Clancy & Associates, LTD.
  • Home
  • Practice Areas
    • Special Needs Planning & Trusts
    • Transition Planning
    • IEP / Education
    • Guardianship >
      • Adults with Special Needs
    • SSI Applications
    • Estate Planning
    • Resources
  • Our Team
    • Katie M. Clancy
    • Alexandra Baig
    • Elizabeth Dean
    • Robyn McCord
    • Jennifer A. Sabourin
    • Kate Devine Schye
    • What is a Special Needs Planning Attorney?
  • Events
  • Testimonials
  • Learning Library
  • Contact Us
    • E-Newsletter Sign Up
Learning Library
Sign up for our e-newsletter

Contributions to ABLE Accounts May Now be Eligible for the Saver’s Credit

10/8/2018

0 Comments

 
Under the federal tax code, certain low- and middle-income workers are eligible for a tax credit, known as the Saver’s Credit, designed to reward them for contributing to their retirement plans.

The new tax law, the Tax Cuts and Jobs Act, provides that people will now be able to benefit from the credit when they contribute to ABLE accounts for people with special needs.

Congress passed the Achieving a Better Life Experience (ABLE) Act in 2014, creating a new savings vehicle for people with disabilities that preserves their eligibility for Medicaid, food stamps, and other means-tested programs while saving for disability related expenses.

Annual contributions to ABLE accounts are capped at $15,000. Of these contributions, a certain portion of the first $2,000 -- $4,000 if the person is married and filing joint taxes -- can be deducted via the Saver’s Credit, depending on the contributor’s income.

With the Saver’s Credit, people can receive a credit equivalent to 50, 20, or 10 percent of their annual contributions to Individual Retirement Accounts (IRAs), including both traditional or Roth IRAs, or employer-sponsored retirement plans -- and now ABLE accounts as well -- up to $2,000.

For 2018, individuals with adjusted gross incomes of less than $28,500, filing as the head of household, can receive a credit for 50 percent of their contributions. So, for example, if a person making $25,000 in adjusted gross income contributes $2,000 toward an ABLE account, she can receive a $1,000 credit on her tax return by claiming the Saver’s Credit. This figure drops to 20 percent if the person’s adjusted gross income is between $28,601 and $30,750, then to 10 percent if the person earns between $30,751 and $47,250. (All income figures are for 2018.) The credit is not available to people making an income above these amounts.

Anyone contributing to an ABLE account could potentially be eligible for the credit, although it is not available to people under age 18 or full-time students, as well as people who are listed as dependents on another person’s tax return.

The Saver’s Credit can be claimed by filling out IRS Form 8880, Credit for Qualified Retirement Savings Contributions. This form will be revised later in 2018 to reflect the new changes.

For more about ABLE accounts, contact us.
0 Comments

Can a Special Needs Trust Pay for Housing Without Reducing SSI Benefits?

10/8/2018

0 Comments

 
Trustees of special needs trusts generally have wide discretion in determining whether to distribute funds to trust beneficiaries. But if the person with disabilities receives Supplemental Security Income (SSI), careful precautions should be taken before any trust funds are used to pay for housing costs.

For the year 2018, federal guidelines set the maximum monthly SSI benefit at $750 for individuals, $1,125 for eligible individuals with an eligible spouse, and $376 for an “essential person,” such as a child. Certain states add a supplement on top of the federal maximum.  

The most critical factor in determining whether SSI recipients are eligible for the maximum benefit is their housing arrangement.

People living alone who pay their full rental expenses, including utilities, are eligible for the maximum monthly SSI benefit, assuming they would otherwise be eligible for the maximum. Likewise, where the SSI recipient lives with another person or persons but pays their proportionate share of the rent, the recipient is eligible for the maximum SSI benefit.

However, where a third party pays the rent—be it a parent or a special needs trust—the Social Security Administration (SSA) will cut the maximum federal SSI benefit by one-third, plus $20. For example, if a person receives $750 from SSI, but his special needs trust covers his monthly rental expenses, his benefit will be reduced to $520.

Spouses of SSI beneficiaries and parents of minor children who are SSI beneficiaries are not considered third parties under the applicable SSA rules, and thus shelter payments by them will have no bearing on the SSI recipient’s monthly benefit.  However, SSA income rules apply to parents of minor children and spouses and would likely disqualify a person from SSI for that reason.  

The rules are identical for other types of housing arrangements, such as where instead of a special needs trust or other third party paying for rent, it covers the SSI recipient’s monthly mortgage payments, co-op fees or, homeowner fees. The same rules apply for monthly utilities payments, such as electricity, gas or water expenses.

Generally, people who are temporarily institutionalized, such as in a hospital, nursing home or assisted living facility, are not eligible for SSI, with some exceptions. A permanent address, however, is not a requirement for continued SSI eligibility. SSI benefits will generally continue where the person is homeless or living in a shelter.

Finally, for SSI recipients who travel, third parties may pay for hotel and food expenses during travel without causing a reduction in the recipient’s benefit.

Payments from special needs trusts can affect a beneficiary's eligibility for Section 8 housing assistance as well.  For more information on distributions from special needs trusts and how they will affect a beneficiary’s eligibility for SSI and other government benefits, please contact us.
0 Comments

Say a Little Prayer: Aretha Franklin Had No Will, and a Child With Special Needs

10/8/2018

0 Comments

 
According to court documents, legendary singer Aretha Franklin did not have a will when she died, despite reportedly having a son with special needs. The lack of a will opens up the intensely private singer’s estate to public scrutiny and unnecessary costs, and means that there are no specific provisions to protect her son.

Franklin, who died in Michigan at age 76, left behind four sons, but no guidance on how to distribute her estimated $80 million estate. The eldest son, Clarence, age 63, has unspecified special needs and requires “financial and other forms of support for his entire life,” according to the entertainment news site TMZ.

When someone dies without a will – called dying “intestate” -- the estate is divided according to state law. Under Michigan law, an unmarried decedent's estate is distributed to his or her children. (Franklin had been married twice but long since divorced.)

Even if the “Queen of Soul” had wanted her estate to go solely to her children, by not having a will or trust, her estate will have to go through a long public probate process, which will likely cost her estate considerable money. If Franklin had created an estate plan that included a will and a trust, she could have avoided probate and kept the details of her financial circumstances private.

But perhaps even more importantly, that estate plan could have made special provisions to ensure that Clarence would receive proper care for the rest of his life. Franklin could have established a special needs trust to preserve any public benefits Clarence may be receiving, or perhaps allocated him a larger share of her estate. She also could have accompanied a financial plan for him with a Memorandum of Intent (also called a “Letter of Intent”) to serve as the primary source of information about her son’s care, providing a roadmap for the courts, guardians, caregivers and others involved in his life.

Clarence could also be harmed by the absence of a will because it opens up an estate to potential challenges that could drag out the probate process. Without a will to clearly state the decedent's intent, litigation resulting from family conflicts often eats into estates.

Finally, Franklin’s estate will be subject to unnecessary estate taxation, leaving even less for Clarence and her other sons. Although she may not have been able to avoid estate tax entirely, there are steps she could have taken to reduce the amount her estate will have to pay.

"I was after her for a number of years to do a trust," attorney Don Wilson, who represented Franklin in entertainment matters for the past 28 years, told the Detroit Free Press. "It would have expedited things and kept them out of probate, and kept things private."

Estate planning is important even if you don't have Aretha Franklin's assets, and it’s doubly crucial if you have a child with special needs as she did. It allows you, while you are still living, to ensure that your property will go to the people you want, in the way you want, and when you want, and to create special protections for the child with special needs before it’s too late. You don’t want your plan for your loved ones to simply be “I Say a Little Prayer.”

Contact us to begin working on your estate plan now.


0 Comments
    Newsletter
    ​
    September 2021 
    August 2021

    Resources

    March 2021
    November 2020
    October 2020
    August 2020
    April 2020
    March 2020
    July 2019
    November 2018
    October 2018
    June 2018
    February 2018

    Categories

    All
    ABLE Accounts
    COVID 19
    COVID-19
    Earned Income Tax Credit
    Letter Of Intent
    Medicaid
    Retirement Planning
    Social Security Disability Benefits
    Social Security Disability Insurance
    Special Needs Planning
    Special Needs Travel
    Special Needs Trust
    Special Needs Trustee
    Supplemental Security Income

Home
Special Needs Planning

IEP / Education
Guardianship 
Testimonials
Contact
Licensed in Illinois
Picture
901 Warrenville Road, Ste. 201
Lisle, Illinois 60532 
​773-929-9000  
Academy of Special Needs Planners
Copyright ©  Clancy & Associates, Ltd.
​All rights reserved.   |   Legal Disclaimer​
​This web site is designed for information only. 
The information presented at this site should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.
  • Home
  • Practice Areas
    • Special Needs Planning & Trusts
    • Transition Planning
    • IEP / Education
    • Guardianship >
      • Adults with Special Needs
    • SSI Applications
    • Estate Planning
    • Resources
  • Our Team
    • Katie M. Clancy
    • Alexandra Baig
    • Elizabeth Dean
    • Robyn McCord
    • Jennifer A. Sabourin
    • Kate Devine Schye
    • What is a Special Needs Planning Attorney?
  • Events
  • Testimonials
  • Learning Library
  • Contact Us
    • E-Newsletter Sign Up