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I highly recommend Litman Krooks for special education needs and advocacy. Marion Walsh and Sandi Rosenbaum were able to help us secure the educational services that our child needed, and they did it with extremely little time to prepare. We were very impressed with their responsiveness and willingness to take our case with just a few days notice.
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New York Special Needs Planning Lawyer
It takes careful planning to provide properly for a loved one with a disability. Families with children with special needs have to be aware of financial planning tools like special needs trusts. They also must consider guardianship and transition planning, as well as providing for their loved one in their estate plan.
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Differences Between an ABLE Account and a Special Needs Trust
|ABLE Account||First-party Special Needs Trust||Third-party Special Needs Trust|
|Governing authority||26 USC §529A (tax code)||42 USC §1396p(d)(4), NY SSL§366 & NY EPTL§7-1.12||NY EPTL§7-1.12|
|Payback provision||Yes. State entitled to receive all ABLE balance at death of beneficiary up to amount of Medicaid provided||Yes. State named as remainder beneficiary to extent of Medicaid provided||No|
|Beneficiary eligibility||Individual entitled to Social Security benefits (or otherwise disabled) before age 26||Under 65 at time of trust creation and disabled by Social Security definition||No limits or requirements|
|Grantor/settlor||Any person (but beneficiary owns account)||Person with disability, parent, grandparent, guardian or court||Anyone other than person with disability|
|Tax issues||No tax on earnings; distributions taxed unless used for “qualified disability expenses”||Trust earnings taxed to beneficiary under grantor trust rules; no separate tax on distributions||Sometimes income taxable to person contributing money to the trust; otherwise taxed at higher trust rates but distributions to or for beneficiary may carry out income tax liability also possible Qualified Disability Trust.|
|Effect of distributions on benefits||If for “qualified disability expenses,” no effect on eligibility or benefit levels||Only distributions for food and shelter raise issues re: eligibility; distributions directly to beneficiary general precluded||Distributions to beneficiary may cause benefit reduction or loss, as may distributions for food or shelter; other distributions have no effect on most eligibility programs|
|Management of assets||State program provider; account holder may choose state||Someone other than beneficiary; court often supervises||Someone selected by settlor; often family members but sometimes professionals (with costs and bureaucracy)|
|Countable resource?||Yes for SSI if balance exceeds $100,000||No|
|Maximum contribution||Gift tax exemption amount ($14,000 in 2017/$15,000 in 2018) per year total, from any source||No limit|
|Limit on number of accounts||1 per beneficiary||No limit|
ABLE accounts are simpler to set up than special needs trusts, but consulting with a special needs planning attorney is still recommended.
ABLE accounts are only available to people whose disability began before age 26, but special needs trusts have no such restriction. Special needs trusts also do not have the contribution limits that ABLE accounts have. An individual may have both a special needs trust and an ABLE account, and choosing the right options for you and your family should be done with the advice of your attorney.
We look forward to helping you build a secure foundation for your child’s future.
Littman Krooks is a Proud Member of the Special Needs Alliance
The Special Needs Alliance is a national organization comprised of attorneys dedicated to the practice of special needs, guardianship, disability and public benefits law.
The Special Needs Alliance is an invitation-only organization whose membership is based on a combination of relevant legal experience in the disability and elder law fields, direct family experience with disabilities, active participation with national, state and local disability advocacy organizations, and professional reputation. Littman Krooks is the only firm in the Westchester, Hudson Valley and New York City area with Special Needs Alliance members.
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This article does not constitute legal advice and should not be relied upon. If you need legal advice concerning this or any other topic please contact our offices to schedule a consultation with one of our attorneys at 914-684-2100 or 212-490-2020.