Garland Law Offices, P.A.

How Do ABLE Accounts Work?

“ABLE accounts can be powerful financial tools for those living with a disability. Here's how they work.”

It took nearly a decade of lobbying, but in 2014, Congress passed the Achieving a Better Life Experience Act. The law, referred to as ABLE, lets people with disabilities open a tax-advantaged account, similar in many ways to 529 accounts used to help with college funding. ABLE accounts are explained in the article “Everything You Need to Know About ABLE Accounts” from U.S. News & World Report.

The accounts allow eligible individuals to save money without putting their eligibility for government benefits at risk. The income from the account is not used for means testing for Social Security Income or Medicaid.

However, despite these benefits, ABLE accounts are still not widely used. Less than 57,000 accounts have been opened nationwide. Here’s more information on how they work.

Why would a disabled person want an ABLE account? Living with any type of disability is costly. There are out-of-pocket expenses for transportation, housing, and education that may not be covered by government programs. Those programs limit a person’s assets to $2,000. Prior to the ABLE Act becoming law, that meant that a disabled person could not save money for their own use. While there are limits to the size of ABLE accounts, they provide an opportunity for a financial cushion.

Who is eligible for an ABLE account? A person who became blind or disabled before age 26 may be the beneficiary of an ABLE account. Someone who is receiving SSI or Social Security Disability benefits is automatically eligible to open an account. Others will need to meet Social Security’s definition of being disabled and have a doctor’s letter stating that they are disabled to qualify.

Do all states offer ABLE accounts? There are 42 states, plus the District of Columbia, that offer ABLE Accounts. But a disabled resident of a state that does not offer ABLE accounts can open one with another state’s program. Right now there are 26 states that let anyone open an account, and the rest limit their programs to state residents. An estate planning attorney will know what your state’s rules are.

Are there tax incentives for using an ABLE account? This varies by state. Michigan and Arkansas let single filers deduct $5,000 in contributions to an ABLE account on their state tax forms. For joint filers in these two states, the maximum deduction is $10,000. In Illinois, there is a state income tax deduction of $10,000 for a single filer and $20,000 for joint filers. For Kansas, deductions are smaller; $3,000 for individuals and $6,000 for couples. New York State and California do not allow any deductions.

How much can be contributed to an ABLE account? $15,000 a year is the limit for annual contributions. Be aware that the first $100,000 of an account’s balance is shielded from asset means testing for government programs. Once the account reaches $100,001, it could impact SSI benefits.

What expenses can the ABLE account be used for? The account is designed to be used by people with disabilities, so things like medical treatment, transportation, education, and assistive technology are permitted uses. The expense must be related to a person’s disability.

Does it cost anything to open an ABLE account? This varies by state. In Ohio, you’ll pay $30 to open an account if you are a resident; out of state fees are $42 annually. In New York, only residents can open accounts, and the fee is $45 to open an account online and $55 if it is done on paper by mail.

Should a Special Needs Trust be used instead of an ABLE account? Many families chose a Special Needs Trust instead of an ABLE account. These trusts cost more to setup, but also offer more flexibility. They once were the only option. An estate planning elder law attorney will be able to guide the family as to which is the best solution for their disabled family member.

Reference: U.S. News & World Report (February 18, 2020) “Everything You Need to Know About ABLE Accounts”

Why Don’t Some Border National Guardsmen Receive Veterans Benefits?

“Some of those guard troops who worked along the border in uniform may never meet the federal definition of a veteran.”

In April 2018, President Trump ordered 2,000 National Guard troops to the U.S.-Mexico border to help Homeland Security.

However, Colorado Public Radio’s recent article, “Even After Years In Uniform, Some National Guardsmen Don’t Get Veterans Benefits,” reports that some of those guard troops who worked along the border in uniform may never meet the federal definition of a veteran.

To qualify for Veterans Affairs benefits, such as health care or GI Bill education benefits, individuals are required to serve 180 days continuously on active duty. That means being requested by the federal government under specific circumstances.

National Guard troops are usually under the control of a state's governor, who can call them up to help with natural disaster. However, there are a variety of orders that can be used to mobilize Guard members. Despite the fact that President Trump called guard troops to the border and the federal government paid for the operation, in most cases, the kind of orders they were under do not qualify those troops for benefits.

Representative Mike Levin, a California Democrat, chairs a veterans subcommittee that recently held a hearing on the issue.

"We haven't followed a very basic principle," Levin said, "which is if you're expected to be doing the same sort of thing, putting your life on the line for whatever particular mission, I believe you should be able to get the same pay and benefits."

Representative Levin said Congress has been slow to respond to the changing role of the guard, which has been used more consistently since the terrorist attacks on Sept. 11, 2001.

"The expectations and the demands placed on our national guard and reserves that perhaps weren't there previously, we have to make sure that federal policy reflects that," he said.

In 2016, Congress changed the law, so anyone who retires from the guard or reserves after 20 years has honorary veteran status, no matter the amount of time they spent in active service. However, this legislation didn’t allow them to qualify for federal benefits.

The federal benefits that guard troops often aren't eligible for, include long-term mental health care in the VA health system. The Veterans Administration estimates that there were 919 suicides in 2017 among guard and reserve members, who never achieved veteran status.

Reference: Colorado Public Radio (November 29, 2019) “Even After Years In Uniform, Some National Guardsmen Don’t Get Veterans Benefits”

How Do I Avoid Unintentionally Disinheriting a Family Member?

“Do you want to disinherit your loved ones? Then simply name the wrong person on your beneficiary forms. That sounds too simple, yes, but everyday individuals die leaving their financial assets to the wrong person.”

When an account owner dies, their assets go directly to beneficiaries named on the account. This bypasses and overrides the will or trust. Therefore, you should use care in coordinating your overall estate plan. You don’t want the wrong person ending up with the financial benefits.

The News-Enterprise recent article, “Don’t accidentally leave your estate to the wrong person,” tells the story of the widower who remarried after the death of his first wife. Because he didn’t change his IRA beneficiary form, at his death, his second wife was left out. She received no money from the IRA, and the retirement money went to his first wife, the named beneficiary.

Many types of accounts have beneficiary forms, like U.S. savings bonds, bank accounts, certificates of deposit that can be made payable on death, investment accounts that are set-up as transfer on death, life insurance, annuities and retirement accounts.

Remember that beneficiary designations don’t carry over, when you roll your 401(k) to a new plan or IRA.

You can name as your beneficiaries individuals, trusts, charities, organizations, your estate, or no one at all. You can name groups, like “all my living grandchildren who survive me.” However, be certain that the beneficiary form lets you to pass assets “per stirpes,” meaning, equally among the branches of your family. For example, say you’re leaving your life insurance to your four children. One predeceases you. Without the “per stirpes” clause, the remaining three remaining children would divide the death proceeds. With the “per stirpes” clause, the deceased child’s share would pass to the late child’s children (your grandchildren).

Don’t leave assets to minors outright, because it creates the process of having a court appointed guardian care for the assets, until the age of 18 in most states. Instead, you might create trusts for the minor heirs, have the trust as the beneficiary of the assets, and then have the trust pay the money to heirs over time, after they have reached legal age or another milestone.

You should also not name disabled individuals as beneficiaries, because it can cause them to lose their government benefits. Instead, ask your attorney about creating a special needs or supplemental needs trust. This preserves their ability to continue to receive the government benefits.

Reference: The News-Enterprise (November 30, 2019) “Don’t accidentally leave your estate to the wrong person”

When Will the VA Process My Vietnam “Blue Water” Benefits?

“Veterans Affairs officials are confident they’ll be able to start processing ‘blue water’ Vietnam veterans disability claims at the start of next year, but also acknowledged a tight timeline ahead for the training and technology work to get the department ready for those cases.”

House lawmakers have expressed worries that even minor issues in the processing of “blue water” Vietnam veterans disability claims, could result in major delays for veterans who have already waited decades for these benefits.

Military Times reported in its recent article that asks “Will VA be ready to process new ‘blue water’ Vietnam veterans benefits next year?” VA officials promise that they will start processing cases in January 2020. However, critics and veterans’ advocates want that to happen more quickly. Advocates have also demanded that the White House speed up the timeline for the benefits.

“These people have waited too long, and we finally have the legislation in place,” said Rep. Mike Bost, R-Ill., ranking member on the House Veterans’ Affairs committee’s panel on disability assistance. “We need to get it done.”

Last summer, President Trump signed into law a bill that finalized presumptive benefits status for “blue water” veterans who served on vessels off the coast of Vietnam during the war.

Under Veterans Administration regulations, vets who served on land in the war are presumed to have toxic exposure related to spraying of the defoliant known as Agent Orange during the Vietnam War. However, sailors on ships off the coast of Vietnam weren’t given the same concession.

However, the new law will see as many as 90,000 veterans become eligible for the new presumptive status, which will mean thousands of dollars in disability benefits each month.

This legislation let VA officials delay processing those cases until the beginning of 2020, even though some cases were already being considered due to a federal court ruling earlier in this year.

Advocates and some members of Congress have complained that the delay has put another unfortunate burden on veterans, who have suffered from Agent Orange exposure for decades.

In an update hearing before the committee, Veterans Affairs Deputy Under Secretary for Field Operations, Willie Clark emphasized that the delay was required to get department systems prepared for the anticipated onslaught of blue water claims.

Reference: Military Times (October 31, 2019) “Will VA be ready to process new ‘blue water’ Vietnam veterans benefits next year?”

What is a Special Needs Trust?

“Special needs lawyers can work with clients to set up individualized special needs trusts.”

Supplemental Security Income and Medicaid are critical sources of support for those with disabilities, both in benefits and services.

To be eligible, a disabled person must satisfy restrictive income and resource limitations.

That’s why many families ask elder law and estate planning attorneys about the two types of special needs trusts.

Moberly Monitor’s recent article, “Things to know, things to do when considering a special needs trust,” explains that with planning and opening a special needs trust, family members can hold assets for the benefit of a family member, without risking critical benefits and services.

If properly thought out, families can continue to support their loved one with a disability long after they’ve passed away.

After meeting the needs of their disabled family member, the resources are kept for further distribution within the family. Distributions from a special needs trust can be made to help with living and health care needs.

To establish a special needs trust, meet with an attorney with experience in this area of law. They work with clients to set up individualized special needs trusts frequently.

Pooled trust organizations can provide another option, especially in serving lower to more moderate-income families, where assets may be less and yet still affect eligibility for vital governmental benefits and services.

Talk to an elder law attorney to discuss what public benefits are being received, how a special needs trust works and other tax and financial considerations. With your attorney’s counsel, you can make the best decision on whether a special needs trust is needed or if another option is better, based on your family’s circumstances.

Reference: Moberly Monitor (October 27, 2019) “Things to know, things to do when considering a special needs trust”

What Can You Tell Me About a Special Needs Trust?

“If you have a loved one who deals with chronic illness or a disability of some kind, you want to be able to keep supporting them after you’re gone. However, you don’t want to disrupt their ability to collect funds from programs like Medicaid or disability payments. In these situations, you can use a special needs trust.”

A special needs trust is a specific type of trust fund that’s created to help a beneficiary with special needs but not jeopardize their eligibility for programs, like Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI) and Medicaid. KAKE’s recent article, “How a Special Needs Trust Works,” says that programs like SSDI and Medicaid can be vital supports for those dealing with disabilities or chronic illnesses.

These programs have income limits to ensure they’re serving those who need them the most. If you were to just give money to your beneficiary when you pass away, it could come in above this income limit.

A special needs trust works around this. That’s because the owner of the funds is technically the trust, not the beneficiary. You also name a trustee to be in charge of disbursing the funds in the trust. Therefore, while the beneficiary benefits from the trust, she doesn’t have control of its assets.

If you are creating a special needs trust for a beneficiary, you must do this before the beneficiary turns 65. And funds from the trust typically can’t be used to pay for food or shelter.

If a person could benefit from a special needs trust, but they themselves own the funds, you can create a first-party special needs trust in which you serve as both the beneficiary and the grantor. These can be complicated to draw up, and states have varying rules determining their validity. A first-party special needs trust has the money that belongs to its beneficiary.

With a third-party special needs trust, the trust holds funds that a beneficiary doesn’t directly own. These are generally used by grantors to allow the beneficiary to start getting money from the trust, even before their death. The funds never technically belong to the beneficiary, so they can’t be used for Medicaid payments. The trust can be used to save money for the beneficiary and future beneficiaries.

The third type of these trusts is the pooled special needs trust. Nonprofit organizations manage assets for a fee, and these organizations pool the funds of multiple trusts together and invest them. When it comes to payments, beneficiaries get an amount equal to their percentage of the pooled trust’s balance.

A special needs trust lets you write down what you wish your funds’ purpose to be, making it legally binding. Special needs trusts are irrevocable, so you can also protect your funds from creditors and lawsuits against the trust’s beneficiary. It lets you help your beneficiary deal with the expenses that come with illness or disability, without hampering their ability to get other assistance.

Reference: KAKE (September 30, 2019) “How a Special Needs Trust Works”

What Should I Know About Getting Veterans’ Disability Benefits?

“Military personnel make many sacrifices to protect our country, sometimes giving their lives. Veterans often give up their good health, even after they return home.”

Individuals who have medical conditions from service are eligible for disability benefits. However, there are a number of myths that make many veterans reluctant to claim them. The process of receiving benefits is also lengthy, confusing and—at times—discouraging.

patch.com’s recent article, “What Every Vet Should Know About Receiving Disability Benefits,” tries to dispel the myths and explain five facts that every veteran should know about disability benefits.

1. Your Claim May Be Denied. Don’t assume because a claim was denied it has no merit, because local offices can reject up to 71% of their claims because of processing errors. Even without errors, denials are frequent. If your claim was unfairly denied, file a Notice of Disagreement Form and consider hiring an attorney.
2. You Can Claim Disability at Any Time. Many vets don't realize a condition was caused by their service, until years after the incident. Many vets also assume they won't require benefits, until their condition worsens. No matter how long ago they served, veterans are allowed to file a claim for disability provided they meet basic requirements. There’s often an issue in demonstrating a connection between a soldier's disability and his or her time in service, because the evidence can be harder to provide years afterwards.
3. Vets Only Have a Year to Dispute a Rating Claim. Unlike filling a claim itself, veterans have only a year to dispute a rating provided by Department of Veterans Affairs. The VA determines ratings by considering any evidence provided, along with required exams and federal data and information from other sources. Ratings for individuals with more than one condition are calculated using a combined ratings scale.
4. Some Vets Are Entitled to Presumptive Service Disabilities. The government has accepted presumptive service disabilities for many veterans who were in particular situations. Presumptive conditions are chronic medical conditions that the government recognizes were most likely due to service. Those who experienced imprisonment, the Vietnam War, the Gulf War and ionizing radiation may have a presumptive condition.
5. Additional Benefits. In addition to disability services, vets can also obtain other benefits, which can include federal hiring preference, health care and prescription costs, VA home loan waivers, job training and an increase in benefits for dependents. Other supplemental options can help vets find jobs, support their families and afford medicine.

Although the process of fighting for disability benefits can be discouraging, veterans deserve these benefits. They earned them and deserve compensation for their duty to their country.

Reference: patch.com (October 7, 2019) “What Every Vet Should Know About Receiving Disability Benefits’

What Changes Will Be Made to Social Security This Year?

“Here are five Social Security changes for 2020 that could impact your monthly take-home income.”

While Social Security now delivers benefit checks to more than 63 million people every month, the program is primarily designed to provide a financial foundation for our nation's retired workers. Nearly 45 million retired workers (70% of all beneficiaries) receive a benefit check monthly, with more than 60% of these seniors expecting their payout to make up at least half of their income.

Motley Fool’s recent article, “5 Social Security Changes in 2020 That Could Affect Your Take-Home Income” explains that with the relative importance of Social Security, it should come as no shock that the second week of October holds considerable importance to these tens of millions of Americans. That's because it’s when the Social Security Administration (SSA) announces changes to the program for the upcoming year. Any changes could directly affect what beneficiaries are paid on a monthly basis. These changes can also affect non-retirees who aren't getting a Social Security benefit Let’s look at some of these changes.

1. The most important figure in the October announcement from the Social Security Administration is the cost-of-living adjustment (COLA). Social Security's COLA is measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The average monthly CPI-W reading from the third quarter of the current year (July through September) is compared to the average monthly CPI-W reading from the third quarter of the previous year. If the average figure has risen from the previous year, then beneficiaries receive a "raise" that's commensurate with the percentage increase year over year, rounded to the nearest 0.1%.
2. Withholding thresholds. Early claimants who haven’t hit their full retirement age but are currently (or expected to begin) taking benefits, will be subject to the retirement earnings test. This test allows early filers to earn up to a certain amount of money, before the SSA is allowed to withhold a portion, or all, of their benefit. For those who won't reach their full retirement age in 2019, $1 in benefits can be withheld for every $2 in earnings above $17,640 ($1,470 a month). For those who’ll reach their full retirement age this year but have yet to do so, are allowed to earn $46,920 before the SSA begins withholding $1 in benefits for every $3 in earnings above the limit. Note that these withheld benefits aren't lost forever, because you get them back in the form of a higher monthly payout when you reach your full retirement age.
3. Maximum monthly payout. If you're currently claiming a retired worker benefit and have made a good deal of money on an annual basis over your working career, there's a chance that you'll be able to net more in monthly payouts in 2020. There’s a cap on the maximum monthly payout at full retirement age. In 2019, no individual at their full retirement age can take home more than $2,861 per month, even if they made millions of dollars each year throughout their working career.
4. Disability income thresholds. Even though 7 of 10 program recipients are retired workers, about 10 million people each month also get a check from Social Security Disability Insurance (SSDI). Approximately 8½ million are disabled workers, and the rest are spouses or children of these disabled workers. If the average CPI-W reading does increase on a year-over-year basis from the previous year (which appears likely), these SSDI income thresholds for the disabled and legally blind should go up a little in 2020.
5. A warning to the wealthy. Lastly, Social Security's changes for 2020 won't just impact those receiving a benefit. Wealthy workers can also anticipate paying more into the program, provided that inflation rises on a year-over-year basis, as measured by the CPI-W.

Reference: Motley Fool (July 28, 2019) “5 Social Security Changes in 2020 That Could Affect Your Take-Home Income”

What Bills Has Congress Introduced to Help Veterans?

“While the House was busy passing its defense spending bill last week, other members of Congress were introducing other legislation aimed at helping veterans.”

radio.com’s article “Congress introduces bills to increase veteran benefits, refund home loan fees, help women veterans,” lists all of the legislation that’s been introduced in Congress aimed at helping veterans.

Cost of living adjustment (COLA). Senators Johnny Isakson, R-Ga., and Jon Tester, D-Mont., chairman and ranking member of the Senate Committee on Veterans Affairs, introduced the "Veterans Compensation Cost-of-Living Adjustment Act," which aims to increase veteran disability benefits from Veterans Affairs.

The COLA for veterans will mirror the increases to Social Security recipients and is decided by the Bureau of Labor Statistics' Consumer Price Index annually.

“My top priority is to ensure that veterans and their families receive the benefits they earned while serving our country,” Isakson said. “I’m proud to introduce this legislation to increase benefits for disabled veterans in keeping with rising costs of living.”

Home loan fee refunds. Tester and Sen. John Boozman, R-Ark., introduced a bill to make certain that the VA repays disabled veterans for home loan fees wrongfully charged.

An Inspector General report revealed that the VA wrongfully charged nearly 73,000 disabled veterans $286.4 million in home loan fees. The VA has been aware of the fact that it owes those veterans the money since at least 2014.

"The (VA's) failure to uphold this responsibility has unduly burdened disabled veterans. This bill ends the VA’s practice of unlawfully charging veterans who qualify for funding fee waivers. Ensuring the VA implements a process to reimburse veterans who weren’t required to pay in the first place and prevent veterans from unfair penalties in the future must be a priority,” Boozman said.

Care for women veterans. Rep. Lauren Underwood, D-Ill., introduced the Caring for Women Veterans Act, which would create an annual VA report to make certain that women veterans receive quality healthcare from VA hospitals.

The population of women veterans will nearly double by 2043, and advocates say the VA must modernize to ensure that all VA facilities are equipped to provide comprehensive services for all veterans.

Veteran burials. Another bill from Boozman and Tester is designed to assist state cemeteries in meeting federal standards for veteran burials.

Reference: radio.com (July 15, 2019) “Congress introduces bills to increase veteran benefits, refund home loan fees, help women veterans”

How Does Washington State Plan to Streamline Its Guardianship Process?

“Washington state lawmakers passed bills this session to make the guardianship application process easier for parents.”

Public News Service’s recent article, “Guardianship Process to Be Streamlined in WA,” quotes Sterling Harders, president of Service Employees International Union 775, who says her union represents thousands of parents who care for children with intellectual and developmental disabilities.

Harders remarked that she’s heard from members that the road to guardianship was complex and expensive, when their children turned 18.

In addition, the guardianship process also differs from county to county.

Two bills in Washington state address these issues, which will ease some of the burden for parents.

"Life is difficult enough for these folks having to take care of special needs kids,” she states. “They don't need one more thing to worry about, and so we are really hopeful that these two bills will make life just a little easier for parent providers."

The Uniform Guardianship Act, Senate Bill 5604, is designed to standardize the guardianship process through Washington’s 39 counties and create a monitoring system and model training program. The bill currently is on the governor's desk.

The bill requires a background check on an agent of a guardian who provides services to the individual subject to a guardianship or conservatorship. It also requires a court hearing to resolve allegations in a grievance against a guardian or conservator.

The second bill is House Bill 1329. It creates alternatives to full legal guardianship. The bill was signed in April and goes into effect at the end of July.

In Washington, there are professional guardians, public guardians and lay guardians. A one-size-fits-all law for guardianship does not work well for families, whose children have different disabilities.

"In today's world, you're either an incapacitated person or you're a person that is not incapacitated with full legal rights, and creating an opportunity for there to be some different options within that continuum, I think, is very important," one parent of disabled children said.

Reference: Public News Service (May 16, 2019) “Guardianship Process to Be Streamlined in WA”