Wait, Are Disabilities and Special Needs the Same Thing

 

In Ohio, a disabled person is an individual who has a physical or mental impairment that substantially limits one or more major life activities. The term disability is commonly used in the laws and regulations that are intended to protect individuals with special needs.

 

The origin of the term special needs is a bit of a mystery. Many people believe it is simply a euphemism for more common terms like ‘disabled’ or ‘impairment.’ In current vernacular, the term special need is a catch-all phrase that refers to all forms of disabilities and a variety of diagnosis and conditions that affect people’s daily functions. Special needs are generally categorized as one or more of the following:

 

• Behavioral

• Communication          

• Developmental

• Learning

• Medical

• Mental/Psychological

• Physical

• Sensory

 

Within each generalized category exists a variety of disabilities and conditions that affect a person's ability to function in their daily environment. A few examples of the correlation between generalized special needs categories and familiar disabilities, diagnosis and conditions are as follows:

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What Estate Planning Options are Available

for Individuals with Special Needs

 

A common estate planning goal is to create a game plan that ensures financial support for children. For parents of children with special needs, however, more specific goals are required. In families where special needs are present, considerations such as managing money for the lifetime of the special needs child, protecting that child’s eligibility to apply for public benefits and providing funds to supplement or enhance public benefits need to be factored in.

 

Three options that are frequently used to meet the needs of persons with disabilities are the Ohio STABLE Account, First-Party Special Needs Trust and Third-Party Special Needs Trust.

 

Ohio STABLE Account:       The Achieving a Better Life Experience Act (ABLE) of 2014 allows states to create tax-advantaged savings programs for eligible people with qualifying disabilities. ABLE accounts allow the designated beneficiary to save and invest money without losing eligibility for public benefits programs like Medicaid, Supplemental Security Income (SSI) and Social Security Disability (SSDI).

 

ABLE accounts permit the designated beneficiary to save money and invest up to $18,000 annually (in 2024) to be used for a wide range of qualified expenses. Funds from an ABLE account can be used for a variety of things not typically permitted from other accounts. As an example, the designated beneficiary can use funds from an ABLE account to help pay for a vacation so long as the trip can help to maintain or improve the health, independence, or quality of life of the designated beneficiary. If used for qualifying expenses, distributions from the ABLE account are tax free.

 

First Party Special Needs Trust:      A first party special needs trust is a trust that is funded with assets belonging to the individual with special needs. By creating the trust, an individual with special needs who has assets greater than the eligibility level for certain government benefits can transfer the excess funds into the trust and still qualify for federal and state benefits. The funds transferred into the trust are not counted in the eligibility determination process.

 

First party special needs trusts are frequently used when an individual with special needs is awarded a large settlement or is scheduled to receive an inheritance. During the individual’s lifetime, trust typically pays for things beyond the simple necessities of life, like education, recreation, counseling, and medical expenses. If any funds that remain in the trust at the beneficiary’s death, they are subject to Medicaid payback by the Ohio Medicaid Estate Recovery program to reimburse the State of Ohio for medical assistance paid on behalf of the beneficiary by Medicaid.

 

Third Party Special Needs Trust:    A third party special needs trust is funded with assets belonging to someone other than the individual with special needs, like a grandparent. These trusts are often created as part of another person’s estate plan to supplement the beneficiary’s government benefits. Because these trusts are funded with assets that never belonged to the beneficiary, they are not required to contain a Medicaid payback provision and can be transferred to another individual as part of the original creator’s estate plan.

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There are many important considerations when creating an estate plan if you have a family member with special needs. The manner in which you gift assets during your lifetime and how you choose to leave an inheritance may impact government benefits eligibility. If your family member has a special need, it is important to consult with an experienced and knowledgeable attorney who has been preparing comprehensive estate plans for individuals and families for 25 years. Contact Christopher M. Alexander, Esq. at (513) 228–1100 or chris@alexander-legal.com.