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Planning for two lifetimes with disabled children

Preserving funds through your retirement and end-of-life care becomes even more important when an adult child cannot provide self support. Medical treatment and better care mean that loved ones with disabilities are living longer.

This is a success story, but one that can complicate planning to provide for your loved one. Marketwatch provides an example, a child with Down Syndrome can easily live a full life that extends into his or her 60s. It’s hard to believe that 35 years ago the average life expectancy was less than half what it is today.

A 2012 paper by the Institute on Disability and Human Development estimates that by 2030, there will be 1.2 adults with developmental disabilities aged 60 or older. Today that number is about 642,000.

Carefully review beneficiary designations

The main consideration when parents, relatives and close friends plan a gift to a special needs individual is ensuring it will not jeopardize means-tested benefits. Owning more than $2,000 can disqualify an individual from receiving Supplemental Security Income or Medicaid.

To this end, it is essential that insurance policy and retirement/investment plan beneficiary designations do not list a loved one who is disabled. Any substantial asset should name a trust as the beneficiary.

Special needs trusts and ABLE accounts

Setting up a special needs trust must be completed with care. The guidance of an estate planning lawyer will ensure it is done properly. Templates and forms exist, but they are not tailored to your individual situation and can cause more problems than they solve.

We have talked about another saving vehicle – 529 ABLE accounts that can hold up to $100,000 without jeopardizing benefits. We discussed the basics of these accounts in our June blog post last summer. These accounts may start to be available in Colorado at the end of 2016 or 2017. They are another tool and potentially more cost effective based on your family needs.

Planning for the future is even more important when a family member has special needs. Get tailored, thoughtful legal advice that will provide you with peace of mind that loved ones will be cared for into the future.

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