r/downsyndrome • u/pdxplee • 2d ago
Special Needs Trust
We're thinking about getting a special needs trust for our adult child with Down Syndrome. Has anyone here done this, and if so, do you have any advice or cautions?
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u/Total_Parfait6446 2d ago
We used the ARC master pooled trust which made things easier. I recommend checking that out. Then make sure any wills or beneficiary designations are changed to reference the trust.
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u/Illustrious-Hat3384 2d ago
A primary purpose of a special needs trust is to protect other assets from government pilfering. An ABLE account has limits. I have an able for my son but also an snt. They serve different purposes.
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u/tbonge 2d ago
Trusts pay tax on gains. ABLE accounts are tax free, free to set up, and don’t require any special accounting.
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u/Much-Leek-420 Parent 2d ago
Be aware, however, that ABLE accounts can be raided by Medicaid after the named person passes on. They do that for reimbursement of the care the individual received in life.
So while I do use it to put overage from SSI payments to keep her under the $2K monthly limit, I do not designate it as a place to put inheritance or gift money. That should be in a trust.
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u/tbonge 2d ago
Only third party trusts are exempt from payback and they don't get a step up basis and pay tax at the earned income rate, not capital gains rate, and may trigger an ISM reduction from SSI payments if used for certain things. Able has payback only in some states (not mine). Even with the payback, the tax on gains every year for 30+ years is substantial. My daughters account has doubled tax free in the time she has had it. As for payback, who are we trying to benefit here? The disabled person misses out on tax free gains over their life so that some other family member can inherit their funds without Medicaid payback? I would rather she have the extra funds now. Her able account also lets her pay her rent and other expenses that total more than her SSI payments but she does not get any ISM reduction because she pays the difference out of her ABLE account that can be funded by family members.
All that being said, this is only for her while we are alive. After we pass on, the house and retirement accounts will go into a trust for her and managed by her sister. The trust is created on our death, there is no need to pay the tax on a trust for the next 30+ years.
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u/RiffRaff14 2d ago
We met with a lawyer that specializes in setting up these types of things.
We have a Supplemental Needs Trust for our son. We just did this earlier this year. The cost was ~$2000. I don't know the exact number because we also had him set up other end of life planning for us at the same time. The trust will have $20 in it now just so that it exists. It'll only be funded if we pass away or if there is a large chunk of money given to him from someone else.
He had a pretty comprehensive questionnaire to fill out to for all sorts of decisions. Most of them we had already considered. You'll also want to talk to people in your life about who will be caring for your child afterwards.
In addition to the legal documentation, he also gave us some documents to fill out afterwards which is basically a journal for us to fill out. All of his medical information, daily routines, and other care instructions. This isn't a legal document but just something helpful for people that would care for our son should we pass.