May 7, 2020
Episode 34: Financial Planning for Special Needs Children with Guest Zaccary Call
In this episode, we discuss financial planning for children with
special needs. Our guest, Zaccary Call, explained that there are
many different facets to Social Security. Social
security/retirement income is what we think of retirement benefits
and starts at age 62 (or later if you choose). Supplemental
security income (SSI) and Social Security Disability (SSDI) both
have disability requirements when it comes to children.
SSI is a benefit paid based on need, whereas SSDI is based on the
child's earnings (if they have worked for at least 10 years) or
their parent's earnings. To qualify for and keep SSI, you cannot
have more than $2000 in assets, excluding your home and your car.
Under SSI, you can earn only $19,000 a year, although they don't
count all of the income, as they have some allowable deductions,
such as for sustaining life (like housing and food). SSI is funded
by general tax revenues. The Federal Benefit Rate (FBR) is $771 for
one individual and $1157 for a qualified couple, as of 2019. SSDI
is based on someone who is insured, meaning they have been in the
workforce for at least 10 years (or 10 years worth of quarters) to
qualify for SSI benefits. There is a family maximum of 150-200% of
the parent's SSI.
SSDI is not paid due to low income, but it is paid because the
child has worked or their parents have worked. Of note, SSDI is
often denied the first time, but you are allowed to appeal or
reapply. Most children who qualify for SSDI are adults when they
become eligible for SSDI. Another, and unfortunate, way to qualify
is if a parent passes away, as you can use the SSI death benefit.
To qualify for a disability under SSDI, you need to show the child
can't do any typical job. They look at current work status of the
child, how much money the child and parents are earning, how severe
the medical condition of the child is (lasting at least 12 months
or expecting to result in death), can the child do the job he/she
was doing, and can the child do any job at all. However, if the
child is blind, they automatically qualify for SSDI. A state
disability agency makes the determination of disability. If this
information is confusing, there is a child disability starter kit
which can help you figure out where to start.
Social security planning can be very important, as there are a lot
of benefits within social security and there is a lot to navigate.
There can be a lot of swapping with SSI, so it can be helpful to
meet with a financial planner to discuss eventualities and the best
option for your SSI. Do not contact SSA for help, as they tend not
to give accurate answers. Attorneys can help with this process, but
they tend to cost money. Financial planners can be very helpful,
however, and less expensive.
Retirement and income planning can be very complex when you have a
child who has special needs and is likely to outlive you. Special
needs attorneys can help. Special needs trusts may also be helpful.
A trust is a document that lays out a set of instructions that are
to be carried out. A person with a disability can receive money
from with without it hurting their ability to obtain SSI. These are
irrevocable gifts from a legal perspective and this should be the
amount you feel that family member needs. You can set up a secial
needs trust for anyone who is disabled, and rules are not as strict
as an ABLE account or SSI/SSDI. The purpose of this is to make sure
you can provide additional money to the child without jeopardizing
their SSI. To create a special needs trust, you would need to work
with an attorney to help you draft the documents. This typically
costs $1500-2500. Make sure that attorney is very familiar with
special needs trusts.
An ABLE account is easier to set up and less expensive to set up.
It is a tax-advantaged account. It is similar to a 529 plan, but
for the needs of children with special needs. A family can put
money into this account and have the money invested and take it out
and spend it on things that the disabled person needs, such as
food, medical expenses, and living expenses. For these accounts,
you take the money out and use whenever you need it. It can also
help avoid losing SSI, while also providing additional money to the
child. Max contribution is $15,000 per year. The max lifetime
contribution is around $300,000. The first $100,000 (at a time) is
exempt from impacting eligibility for SSI. If there is money left
after the person passes away, Medicaid can recoup some money, but
the rest will go to a beneficiary that was previously designated.
To be eligible for ABLE accounts, you must meet criteria for a
disability, with similar criteria as SSDI. To set up an ABLE
account, find the state that you would like to set up your ABLE
account with and follow their instructions.
Links:
Financial Planning
Firm
Podcast/Blog
Twitter
Instagram
Facebook: Zaccary Call
Linkedin:
Zaccary S Call
SSA disability
page
Brochure about
Disability
How
do you qualify?
Child disability starter kit.
Able
accounts
https://www.able-now.com/
Special
Needs Trust
Investopedia
Email us if you have
any questions or ideas!
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Show Music:
Intro Outro: Intro Outro 2 by Mattias Lahoud under CC-BY 3.0
License (www.freesound.org)
Theme Song: 90s rock style by monkeyman535 under CC-BY 3.0 License
(www.freesound.org)
Self Care Song: Green and Orange No Water by Duncan Alex under
CC-BY 3.0 License (www.freesound.org)
Hosted by: Jessica Temple and Lewis Temple
Disclaimer: Our show is not designed to provide listeners with specific or personal legal, medical, or professional services or advice. Parents of children with health issues should always consult their health care provider for medical advice, medication, or treatment.
Copyright 2020 Jessica and Lewis Temple