Planning for Bright Tomorrows

Planning For Bright Tomorrows Estate and Future Planning for Ohioans with Disabilities and Their Loved Ones

Written by Logan K. Philipps & Derek Graham, Philipps & Graham, LLC

1

About the Ohio DD Council The Ohio Developmental Disabilities Council (ODDC) is a planning and advocacy group of over 30 members appointed by the Governor.

The ODDC receives and disseminates federal funds in the form of grant projects in order to create new ideas, pilot new approaches, empower individuals and families, and advocate for systems change to more fully include people with disabilities in their communities.

About the Authors Logan K. Philipps, Philipps & Graham, LLC logan@pglawohio.com Logan has been an attorney since 2006. As an estate planning attorney, Logan helps people plan for bright tomorrows for themselves and their loved ones.

An area of concentration for Logan’s practice is planning for families with children with special needs. Before becoming a lawyer, Logan taught elementary school in Cincinnati, Ohio. He utilizes his teaching background to educate individuals, parents, grandparents, and loved ones about the strategies available to protect family members. His experience with special needs started as a teenager when his father remarried and he gained a stepbrother who has special needs.

Logan lives in Grandview Heights with his wife and three boys.

Derek Graham, Philipps & Graham, LLC derek@pglawohio.com Derek Graham is an estate planning attorney and partner at Resch, Root, Philipps & Graham, LLC in Dublin, Ohio. Derek’s practice focuses on developmental disability law, special needs planning, guardianship, probate, probate litigation and business (organizational, transactional and succession). Early in his career he was fortunate to get experience in civil litigation, business transactions and estate planning. Then in 2009, he and his wife had their first daughter who was born with Down syndrome. Like many of his clients today, they were inundated with information and felt overwhelmed. He now spends the majority of his days helping similarly situated families with the various resources that exist. Derek finds it very rewarding to help families understand how to effectively and practically plan their estate. More than that though, he enjoys helping families understand the resources available to them and how to get the most out of these resources.

For more information about the authors or Philipps & Graham, LLC, please visit https://www.pglawohio.com/

Table of Contents

4

What is Special Needs Planning?

6

Estate Planning

6

Parents of Children with Special Needs

8

Persons with Disabilities

8

What is a Trust?

10

Benefits

12

Medicaid

12

Social Security

15

What are Adult Disabled Child Benefits and who is eligible?

18

What types of Special Needs Trusts are there?

18

Non-Payback Trust

20

Payback Trust

20

Supplemental Services Trust

21

Pooled Trust

22

Who can act as a trust?

23

What assets can be held in a trust?

24

How much money and what assets should I/we leave for the care of our child?

25

What is a Memorandum of Intent?

26

Can I leave the family home to my child with a disability at my death and preserve the child’s government benefits?

27

Table of Contents What is an ABLE Account? What is a STABLE Account?

27

How do savings in a STABLE Account affect SSI or Medicaid?

29

Who is eligible for a STABLE Account?

29

Are there contribution limits?

29

What happens to any money left in a STABLE Account when the beneficiary dies?

30

What expenses are allowed to be paid by STABLE Accounts?

30

How does someone open a STABLE Account?

31

Is a STABLE Account all a parent needs when planning to leave an inheritance for a person with disabilities?

31

Final Thoughts

31

Exhibit A

32

5

What is Special Needs Planning?

Special needs planning is estate planning when a disability is involved. Special needs planning combines benefits planning, planning for assets, inheritance planning, Supported Decision-Making, and Guardianship.

DD Council publishes a book titled Supported Decision-Making and Guardianship that details Supported Decision-Making and Guardianship. There is a natural overlap between this book and that one. Individuals seeking information about Guardianships, Powers of Attorney, Health Care Directives, etc. should consult that book available at www.ddc.ohio.gov.

ESTATE PLANNING What is estate planning?

Estate planning is generally thought to be the plan put into place to handle a person’s assets for when they die. Estate planning definitely involves planning death but includes much more. Estate planning involves what happens to assets while a person is alive and what happens when a person dies.

6

This book is intended to help people with disabilities and those who love them plan for the future.

For family members with loved ones with special needs, estate planning usually means, “how can I make sure my child is cared for when I am gone?” For individuals with special needs, estate planning means,“how do I control my property and make sure I stay eligible for benefits?”

What is an estate?

An estate includes everything a person owns in his or her own name or owns with another person, everything payable to him or her, and everything controlled by that person. An estate can be comprised of a residence, cash, stocks, bonds, and other investments, as well as any ownership, full or partial, of a business. An estate also includes any retirement plans, such as IRAs and 401ks, and life insurance death benefits. It even includes personal property such as vehicles, collectibles, and other treasured items. A residence, no matter how large or small, is part of an estate.

Why is estate planning essential for all individuals in the disability community?

Many individuals with disabilities need to maintain eligibility for public benefits like Medicaid and Supplemental Security Income (SSI). Many of these benefit programs limit eligibility to individuals who have limited resources. These programs are means-tested, meaning that if you have the “means” or ability to pay for something on your own, you won’t be given assistance to pay for it.

7

PARENTS OF CHILDREN WITH SPECIAL NEEDS Why do parents of children with special needs need to do estate planning?

Leaving assets for a child who is receiving or will receive means-tested benefits requires care so that the assets left for that child that are intended to enhance the child’s life don’t inadvertently cause the child to become ineligible for those benefits.

Government benefits come in many forms. The most common are Medicaid and Medicaid Waivers, Supplemental Security Income (SSI), Social Security Disability (SSDI), Adult Disabled Child Benefits, food stamps, housing vouchers, etc.

Medicaid and SSI are means tested, meaning that a person becomes ineligible for benefits if he or she has more than $2,000 in countable assets. Most parents will leave at least that much to their child.

Proper planning can guarantee that an inheritance will not negatively impact a child’s eligibility. Most of these plans will make use of a trust for the child with special needs.

PERSONS WITH DISABILITIES Why do people with special needs need to do estate planning?

People with special needs, if able, should be able to control their property when they are alive and, if able, select those individuals that they trust to control their property should they become unable to make decisions.

This type of estate planning that involves controlling property while an individual is alive was the subject of a different book 8

titled, Supported Decision-Making and Guardianship, available at www.ddc.ohio.gov. Supported Decision-Making and Guardianship are discussed in detail.

Generally, a person with special needs may not accumulate assets over the $2,000 limit. This might happen through saving money, but more often a person finds themselves over the resource limit because of a gift or an inheritance. If a person with special needs accumulates more than $2,000, that person will need to take action to move those assets out of the person’s name to a place that will not be counted as a resource. The person will need to spend the assets very quickly, use a special needs trust or an ABLE Account (Ohio’s ABLE Account is called a STABLE Account) to remain eligible for benefits.

There is an exception to the general asset limit of $2,000.

This exception is the Medicaid Buy-In for Workers with Disabilities (MBIWD) program for individuals with disabilities who are working. Individuals who are saving assets while working can hold countable assets up to $14,580 in 2024 and still remain eligible for Medicaid. This amount is adjusted annually.

9

What is a Trust?

A trust is a legal document established by a trustmaker that allows one person (a trustee) to manage, use, and spend assets for another person (a beneficiary). A trust is a legal entity that can own assets. A trust can be established by one person or multiple people, in which case the trust would have, trustmakers.

One way to think about a trust is as a treasure chest. The trustmaker establishes the treasure chest. Assets are placed in the treasure chest. The trustee has the keys to the treasure chest, therefore control of it, and must use the assets for the beneficiary. Just like a treasure chest in a pirate story has different items in it like gold, diamonds, rubies, etc., a trust can have many different items in it like a house, a bank account, stocks, car, etc. A trust can own anything a human can own.

A Revocable Trust may be amended or revoked. An Irrevocable Trust generally may not be amended or revoked, although there may be some exceptions to the general rule.

What is a special needs trust and why do people have them?

The term special needs trust means different things to different people. Generally, parents, individuals with disabilities, and lay people refer to any trust that protects a 10

beneficiary’s eligibility for benefits as a special needs trust. To them, a special needs trust is a trust for a person with a disability in which the assets contained in the trust are not counted as a resource. Most people consider any trust that maintains eligibility for means-tested benefits a special needs trust. This understanding is not actually correct.

Instead, the State of Ohio, the Social Security Administration, and their employees identify a Special Needs Trust as a specific type of trust commonly called a payback trust. A Special Needs Trust is an important trust for a specific situation usually involving an individual’s own assets. Most families in their planning do not want to use a Special Needs Trust. They usually want a Third-Party Discretionary Trust. The various types of trust used in planning for an individual with developmental disabilities are discussed in detail later in this book.

The various types of trusts used to protect eligibility are discussed in detail further in this book.

No matter the type, a trust for a person with special needs is intended to protect eligibility for public benefits by supplementing rather than replacing government benefits that a person may be receiving or might later be eligible for from various assistance programs. In other words, the purpose of the trust is to cover items that government benefits do not pay for, such as trips to visit family members, reading material, educational tools, concert tickets, passes to theme parks, over-the-counter medicines, training, education, treatment, rehabilitation not covered by public benefits, recreation, entertainment, and consumer goods, etc.

11

BENEFITS What benefits are available to people with disabilities that must be protected?

It is beyond the scope of this book to discuss in detail the various government benefits available to individuals with special needs. The major benefit programs are discussed generally below. Individuals should seek assistance from their county board of developmental disabilities, county department of job and family services, Opportunities for Ohioans with Disabilities, or the Social Security Administration for information about benefits. The two major benefits that are available to people with disabilities that are means tested are Medicaid and Supplemental Security Income (SSI).

Medicaid What is Medicaid?

The Medicaid program is a partnership between the federal and state governments that pays for healthcare services for approximately 3.1 million Ohioans with low incomes. This includes more than 1.33 million children. In state fiscal year (SFY) 2023, federal and state expenditures on Medicaid exceeded $36.13 billion dollars and accounted for over 5% of Ohio’s entire economy. The Ohio Department of Medicaid (ODM) is the state agency charged with managing the Medicaid program in Ohio.

The federal government finances a significant portion of state Medicaid programs. States are required to provide coverage for certain federally-defined eligibility groups and services.

States also can receive federal funding for optional groups and services, such as extended postpartum coverage up to one year after childbirth.

12

How Do I Qualify for Medicaid?

To qualify for Medicaid in Ohio, a person must, at a minimum, be an Ohio resident, have or apply for a Social Security number and be U.S. citizenship or meet non-U.S. citizenship requirements.

Any person over the age of 18 who meets low-income eligibility in Ohio may be covered for Medicaid. However, for the purposes of this book, we will limit our discussion to Medicaid with a disability requirement.

Anyone receiving SSI in Ohio is eligible for Medicaid.

Opportunities for Ohioans with Disabilities make SSI disability determinations on behalf of the Social Security Administration. Ohioans seeking a disability determination can start the process online through the Social Security Administration (www.SSA.gov) or Ohio Benefits (www.Benefits.Ohio.gov).

What is a Medicaid Waiver?

Medicaid eligibility through SSI is for health insurance only.

It does not entitle a person to a Medicaid Waiver. Formally known as a Home and Community-Based Services (HCBS) Waiver but more commonly known simply as a “Medicaid Waiver”, waivers allow individuals with disabilities to receive care in their chosen communities rather than in long-term care facilities, hospitals, or Intermediate Care Facilities.

Individuals must require a specific “level of care” and not own countable resources in excess of the resource limit in order to qualify for a HCBS Waiver. It is important to note that some personal property is not considered a countable resource.

What is a resource limit?

The resource limit is the maximum value of the assets an individual is allowed to own and still remain eligible for 13

Medicaid Waiver Services and/or SSI (and the Medicaid that accompanies SSI).

Countable assets include cash, stocks, bonds, investments, credit union, savings, and checking accounts, and real estate in which one does not reside. Assets that are considered exempt (non-countable) include personal belongings, household furnishings, an automobile, irrevocable burial trusts, and one’s primary home, given the Medicaid applicant or their spouse lives in the home and the home is valued under $713,000 (in 2024).

There are two resource limits in Ohio. The general limit is $2,000. This means a person may not have countable assets worth more than $2,000 and still remain eligible for Medicaid. An individual who is working may have countable resources in excess of $2,000 and remain eligible for Medicaid under the MBIWD program. Care must be taken to determine what might be considered a countable asset to the individual when a parent dies so that eligibility is not terminated.

What is “Level of Care”?

14

The scope and amount of services that an individual will need determines their level of care and the type of Medicaid services for which they are eligible. Level of Care is not a financial eligibility component of the Medicaid long-term care programs. An individual who wants to be enrolled in a waiver program must meet the specific Level of Care that is required for that waiver.

The Developmental Disabilities Level of Care is necessary for enrollment onto a Medicaid HCBS waiver. The Ohio Department of Developmental Disabilities administers three waivers that require a Developmental Disabilities Level of Care: Individual Options Waiver (referred to as the “IO Waiver”), Level 1 Waiver, and Self Empowered Life Funding (SELF) Waiver.

What Services are available with a Medicaid Waiver?

A Medicaid recipient does not actually receive direct cash benefits but, rather, receives benefits by way of payments made directly to providers.

Exhibit A contains a brief description of the types of Medicaid Waivers and the services each provides.

Are there other sources of support if I don’t have a Medicaid Waiver?

If the disability had its onset before age 22, the individual might be eligible for services from a county board of developmental disabilities. The county board uses funds raised from property tax levies to provide a wide variety of services and supports, as well as the assistance of a social worker or case management individual called a Service and Support Administrator (SSA).

Social Security What do people mean when they use the term Social Security?

The term Social Security is often used misused. Many individuals use the term Social Security as the name for one of the programs the Social Security Administration operates.

The Social Security Administration operates three major programs: Supplemental Security Income, Social Security Disability, and Social Security Retirement.

15

Supplemental Security Income (SSI) is a monthly payment from taxpayer funds that is used to provide food, shelter and other necessities for those who are eligible. In 2024, payments ran as high as $943 per month. The full amount may be reduced based upon support the recipient receives from others and the earned and unearned income of the recipient.

Common circumstances that cause a reduction • An SSI recipient lives rent free in someone else’s home (including the individual’s parent’s home.

• An SSI recipient earns income over $85 per month.

• An SSI recipient is given over $20/month in a gift.

Social Security Disability Insurance (SSDI) is a monthly payment based on the amount of Social Security the recipient or, in some cases, another related person has paid into the system as a wage earner. A person with a disability who worked and paid into the system may be able to draw SSDI. A person with a disability may be able to receive payment on another person’s work record under a program called Disabled Adult Child Benefits which is explained below. Monthly SSDI payments are determined by the amount paid into the system and the amount of earned income, not by a person’s assets. After receiving SSDI for 24 months, the person becomes eligible for Medicare.

In most cases, a payment from SSDI will eliminate a person’s payment under SSI because usually the SSDI payment is greater than the SSI payment. In some cases, a person may be eligible to receive both SSI and SSDI, as well as both Medicaid and Medicare. In the latter situation, the total monthly payment of SSI and SSDI will be limited to 16

the same amount as the maximum monthly SSI payment.

Social Security Retirement is a federal program that provides retirement and survivor benefits to wage earners and their spouses, former spouses, widows and widowers, and children. A wage earner’s eligibility for retirement benefits is based upon his or her work history (the years during which the wage earner paid into the Social Security trust fund).

Medicare Medicare provides health care benefits for: (1) people 65 or older, and may include some individuals with disabilities who are under the age of 65; (2) spouses, divorced spouses, and widows and widowers of eligible wage earners; (3) children with disabilities of certain wage earners; and (4) those with permanent kidney failure. Within the program, there is Medicare Part A, Medicare Part B and Medicare Part D. Medicare Part A is the hospital insurance program; Part B is the medical (nonhospital care) insurance program. Medicare Part D is the prescription drug benefit to subsidize the costs of prescription drugs and prescription drug insurance programs for Medicare beneficiaries.

Medicaid Medicaid is run by each state and provides healthcare benefits for persons with limited or no income. The federal government provides funding assistance for each state’s Medicaid program, but each state develops its own program.

See additional description of Medicaid provided previously.

17

What are Adult Disabled Child Benefits and who is eligible?

An adult who is or becomes disabled before the age of 22 may be eligible for child’s benefits if their parent is deceased or starts receiving retirement or disability benefits.

The Social Security Administration considers this a “child’s” benefit because it is paid on a parent’s Social Security earnings record.

To be eligible for the “adult child” benefit, the individual must be unmarried and at least 18 years of age. An adult child can include an adopted child, or, in some cases, a stepchild, grandchild, or step grandchild. The amount paid is 50% of the parent’s benefit while the parent is living and 75% of the parent’s benefit when the parent is deceased.

This payment does not reduce the parent’s benefit.

What types of Special Needs Trusts are there?

The term “special needs trust” is used generically in the community by individuals, parents, individuals, county boards, and sometimes even courts to describe a trust keeps a person eligible for benefits. Most of the time this description is fine and causes no harm, but when it comes to Medicaid and the Social Security Administration proper 18

names are important. Under Ohio and Federal law a Special Needs Trust is a specific type of trust that keeps a person eligible for benefits. In Ohio and under Federal law there are 4 different kinds of trust used in the disability community to keep a persona eligible for benefits. Please refer back to page ____ to review what a Special Needs Trust really is.

These trusts can be broken down in two broad categories Payback and Non-Payback Payback Trusts require that upon the death of the beneficiary, money left in the trust must be paid to the tate of Ohio up to an amount equal to the total amount of medicaid payments made on behalf of the beneficiary or retained in the trust to be used to assist other individuals with special needs.

Non-Payback Trusts allows for any money left in the trust after the death of a beneficiary to remain in the control of the trustee and distributed as directed by the trustmaker(s), often to relatives of the initial beneficiary.

Expenditures from all of these trusts are limited to items not covered by government benefits. Generally, these are considered quality of life expenditures: recreational items, vacations, clothing, legal fees, or other items/events for which Medicaid or other third-party payers have denied payment. Extreme care should be exercised by the trustee when administering trusts.

Which trust is right?

The type of trust available for a person depends on whose assets are funding the trust. In order for a Non-Payback trust to be used, the assets funding the trust must never have been owned by the beneficiary with special needs.

19

Non-Payback Trust Third Party Discretionary Trust As the name suggests, only a third party - not the individual with special needs - can establish a Third-Party Discretionary Trust, and only assets that never belonged to the individual with special needs may fund this trust.

A Discretionary Trust is one in which the trustee is given “discretion” as to when and how assets in the trust are distributed. A Discretionary Trust is one of the most common estate planning tools for families of children with disabilities in Ohio.

The primary advantage of a Discretionary Trust in Ohio is that there is no requirement that a portion of the trust be turned over to the state upon death of the beneficiary. That is logical because the funds in the trust never “belonged” to the beneficiary.

Most parents will use a Third-Party Discretionary Trust as part of their estate planning. This trust allows them to leave assets to be spent on their child while he or she is alive and then pass those assets on to other relatives, often siblings, when the child with a disability dies. In most cases, the Third-Party Discretionary Trust is funded at the death of the parents.

Payback Trusts Special Needs Trust The Special Needs Trust is the Medicaid Payback Trust.

This type of trust can be created for anyone with a disability, by the person with a disability, a parent, grandparent, legal guardian or a court. The trust must be funded before the beneficiary reaches age 65. It must comply with both state and federal law and the regulations of the Ohio Department of Job and Family Services.

20

This type of trust requires that the State of Ohio receive the assets remaining in the trust when the beneficiary dies, if any, in an amount equal to the expenditures from the state for the benefit of the beneficiary.

This trust is most commonly used when the individual with special needs has financial assets of his/her/ their own and needs to qualify for SSI or a Medicaid Waiver.

Example: An individual may have saved money during their youth and into adulthood, perhaps the money came from working, birthday gifts, bar or bat mitzvah gifts or first communion gifts. Saving money seemed like a good idea to learn financial responsibility but now that the individual is an adult the individual might need a waiver or wish to begin receiving SSI. Those funds that have been saved can be placed in a special needs trust and the individual can immediately be financially eligible for the waiver and/or SSI. An ABLE account could also be used if the amount is below the maximum deposit limit of the ABLE account.

The Special Needs Trust can be created by an individual with disabilities, parent, guardian, or court.

Supplemental Services Trust Only a person other than the beneficiary can create a Supplemental Services Trust. In other words, unlike a Special Needs Trust, the beneficiary cannot create his/her/ their own Supplemental Services Trust. The assets used to create a Supplemental Services Trust must come from someone without a legal obligation of support and cannot belong to the beneficiary. To meet the requirements of the law, the Supplemental Services Trust cannot be created with more than $260,000 as of 2024. This amount increases $2,000 per year.

21

Expenditures from this trust are limited to those items defined as “supplemental services”: non-necessities such as recreational items, vacations, or items for which Medicaid or other third-party payers have denied payment.

Ohio law requires at least 50 percent of the assets in the trust at the time of the beneficiary’s death be paid to the state of Ohio. After payment, the remaining funds can be distributed to other individuals.

Pooled Trust Pooled Trusts are called “pooled” because the funds from many trusts are combined together for purposes of investment and management. However, a separate account is maintained for each beneficiary and distributions for the beneficiary are made from the beneficiary’s individual account.

Pooled Medicaid Payback Trusts must be established and managed by nonprofit organizations.

A pooled trust offers options for what happens to any funds remaining in the beneficiary’s account at the beneficiary’s death. The person who establishes the pooled trust fund for the beneficiary decides which option to choose when the pooled trust fund is established.

One option is that funds remaining in the beneficiary’s account be retained by the nonprofit that established the trust to be used for the nonprofit or an affiliated partner nonprofit. If this option is chosen then there would be no payback to Ohio. If this first option is not chosen, federal law requires that remaining assets be used to repay Ohio for past Medicaid expenditures for the beneficiary. After repayment, assets can be distributed to individuals.

The Pooled Trust can be created by an individual with disabilities, parent, grandparent, guardian or a court.

22

Who can act as trustee of a trust?

A trustee is the person or entity that administers trust. The trustee must follow the instructions of the trustmaker. The trustmaker determines who will serve as the initial trustee or trustees. Often the trustmaker will name himself/ herself/themselves as the initial trustee. Successor trustees are named by the trustmaker.

A successor trustee is the person or entity that administers the trust at any time the initial trustee is unable to serve. Naming a successor trustee is of great concern to trustmakers. Many times, families are fortunate enough to have a responsible member who can be named as a successor trustee. Because a sibling or other relative will likely be very familiar with the needs, wants, and desires of the beneficiary with a disability, they are the right choice to serve as trustee.

The individual selected does not need any particular skill or background in finance or investing because the individual can use trust funds to hire advisors. It is possible to have multiple people to serve as trustee at the same time, but this can cause some issues. For example, if two siblings are serving as trustee of their sister’s trust, what happens if the siblings disagree on an expenditure for the beneficiary or if they disagree on the proper investments to make? This sort of situation may require probate court intervention.

For most of the families that we help, a single family member is chosen to serve as the initial successor trustee 23

with other family members named as contingent successor trustees. A trust can be drafted with flexibility to allow the trustmaker to change named successor trustees if things change.

Sometimes a family member is not the right choice to serve as successor trustee and the trustmakers choose another individual or professional trustee.

Professional trustees like lawyers, banks and trust companies are often good choices to serve as successor trustees of the trusts described in this book. Family members can advise a corporate trustee on the wants and needs of the beneficiary with a disability, but the trust company would have the responsibility of managing trust assets, making proper distributions for the beneficiary, and filing the necessary tax returns to keep the trust in compliance with state and federal laws.

There are special requirements related to who can be a trustee of a pooled trust. Therefore, in Ohio, most trustees of a pooled trust are corporate trustees. There are no restrictions regarding who can serve as a trustee of the other trusts described in this book.

What assets can be held in a trust?

Any kind of asset may be held by a trust, including cash, personal property, real property, and houses. The trust becomes the owner of the property. Just like a treasure chest can hold gold, diamonds, rubies, etc., the trust (acting like a treasure chest) can hold different assets. Some pooled trusts will not hold certain types of assets but that is a case-by-case situation. Most often a parent or parents establish a Third-Party Discretionary Trust while they are alive and plan to have assets, like life insurance proceeds, flow into the trust when the parent or parents die. In this situation, no assets or few assets are put into the trust until 24

the death of the trustmaker, in which case the trust is a nearly empty treasure chest waiting for a future event to occur that will cause assets to flow into the trust.

However, many times those same parents, in the example above, notify other interested individuals (grandparents, aunts, uncles, friends, etc.) who may wish to leave an inheritance to the child that they have established a trust for the child so that the trust can be incorporated into the benefactor’s estate planning. In this way, the trust can be used as a receptacle for gifts from grandparents, uncles, aunts, and other family members who wish to remember the child.

How much money and what assets should I/we leave for the care of our child?

Parents of children with special needs are often concerned that their own needs for retirement or medical care may deplete all their assets leaving little or nothing for their child. While having a child with a developmental disability can certainly add expense to any family, the amount of increased expense that a family experiences will depend on several factors, most notably of which is how well the family is utilizing available 25

government benefits. It is every family’s desire to leave behind a sufficient amount of funds to provide their child a consistent standard of living but there is not any one formula or amount of money that necessarily accomplishes that objective. Parents of children with special needs should assess their own financial condition and the needs of their own child when determining how much to leave behind. As expressed throughout this book, it is more important to consider “how” you are leaving money behind (i.e. make sure it is in the right type of trust) than it is to focus on “how much” you are leaving behind.

While no one answer is applicable to all situations, most parents want their child to live in the same style they did when the parents were alive. For some families that will mean that all assets will go to the individual’s trust when parents pass away. For other families, assets will be able to be divided among multiple children. The distribution pattern for the family will likely change over time as the needs of all family members change. These are just some of the variables to consider.

Many families work with a special needs attorney and a financial advisor to make these important decisions.

What is a Memorandum of Intent?

The parents of a child with a trust intended to protect benefits cannot place instructions or guidelines to a trustee on 26

how to spend trust assets for their special needs child.

However, parents can prepare a document outside of the trust describing their child, the individual’s needs, and activities that make their child happy . This document can be called many things: Memorandum of Intent, Care Plan, Roadmap for Care and Support ® or something else. Once created, the document should be updated regularly as the needs of the beneficiary change over time.

Can I leave the family home to my child with a disability at my death and preserve the child’s government benefits?

Yes, but considerations should be taken to determine if this is the best thing to do. While the home is not a countable resource for Medicaid or SSI while the individual with disabilities lives there, it can be if the person moves out. If, at a later date, the individual does not live there and the home is sold, the proceeds from the sale of the home will be considered a countable resource. It may be preferable to leave the home to a trust.

Another caution is that a disreputable person might attempt to exploit the individual and move into, or attempt to gain ownership of, the home.

ABLE Accounts What is an ABLE Account? What is a STABLE Account?

The ABLE (Achieving a Better Life Experience) Act falls under Section 529 of the Internal Revenue Code. It is the law that allows people with disabilities and their families to save money in a special savings account (called an ABLE account) that allows the accumulation of assets above the Medicaid and Social Security resource limit. An ABLE Account also 27

allows people with disabilities to have more control over their finances than some of the other savings vehicles discussed previously in this book.

The ABLE Act allows states to design their own ABLE accounts. Ohio’s ABLE Account is called STABLE. Ohio was the first state to offer an ABLE account. This book will provide information about Ohio’s STABLE Account. Readers are encouraged to explore other states’ options if they wish.

Funds in a STABLE Account are not considered assets for SSI and Medicaid. Funds placed in a STABLE Account can be placed in different types of investment or savings accounts, chosen by the account owner. STABLE Accounts can earn interest or increase in value based on investment performance. It is also possible for a STABLE Account to lose value based on investment performance. Earnings from a STABLE Account are not taxed, provided they are spent on qualified expenditures.

Most ABLE accounts, including an Ohio STABLE Account, have a payback provision, but there are a growing number of states that are eliminating the payback requirement. This means that Medicaid could be paid back for any services that were provided to the account holder with funds remaining in the account after the death of the beneficiary. In this way a STABLE account is similar to a Payback Special Needs Trust but a key difference is that a person with a disability can have control and access to the STABLE Account.

28 28

How do savings in a STABLE Account affect SSI or Medicaid?

The first $100,000 in a STABLE Account is exempted from the SSI individual resource limit ($2,000). If a STABLE Account exceeds $100,000, any amount over $100,000 will count as a resource towards the $2,000 SSI limit. All amounts in a STABLE Account are exempted from the Medicaid resource limit.

Who is eligible for a STABLE Account?

The ABLE Act limits eligibility to individuals with significant disabilities with an age of onset of disability before turning 26 years of age. This age limit will increase to 46 years old on January 1, 2026.

Are there contribution limits?

A qualified individual may have only one ABLE Account.

Ohioan’s can open an ABLE Account in any state. Ohio offers residents incentives to open a STABLE account in Ohio. These incentives are described on the STABLE Account website.

If the qualified individual is not employed, the total annual contribution by all contributing individuals, including the qualified individual, family and friends, is $18,000 (in 2024).

The annual contribution limit is the same amount as the federal gift tax exemption limit. If the qualified individual is employed, he or she can contribute an additional $14,580 in wages for a total possible contribution of $32,580. The total account value limit is the same as Ohio’s limit for education-related 529 savings accounts, which was $523,000 in 2024. The federal gift tax exemption limit and maximum account value are adjusted annually.

29

What happens to any money left in a STABLE Account when the beneficiary dies?

Ohio STABLE Accounts have a payback provision. This means that Medicaid may ask to be paid back for any services that were provided to the account holder with funds remaining in the account after the death of the beneficiary.

If there are outstanding bills for any Qualified Disability Expenses, the money in the STABLE Account can be used to pay those expenses before Medicaid is reimbursed. STABLE Accounts can also be used to pay for funeral and burial costs. Importantly, Medicaid can only seek repayment from a STABLE Account for services covered by Medicaid after the STABLE Account was established (or, in the case of an account rolled over from another ABLE plan, after the original ABLE Account was opened). Any remaining funds, after payback, can be distributed to a designated successor beneficiary selected by the original beneficiary. The designated beneficiary must be a sibling, step-sibling, or half-sibling of the beneficiary and must have a STABLE account already or be eligible for one. If a successor designated beneficiary is not chosen, the assets will be distributed to the original beneficiary’s probate estate.

What expenses are allowed to be paid by STABLE Accounts?

Allowed expenses are called Qualified Disability Expenses. A Qualified Disability expense is an expense that helps maintain or improve the health, independence, or quality of life of the person with a disability, it can qualify as a qualified expense. Qualified Disability Expenses include, but are not limited to, education, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial management and administrative services. The STABLE Account website provides additional guidance (www.stableaccounts.com).

30

How does someone open a STABLE Account?

Ohio STABLE Accounts are completely online. Anyone wishing to open an account can visit www.stableaccounts. com to learn more and open an account.

Is a STABLE Account all a parent needs when planning to leave an inheritance for a person with disabilities?

Because of the yearly contribution limits and the payback provision, the STABLE Account may not be the answer to all concerns for many families and individuals, particularly when leaving an inheritance for a child, but may instead be a component of an estate plan for an individual with special needs. For many families, a STABLE account will be used in conjunction with a Third-Party Discretionary Trust.

FINAL THOUGHTS It is our sincere hope that this book has provided you with some answers to questions that you have. Because every individual is unique, each situation regarding estate planning is unique. If you have additional questions, you should ask other parents, the Ohio DD Council office, other trusted advisors, or an attorney with a focus on Special Needs Planning for additional information.

31 31

EXHIBIT A: MEDICAID WAIVERS IN OHIO* Level One

SELF (Self Empowered Life Funding)

$41,424/year children

$41,424/year children

$62,136/per year including:

$62,136/per year including:

• Adult Day Services

• Adult Day Services

• Personal Care

• Support Brokerage

• Community Respite (Camps) • Remote Monitoring • Transportation • Community • Informal Inclusion Respite • Residential Respite • Community Respite (Camp)

Individual Options (IO) Day Services Uncapped funding towards: • Adult Day Services • Personal Care • Transportation • Environmental Accessibility Modifications • Remote Monitoring • Adaptive and Assistive Equipment

*Please refer to the Ohio Department of Developmental Disabilities website (www.dodd.ohio.gov) for a complete list of Home and Community-Based Waiver types, eligibility and services provided.

32

Notes

33

Notes

34

Notes

35

1810 Sullivant Avenue Columbus, Ohio 43222 614-466-5205 or 800-766-7426 Fax: 614-466-0298 ddcinfo@dodd.ohio.gov www.ddc.ohio.gov

Revised 10/2024