals who have paid into the Social Security trust fund and meet work credit minimums. Unlike SSI, SSDI applicants do not need to meet an income or resource limit. To determine eligibility, the SSA converts a person’s earnings into work credits. Usually, the older the person is, the more work credits they need to qualify for SSDI. The SSA uses a “work test” to determine the number of work credits a person needs to contribute. Additionally, unlike SSI benefits, an SSDI recipient’s spouse and minor children may be eligible to receive partial auxiliary benefits.

Individuals with special needs may qualify for both SSI and SSDI, depending on their work history. However, many individuals who have been living with a disability for a long time may not have the work history required to obtain SSDI benefits. For this reason, most individuals with special needs obtain SSI benefits, and fewer obtain SSDI benefits.

Of course, given the strict income requirements of SSI benefits, it can be difficult to navigate the application process. Many individuals with special needs have family members who want to provide financial assistance, but fear that by doing so they may jeopardize their loved one’s eligibility for SSI benefits. However, there are several ways that family members can provide assistance to loved ones living with a disability without affecting their eligibility. For example, by establishing a Colorado special needs trust, family members can set aside money that can be used for any disability-related expenses.

Have You Been Denied Disability Benefits in Colorado?

If you have a loved one living with a disability, and want to explore your options for safely providing assistance without affecting their eligibility for government benefits, contact the Braverman Law Group. Our legal team has extensive experience helping our clients and their families plan for the future. We provide a full range of Colorado estate planning and special needs planning services across Boulder County. Contact our office at 303-800-1588 to schedule a free consultation with an attorney on our legal team.