How to Properly Provide Financial Assistance to Help Someone with Special Needs Through College

September 12, 2018

As we all know, college is more expensive than ever before. After a four-year education, people are piling up debts that are going to take more than a decade to pay off. Despite the price, finishing college is an outstanding achievement, and thanks to increased efforts in accessibility and guidance, people with special needs are graduating at an accelerated rate. However, the journey is still an expensive one, and friends and family want to know the best way to help ease the financial burden on the special needs individual and his or her family.

Revocable Trust

In a scenario where you want to encourage a special needs loved one to finish their degree, but aren’t sure they will, you may want to create a revocable trust. With a revocable trust, you can change the terms of the trust whenever or however you want. The major benefit of a revocable trust is its flexibility, which allows you to support the plans of your loved one no matter the situation. If a special needs loved one starts school, a revocable trust would allow you to help fund their education at every step; however, if something comes up and the loved one must drop out of school, a revocable trust will allow you to change the terms of your gift to continue supporting him or her.

The asset(s) in a revocable trust, however, are considered “countable resources” for the purpose of determining the special needs person’s qualification for government benefits, such as SSI and Medicaid. If continued qualification for government benefits is a goal or concern, consider an ABLE account, discussed below.

ABLE Account

If you are a guardian of a special needs person, and you have many people who want to donate money to his or her schooling, then you may want to consider establishing an ABLE account. An ABLE account is just like any other savings account, except the funds in the account (up to $100,000) will not impact their eligibility for disability programs like Medicaid and Supplemental Security Income (SSI). With an ABLE account, any number of friends and family can transfer money into the account, but you can control how to spend the money on your loved one’s schooling.

Special Needs Trust

If you or a loved one want to give more than $100,000, a special needs trust may be the best solution. There is no limit to the amount of money that can be in a special needs trust and, if properly drafted, the money it holds is not a countable resource for purposes of determining eligibility for government benefits like SSI and Medicaid. There are special considerations and features of a special needs trust that we would need to discuss, but it is a powerful and flexible planning tool in the right situation.

It’s fantastic that there are so many ways that friends and family can help a special needs loved one through college, but setting the right plan into motion takes knowledge and experience. If you need help creating an ABLE account or would like guidance in establishing a revocable will or special needs trust, Chestnut Hill Legal is here to help.

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