[00:00:01] Speaker A: Welcome to Shining Through Inspire Voices of Autism with show host Jennifer Dantzler. My name is Veronica and I have Williams syndrome. Thank you for taking the time to learn more about the world of autism. If you enjoy what you hear today, don't forget to subscribe to this podcast.
[00:00:19] Speaker B: Hey, everyone, this is Jennifer Dantzler, and I'm the executive director and founder of inspirend, a nonprofit whose mission is to create truly inclusive communities through education and engagement. The goal of this podcast is to shine a light on real people and their stories in hopes of inspiring others who are on this journey of autism. Either themselves, their child, their loved one, their co worker. I truly believe ignorance is not bliss and we cannot be inclusive communities if we do not understand the people in the community.
With autism now affecting 1 in 31 people, we need to get louder about this topic. We recognize that autism is a spectrum. There are a lot of people with a lot of different needs, a lot of resources available or none available. And we know that in every episode, we can't meet everyone. Everyone's needs for their specific interest.
However, we hope that in each episode you do gleam some kind of insight as to how you can help your child or yourself be a better advocate. And as we go through our podcast, our goal really is to address the entire spectrum, the various needs, the various environments that we're going to be in. And we hope that there's something in every episode for each one of you. So let's get started.
Hello, everyone. We are back today with a very special guest. Her name is Catherine Byers. She goes by Cat, so I'll be calling her Cat in this podcast. She is a senior associate attorney with Rosenblatt Law Firm, but she is also a special needs consultant for the American College of Finance. And so today we're here to talk about a topic that's very hard but near and dear to my heart, which is futures planning, estate planning, financial planning for our people with children with special needs. So, Kat, thank you so much for being here.
[00:01:57] Speaker A: Yeah, thank you so much for having me.
[00:01:58] Speaker B: Full disclosure, Kat is so wonderful. We actually also just got done doing a lunch and learn where she presented to some of our families in person about this topic. And so my challenge here today is going to be how do we get all this information to you where you don't have this really great, detailed PowerPoint in front of you? So we are going to do the best we can with this. So let's get started. Okay, Kat, let's start first with talking a little bit about your credentials. You're an attorney. How long have you been in the field and why are we sitting here today?
[00:02:27] Speaker A: Can't believe it's been 10 years since I've been an attorney.
I went to Michigan State School of law, graduated in 2015 and licensed in 2015.
Really got into estate planning, probate, guardianship, that's my specialty. Maybe about two years in, I was actually almost on my way out being a lawyer. It was a little bit rough start, but found estate planning and really kind of fell in love with the special needs community and working with families through guardianship and some of these more complicated issues. So I've been doing this now for 10 years. Born and raised in San Antonio, but.
[00:02:59] Speaker B: She did do her undergrad at A and M Corre. Yes.
[00:03:02] Speaker A: And I always have to kind of give a caveat. I was a first generation Aggie, so my parents went to ut, so sometimes that makes people like me or dislike me a little bit less.
[00:03:11] Speaker B: Okay. Yeah. So we might have gained half of our listeners back.
[00:03:13] Speaker A: That's good, that's good.
[00:03:14] Speaker B: All right. Wonderful.
[00:03:15] Speaker A: And my husband's a UT fan too, so I just decided to upset everybody else, you know, in the family.
[00:03:20] Speaker B: We're not here to take a talk about this, but my daughter goes to ou, so I will say this weekend we'll see what happens. Anyway, let's get onto the topic at hand. Okay. So here we're gonna primarily talk today about special needs trusts and the importance them. And I'm probably going to say this a hundred times in this interview. You just have to get started. And this is so important. And I know a lot of people are often scared off because they think either I can't afford to do it, I don't need to do that.
[00:03:46] Speaker A: Right, Right.
[00:03:47] Speaker B: So I think today, hopefully we'll prove you wrong on both those counts and hopefully just pique enough interest to understand the why it's so important. So let's first talk about a special needs trust and why a family needs a special needs trust.
[00:04:01] Speaker A: Usually if we're talking about special needs trust, it starts with the conversation of an individual who's receiving certain government benefits. Primarily we're looking at individuals who have some type of disability that helps them to qualify for ssi, Supplemental Security Income, as well as trying to qualify for Medicaid. We talked a little bit about this today at the presentation that trying to get on the Medicaid waiver program, it could be a 20 year wait list, and trying to prove to the government that you meet these kind of strict definitions of being a disabled person.
It can be a lot of work for families. And so the idea is, if we've worked so hard to get an individual these benefits, let's make sure that as part of our giving and our estate planning that we're not going to inadvertently knock them off. It's hard enough to get on. Let's try to preserve them. The whole point of a special needs trust, it is a special type of trust. It's not like a discretionary support trust, but it's definitely one that Social Security has kind of given the okay that says as long as this trust has these types of requirements and these things are met, we can leave money in a trust for an individual who's on these benefits without kicking them off.
[00:05:11] Speaker B: So there could be a million dollars in this special needs trust and that will not exclude them from receiving Social Security and Medicaid, correct?
[00:05:19] Speaker A: Correct. Because of the type of trust that it is, one of the key aspects of it is that it's an irrevocable trust. You have to have a trustee that's not the individual who's receiving the money from the government.
That individual has to be the only beneficiary of that trust. And there has to be very strict distribution standards as far as what that trustee is allowed to spend money on. The biggest thing I say rule of thumb with these, if your Supplemental Security Income or Medicaid is paying for that service, the trust should not pay for it. So that's kind of like a quick checklist of what these trusts need to have in order for, for someone to keep their benefits while still getting a large sum of money.
[00:05:57] Speaker B: For special needs trusts, again, sometimes parents say I don't have much. But what they don't think about things are, oh, they have a life insurance plan, Aunt Susie is leaving money to their child, and all of that can still go into this special needs trust if done correctly.
[00:06:13] Speaker A: Correct. Again, kind of jokingly, I say this during most of my presentations, which is most of us, we might say we don't have a whole lot, but we're probably worth a whole lot more when we die versus what we have now. You know, for instance, my life insurance or retirement accounts, those have pay on death benefits, so I may not see those, but my beneficiaries will inherit that money. You probably have more than you think, especially things like with real estate, most people own a home and a car. You sell those off, you're going to easily get some net proceeds after passing. So people have more than they think.
[00:06:45] Speaker B: But even if all they, they rent and all they have is a beat up old car. And even if it's worth $4,000.
[00:06:51] Speaker A: Right.
[00:06:51] Speaker B: Then that could exclude that individual.
[00:06:53] Speaker A: Right.
[00:06:54] Speaker B: From getting Social Security benefits.
[00:06:55] Speaker A: Yeah. Because we're dealing with very small amounts. So with the SSI program, essentially it's an individual can't have more than $2,000 of assets and they can't make more than $2,000 of income. So you're right. If there's only a vehicle in the estate and you are like, I don't need a will because I only have a car. But you have a child who's on government benefits when you die, that car becomes an asset that now belongs to them. And if that car is greater than $2,000, you know they're going to get kicked off after you've worked so hard to get them on. And something as small as a car could interfere with that.
[00:07:28] Speaker B: But also then the cost to probate, the cost to go through all of those hassles because of one thing that you inadvertently didn't realize you had or didn't you think was worth a lot and now you're having to spend a lot more money.
[00:07:41] Speaker A: Yeah.
[00:07:42] Speaker B: To go through the hassle.
[00:07:44] Speaker A: Right.
[00:07:45] Speaker B: Of figuring that all out. And I think also one of the things that we can't impress upon enough is not all trusts are created equal. And there are a lot of attorneys who will say, I do special needs trusts and they're not doing them the right way. So I know you talked today about two key words that helps determine that trust, the supplement and supplant. So can you talk about that a little bit?
[00:08:08] Speaker A: I will have clients that will come and maybe they're a little bit wary of a trust that was drafted and they're like, oh, we see that you have a special needs consultant from the American College of Finance. Will you please just review this and make sure it's correct?
So as I'm reviewing it, I am looking for keywords and key language and key provisions. The kind of the big one is there should be something in there that says trust distributions are there to supplement these government benefits, not supplant. So again, rule of thumb is SSI and Medicaid. If they're covering it, they're paying for it. The trust should not pay for that. If that trust doesn't have that language, you're really going to be asking for an uphill battle, I think, with Social Security and trying to compel them to believe it's a special needs trust.
[00:08:50] Speaker B: When should a family set up a special needs trust? Should they wait until the child is 18. Should they do it when they're 2 and first diagnosed? When is the best time to set.
[00:09:00] Speaker A: Up the trust you plan for? Right now. Again, most people, there's a lot of misconceptions about the importance of estate planning. I hear all the time, I'm too young, I don't have anything. But again, wills and estate planning, it's not about how much you have, it's about ensuring that the assets are given to the right beneficiaries and in the right manner.
If you have a child that is on the spectrum or you think that they may need these government benefits in the future, then draft a will now and either we can put in the will that upon passing a special needs trust is created. We talked a lot about this today with. You can put contingency provisions in there that if the child at the time they inherit, if they're on ssi, Medicaid, or we think they're going to qualify, then it can be a special needs trust. If they end up being high functioning and don't need those benefits, then a discretionary support trust. So you can, you can work in that flexibility.
[00:09:51] Speaker B: And then also there might be a parent that says, I don't have any money to put in that trust right now. But again, this can be a trust that gets executed upon death.
[00:09:59] Speaker A: Correct.
[00:10:00] Speaker B: For the future assets. So don't let that make you think that then I have no reason to set up that trust right now.
[00:10:06] Speaker A: Exactly right, yeah.
[00:10:07] Speaker B: Okay. Talk a little bit about third party trust versus first party trust because I learned a huge thing today about that. And so first explain the difference between the two.
[00:10:16] Speaker A: There's actually two big differences. The first is the source of funding. Where is that money coming from? Where is the trust property coming from? What's the originating source? If it's from a third party that's not the child, parent, grandparent, estate, assets, whatever it might be. If it's not the child's money and it's being sourced through a third party, it's a third party special needs trust. If an individual inherits money outright, maybe someone died without a will. We see this also a lot. If a child develops a disability through some kind of injury or personal injury lawsuit, they get a lump sum settlement. If that's the child's money, the child's assets we're putting into that trust, it's a first party number one, I think big, biggest difference source of funding. But the second biggest difference is what happens to that money when the child dies. If there's money left in that trust. We love third party trust because one is proper planning. The biggest benefit of it is that when that child dies and the trust terminates, person who funded that can control where the remainder of that money goes. So you could say if I have other children, it goes to my other kids, it goes to a charity versus a first party trust. We don't get to determine where that goes. The state of Texas gets the rest of that money. And most of us are not wanting to give the government any more money than we have to. Kind of sometimes it's a necessary evil. We do need first party trust in certain situations. But when that child dies, the state of Texas kind of comes back and says we want to get reimbursed for the expenses we've been giving you during your lifetime.
[00:11:42] Speaker B: And where that really hit home today for me was sometimes as you mentioned, you have higher functioning individuals who maybe do have a full time job and they're making $50,000 a year, for example, which is good salary but definitely still not enough to live on. But then that will kick them out of ssi. And then it's not uncommon for our people on the spectrum to also get let go of jobs because of something that they didn't understand or rules they didn't follow, or social skills or social hierarchy that they didn't understand. And then now they've been excluded from their benefits and yet they've been fired from their job.
[00:12:16] Speaker A: Right, right.
[00:12:17] Speaker B: And so first party trust can be, if that's that individual, then some of that money.
[00:12:22] Speaker A: Right.
[00:12:22] Speaker B: Can go into that trust instead. And I think that to me, I didn't know that that was an option again for our individuals who make just enough to exclude them, but not enough to really survive.
[00:12:33] Speaker A: Right. And there was a change in the legislation a couple of years back where as far as who could create these special needs trusts. And it used to be only either like a court, a parent, a guardian, but they modified it so that now the individual themselves who's receiving those benefits can also have the ability to create it, so long as they have the capacity to do so. Because we do have individuals who are high functioning, maybe their disability is physically based, not mentally based. And so the blogs took a step back and realized there's kind of this gap where you have a high functioning individual, they want to continue to work, they want to keep their benefits, because again, the benefits, it's not the monthly amount that comes in that's as important, it's that Medicaid and the healthcare coverage, we want to keep that and they're like, I can set this up myself. And the law was saying, no, you can't do that. So I think that they can be really important for, for those individuals. We want to encourage individuals to go out and work and we do.
[00:13:27] Speaker B: And honestly it is kind of punished behavior because as. And we won't. A whole different podcast will be the Medicaid waiver services.
[00:13:35] Speaker A: Right.
[00:13:35] Speaker B: And in the state of Texas, once you turn 18, if you have SSI and qualify as disabled, you get services through Medicaid waiver. The catch is there's an 18 year wait list, 16 to 20 year wait list for this, what's now called interest list. And but those are lifelong services. So it's very important to get on that list whenever you learn about that list.
[00:13:56] Speaker A: Right.
[00:13:57] Speaker B: So you would go to your local IDD authority, call them up and say, my child has autism. I want to get them on this wait list. Often I see parents now who don't even have the goal for their young adult to get even a part time or full time job because they'll get disqualified. You have to be on SSI to get the Medicaid waiver as an adult.
[00:14:16] Speaker A: Right.
[00:14:16] Speaker B: Yet again, if you're making 40 or $50,000 a year, you won't be eligible. But that's not anything that you can live on.
[00:14:22] Speaker A: Right.
[00:14:23] Speaker B: And then the Medicaid waiver services will help cover things like day programming supports, home living, respite care, some of the other medical supplemental services. Right, right. And so that's all really, really important. And I think that's what's so frustrating is, you know, when I talk to a parent and we talk about the potential for their child and they're like, yes, but, yes, but, yeah, right. And then that just, that kills me.
[00:14:46] Speaker A: It kills me too, because when I went and got my special needs consultant license with the American College of Finance, we took so many courses about how important it is for an individual who has special needs or disabilities to work. It makes them feel good, it helps with their overall mental well being.
They feel like they have a purpose. And so we're trying to encourage that. But then it's like, but you can only do so much or else you're going to lose your benefits. So it's kind of a nice solution. I don't want people to use the first party trust and fund it with hundreds of thousands of dollars. But again, if you have a high functioning individual that wants to work and make more than $2,000, it's a great option.
[00:15:24] Speaker B: Right. Because again, to Reiterate what you said earlier. First party trusts, once that person no longer needs it for whatever reason, then that money would go to the state, most likely versus in a third party trust. They could then designate the remainder, say to another child or someone else in their family or really to, to anyone else, to the nonprofit that maybe help support their child along the way or what, what have.
[00:15:45] Speaker A: Right.
[00:15:46] Speaker B: Okay, now let's talk a little bit about wills, because I know you talked a lot about that today because there are a lot of people who say, I don't, again, I don't need a will. I don't have anything. Right. So why should we have a will?
[00:15:59] Speaker A: Oh my gosh, I could talk about this all day. Because again, wills, there's a lot of misunderstanding and misconceptions about wills. People think, again, I'm either too young. Wills are only for, quote, unquote, old people.
I don't have a lot of assets. I don't need a will.
I can't stress enough that wills have absolutely nothing to do with wealth. We can address wealth concerns if we're worried about estate tax issues, income tax issues, but really the whole point of a will is to ensure your property is going to the right person and that they're receiving it in the right manner.
Let's not even talk about special needs trust. Let's just talk about a child who's, who's a minor. Right. Or maybe a child that has drug addiction, bad spending habits. Right. If you don't put in writing, when I die, I want my property to be managed for my child in a trust. That money just goes to them outright. And that can cause a lot of problems, especially if they're, you know, under 18. They don't have capacity to manage that money for them. Or they might spend it all on bad, bad habits. It's more detrimental though, for the families who have these children with special needs, who've worked so hard to get them on these benefits, because now the child has money, now they have assets that are in their name. Now they're over that $2,000 limit. And again, the solution might be a first party special needs trust, but when that child dies, the state of Texas is going to come back and pretty much wipe that trust property out. It's really about controlling and ensuring your assets go in accordance with your wishes.
[00:17:26] Speaker B: As far as trust wills go, I know we talked today about within each trust you have a trust manager. And I did ask the question about who that trust manager should be because I do encounter a lot of families where they say it will be their sibling who will be the trust manager. Talk a little bit about who you think should be the trust manager and why.
[00:17:45] Speaker A: Every family is going to be a bit different. Right. I mean, there, there may be families that have really well rounded children that are smart and can handle being a trustee for a disabled sibling. It can take a toll, Right. Long term, it can take a toll on the relationship between the parties. It can just take a toll on that person in general.
If you have a child that can do it or a sibling that can do it, fantastic. But my preference usually with a special needs trust is a corporate trustee. I want a professional who has a fiduciary duty to manage that money and who's qualified to know those very stressful particular rules that Social Security has to ensure that they're making proper distributions, to ensure that they're issuing the K1 tax filings, they're filing them on time. It's a tedious job, I think. And being any trustee in general can be hard like that. But with special needs trust, you're adding a whole other layer of complexity to the situation because again, you're. We're working within the federal government rules. Not every person off the street can pick that up and know those rules. I think corporate trustee would be the way to go for, for your special needs trust, for sure.
[00:18:49] Speaker B: I know we talked today about, oh, but then there's a fee for that or you know, those kinds of things. But again, there's more of a risk to have it be the sibling who then doesn't know how to do that correctly. And then they lose the benefits for this child for life or even worse, right now they get accused of fraud or what have you. Right, right, exactly. Embezzlement, who knows what. Yep. And I know there are things that protect that child. You know, one of the examples we gave, I know I've heard of a lot of families where the sibling then said, oh, I need to put in a $70,000 pool because my sibling likes to swim.
And you know, and so there's protections for that child with special needs that I think are very important. And I think it's easy, you know, that parent of that, say 23 year old sibling who says, yes, I want to take this on. He's my brother right now, he's 30, has two kids at home, very busy, traveling for work. You know, life changes.
[00:19:39] Speaker A: Life changes. Absolutely.
[00:19:40] Speaker B: And then that can be really. So, yeah, I mean that's sort of a big passion of mine. And again, so some of the trust Advisors have minimum amounts to be in that account. Others don't.
[00:19:52] Speaker A: Right.
[00:19:52] Speaker B: But the key is it's about when that trust is funded. So right now, not everyone has $500,000 to put in a special interest. But if you have a life insurance plan for $500,000, then that would qualify to be in that trust, which would then have that trust advisor.
[00:20:07] Speaker A: Right. It would meet that fee and then they could step in. And I think a lot of people get worried if they put a corporate trustee in their documents now they're like, well, am I paying for the corporate trustee now? And I'm like, no, it's only when they step into that role. If and when again, you pay for what you get is more important to me, especially when it comes to protecting these individuals with these benefits, because again, you work so hard to get them on. Some of these are life and death situations. They need that benefit. They wouldn't be able to survive without it. For me, it's more about peace of mind, making sure we have a professional in there that understands what types of distributions can come in, what, what shouldn't go out, versus like, uncle, you know, your Uncle Bob, you know, hey, Uncle Bob, I want $10,000 for a car. Uncle Bob says, yeah, sure, no problem. Right. It's not the same kind of rules. Right. You've got to be familiar with the Social Security administration rules. And it's just you pay for that security. Right.
[00:20:59] Speaker B: And that's complicated because now there's friction between Uncle Bob and the person with special needs, or Uncle Bob and the sibling of the person with special needs who won't to build the pool.
[00:21:08] Speaker A: Right, right.
[00:21:08] Speaker B: For their brother kind of thing. And so, yeah, I mean, as much as I think we can take that onus of responsibility off, and honestly, I want the siblings to be able to be the siblings.
[00:21:17] Speaker A: Right.
[00:21:17] Speaker B: And not the trust manager.
[00:21:18] Speaker A: Right. They have other things. And. And we kind of talked about this a little bit today too. Maybe a sibling can be like a legal guardian. If that child or the individual needs a guardian, sure, they can be their legal guardian, be that voice to talk to the trustee. But. But they can still then just be siblings. Right? We're not. It's not a business or managerial role. And trying to prevent that friction is. Is always a good idea because again, with what we do, we see a ton of litigation, especially dealing with trusts and.
[00:21:45] Speaker B: Right.
[00:21:46] Speaker A: And a lot of distrust. Well, where's my money? And I don't know what you've been doing with it. And it just ends up getting very costly as well. Right.
[00:21:52] Speaker B: I know one of the slides you had today, which was very good, was thinking about all the different aspects of what you call your property.
[00:21:58] Speaker A: Right.
[00:21:59] Speaker B: Between your bank accounts, this and that.
[00:22:00] Speaker A: Right.
[00:22:01] Speaker B: Talk a little bit about beneficiaries because I know that's where you said sometimes that trips people up and how the beneficiaries of things like bank accounts will trump a will.
[00:22:10] Speaker A: Right. Yeah. I'm a highly visual learner. So I love that slide because it helps my brain kind of categorize the different types of assets and how they're distributed at death. Because not all trusts are created the same. Not all assets are treated the same at death either. Sometimes I'll meet with a client and they say, I want my quote, unquote estate to pass to my child, but it has to go into a special needs trust. That term estate, estate is really going to be confined to what we call our probate assets. So things like your home, other real estate, vehicles, personal property. If you have a will that says, my estate goes into a special needs trust for my child, great. It'll control those things. If you have a beneficiary designation, though, sometimes people think my will says it's going to go to my child, but then to a special needs trust, they might think I can put my child directly on that beneficiary because my will says if my child inherits, it goes into a trust. If they're a beneficiary, though it's controlled by contract law. It's a completely different area of the law. The will has no jurisdiction over that beneficiary designation. And so sometimes a parent might think they're doing it the right way. But now what we've done is we've just written, you know, a $500,000 life insurance policy check to a child who has special needs, who's on ssi, Medicaid.
Again, the first party trust can come in to kind of save the day.
But the goal is we don't want to have to pay the government back at the end of the day. Right. And so making sure we've got those proper designations. We talked about how you can name a special needs trust as a beneficiary on those accounts, which is what we talk about for all of our clients that are in this situation, that's going to be the best way to ensure that the will's still kind of governing those beneficiary assets.
[00:23:51] Speaker B: Say they have a special needs trust and they designated the special needs trust, or they. But they had one account that has $10,000 in it that they didn't think to do that.
[00:24:00] Speaker A: Right.
[00:24:01] Speaker B: Now that goes to probate. And you're also going to spend close to that on the attorney to probate the will.
[00:24:07] Speaker A: Yeah.
[00:24:08] Speaker B: So those are the kind of things that you're like, I didn't think about that one. And think about that little savings account that I haven't thought about in five years.
[00:24:15] Speaker A: Right. And it's daunting for individuals to come and think about an estate plan because that term estate plan can just be overwhelming. But part of the, the process and the kind of the growing pains, if you will, is I want you to go through your list of assets because those beneficiary, those designations, those accounts can sometimes be what. Cause the biggest problem we talked about. There are ways in which we can work around a probate situation. And maybe we've done all the right things, but there might be one financial account that could have had a beneficiary on it that didn't. Right. And now the only way we're going to get access to it is going into court and hopefully there's enough money in the account to justify it. It's a good homework project to do, which is again, it's homework. It's not fun, but it's just incredibly, incredibly important.
[00:24:58] Speaker B: Yeah. Well, and you mentioned, say, things like coin collections, maybe a remotely valuable piece of art, you know, things that you just don't think about but could really mess them up for long term care. So just in your will, give that painting to someone else.
[00:25:12] Speaker A: Yeah. Right.
[00:25:13] Speaker B: At the end of the day, the SSI benefits and the Medicaid waiver benefits are going to be way more important that even that $20,000 painting that someone might have in the house, which most of us don't.
[00:25:23] Speaker A: Right.
[00:25:24] Speaker B: We have prints and that's okay.
[00:25:25] Speaker A: Yeah.
[00:25:26] Speaker B: Okay. So I want us to go back now because that's a whole lot. Very thankful for that. So let's go back and summarize a little bit and talk about step one. They get off their podcast, they stop walking on the treadmill.
What do they do first?
[00:25:41] Speaker A: So I always say you, you call us, Right. We call us at Rosenblatt Law Firm. We will sit down and give you a free consultation because at the end of the day, my, my passion is education. I want these families to know how important it is. I will sit with you for an hour free of charge. At the end of the day, if you're like, thanks for the information, I think you're too much. Oh, I don't think that you're the right attorney for me, that's completely fine.
I can even try to find somebody else for you. Right. But ultimately, just come and get the information so you can start collecting the data. Really?
Right.
[00:26:17] Speaker B: Okay. So that's the very first step. I think I want step 1A to be if you're not already on the Medicaid waiver wait list, I don't. If your child's 2 or 22, you go to your local IDD authority and you get on that wait list for the Medicaid waiver services for when they turn 18. And then one of the other things I know we talked about today was also making sure before tons of other workshops we could do on guardianship.
[00:26:42] Speaker A: Right.
[00:26:42] Speaker B: I do want you for a second in a minute to talk about the ABLE account, just briefly. Also making sure that we're thinking about the finances before their 18th birthday, because there is discussion how long Medicaid can look back. If all of a sudden a child had assets worth $50,000 when they were 16 and now 2,000 when they're 18, the state might say, where did all that go? So really, just thinking about all that ahead of time, one of the tips I always say is if Aunt Susie wants to give her for Christmas, let it be a Visa or Amazon gift card. Stop writing checks to these guys for their benefit or take them on a shopping spree, but don't write them checks. And so the first step would just be to contact you. Get started. Out of the two, the will is probably more important than the trust.
[00:27:27] Speaker A: Let's say if I have a child who has special needs, I could do a standalone special needs trust that says, you know, if people want to leave assets to my child, that they can name this trust. I can even use that trust as a beneficiary on life insurance and things like that.
But I still probably have a car, personal property, a home that's only controlled by what my will says. If I die without a will, because I'm like, I don't have a whole lot on this side, that's still going to be money and assets that once liquidated, would go to my child outright versus into that special needs trust, we can create a special needs trust as well within that will, which is what most people tend to do, there's not a right or wrong way to do it.
But some people say I will just have a will. And in my will, when I die, my estate goes into a special needs trust that gets created at that point in time. So for me, number one, absolutely will Will. Will.
[00:28:17] Speaker B: Okay, so talk just briefly about the Able account, what it is and when would parents access it or have used it as a benefit.
[00:28:25] Speaker A: Yeah, the able accounts are a wonderful tool. If we are talking with clients about creating a special needs trust and especially a third party special needs trust. Cause usually we're working on that proper planning. We start talking a little bit about taxes and income on these types of trusts. Because irrevocable trusts have their own kind of tax bracket, very severe tax rates. We don't want the trust paying those taxes. So there's a great little tool that we have called an able account that essentially is a glorified bank account that Social Security has said. We approve this bank account for individuals who have SSI and Medicaid. You're allowed to have up to a hundred thousand dollars in that account without impacting your benefits. You have to have some disability that was diagnosed before the age of 26 in order to get one opened for you. You are allowed to spend money on quote, qualified expenses versus a special needs trust. You're kind of limited. The special needs trust is allowed to supplement, not supplant those benefits. So it can be kind of more restrictive.
Able account says you can pay for housing, you can pay for food, you can pay for the. As long as they're a qualified expense. If we're talking about income being generated in the trust, we pull it out, we deposit it into the Able account. So you're not, you're avoiding a tax issue. But now we have some spare money that the child can use and have more flexibility on what they can use it for.
[00:29:44] Speaker B: And you can do that at most banks nowadays, right?
[00:29:46] Speaker A: Yeah. And again, the Social Security allows it because there's a clawback. Right. When, when that child dies, money left in that account would first go to the state of Texas.
So it's a great tool to have alongside of a special needs trust, especially a third party special needs trust. But we don't want to overly fund it either. Right. And that's another great tool as well for an individual that maybe they again want to work more and earn more than $2,000. An able account would also be a great tool to put that excess income.
[00:30:14] Speaker B: Or again, a fan Susie says this year I really want to give Johnny $10,000. I don't trust giving it to mom or dad. I'm not sure Johnny's going to use it.
[00:30:22] Speaker A: Right.
[00:30:22] Speaker B: But we also know Johnny has expenses this year. She can put it into the Able account.
[00:30:27] Speaker A: Right.
[00:30:27] Speaker B: And know that it will go towards as you said like qualified expenses for Johnny.
[00:30:32] Speaker A: Yeah. And there's a limit as far as how much you can contribute to these accounts every year. So you have to be cognizant of that. It's usually in line with whatever the annual gift tax exclusion amount is. So it would have been 19,000 for this year. You can't go above that. Okay. So if the child's working, Aunt Susie wants to give that child money, we just have to make sure that it's not going over that. That amount.
[00:30:52] Speaker B: Good, Wonderful. I think the important piece again, we want our listeners to take away is like, you think you can't afford to do it, but you really can't afford to not do it.
[00:30:59] Speaker A: Exactly right.
[00:31:00] Speaker B: It's really so vital. So. Okay, Kat, where can they find you?
[00:31:03] Speaker A: Go online. Find us at Rosenblatt Law Firm. We have a local office here in Kingwood. We are also based out of San Antonio and we have right now a virtual office out of Austin, Texas as well.
[00:31:12] Speaker B: And you will do zooms. I love.
They don't want to come to beautiful King with Texas.
[00:31:17] Speaker A: Exactly.
[00:31:18] Speaker B: Then they can do a zoom. Exactly. Well, Kat, this has been invaluable. We are so grateful. And I even today at the luncheon, I just, if we even just help one or two families absolutely make progress towards this, then I consider that a great day.
[00:31:30] Speaker A: Yes, me as well.
[00:31:31] Speaker B: Thank you so much.
[00:31:32] Speaker A: Yeah. Thank you for having me.
[00:31:33] Speaker B: If you need help or resources, whether you're a parent, someone on the spectrum, a business or a community organization who want to know more or need help or want to share resources, please reach out to
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[00:32:17] Speaker A: Thanks for joining us on Shining Through Voices of Autism. If you enjoyed this episode, be sure to subscribe, leave a review and share with others who want to celebrate neurodiversity.
[00:32:30] Speaker B: Until next time, keep shining SA.
