“Opening up this type of trust is key,” she says. A third-party special needs trust is often the ideal option for families because generally the government does not recoup any remaining trust assets after the beneficiary has passed away.
By creating a third-party special needs trust, parents and grandparents can put away substantial assets to pay for additional things the child might need beyond the monthly SSI cash payment and the basic medical care that Medicaid provides, which may include living expenses.3 This type of trust can also help ensure that your child’s needs are provided for and that the funds are protected, particularly after both parents are gone.
Because the assets contributed to the trust have never been in the child’s name and the trustee has discretion about how to use the money, typically for "supplemental, extra care, comfort and happiness"—taking care not to duplicate government benefits—the child maintains SSI and Medicaid benefits. At the end of the child’s life, whatever is left in the trust generally may go to siblings, charity or whomever the parents designate.
529 ABLE accounts: another financial tool
Families can supplement government benefits and any private insurance they have by taking advantage of the new 529A ABLE (Achieving a Better Life Experience) Savings Plan. This program allows families of disabled children to pay for a variety of qualified disability expenses, including education, housing, financial management and other expenses to help improve your child's health, independence and quality of life.
Like 529 education savings accounts, 529 ABLE plans are tax-advantaged and state-sponsored. Families can contribute up to, generally, $15,000 per year for 2019 . But be mindful: Different states have different rules. And in any state, if the account exceeds $100,000-$102,000 (depending on the disabled beneficiary’s other personal assets), the individual’s SSI benefits will be suspended until the account falls below that threshold.