Advice: Investment vehicles for child with disability

[massmustache]

Partially spurred by the recent bargain stocks I am looking at opening a 529 for my youngest daughter (4) and searching for something that makes sense for my oldest (7) who is intellectually disabled.  She is not likely college bound and will likely require assistance long term... hard to say exactly how much but we are planning for worst case (well... hoping to plan for... no idea what it will cost).

I know there are 529a plans that are explicitly for this purpose but they have some odd parameters whereby the person becomes ineligible for other social programs if the fund exceeds 100k (that is insane BTW).  Has anyone else done this investigation?  I have been lax and just stacking as much as possible into my brokerage (VTSAX) accounts... feel like now is good time to start putting something into a tax advantaged account for them (reality is I use use my own funds when required as well).

I am hoping that someone might have done this leg work and have some guidance on where to start investigation... or personal experience with older child.

[massmustache]

Sorry, I did some searching in other topics and found some good sources.  Won't let me delete the thread... but feel free to (mods?).

Thanks.

[terran]

Not necessarily right now, and you probably should fund it with your will, not right away, but you'll want to look in to special needs trusts as a way to leave her much more than $100k without messing up important government benefits.

Also make sure you're fully funding your own retirement accounts. You can always use them for education or supporting your disabled daughter just as easily as you can use them for yourself. You'd need to do some research on this, but I think despite the new rules requiring that inherited retirement accounts be emptied within 10 years, that those left to someone with a disability (probably through a trust) can be stretched out across their lifetime more like the old rules.

Not saying I'd hire a financial planner from here (or anywhere), but there is some good information at https://specialneedsanswers.com/ and also at https://www.specialneedsalliance.org/ (finding a lawyer through there could be good if/when you're ready to set up a trust and estate plan).

[nsmall]

Feel free to post what you found @massmustache

I have a 9 year old with Autism I adopted and have been told he will potentially qualify for Social Security when he is 21.  I would rather he find some sort of part time occupation but its so far out I am confused what to do too.  I have a 529 going, but I am pretty sure he will not be able to attend college.

Thanks for your words of wisdom Terran.

[ctuser1]

I have an autistic child too, and the below are based on my game plan. Your situation is likely different from mine and hence you should adjust it accordingly. Also, my game plan is still only half baked, in that it is not yet reviewed with a professional.

Before Age 18:
Research guardianship or conservatorship appropriate for your state. You are likely to require assistance from a lawyer.

Age 18:
She would qualify for Medicaid and SSI.
Medicaid and SSI eligibility is *very* finicky. That is where the 100k limit for 529a and income tests etc come in.
You may still be able to keep your daughter on your employer plan - but that will be secondary. This is a good setup - since medicaid billing rates are usually very low.

When you, or your spouse become eligible for claiming early social security benefits:
Whoever turns 62 first should claim Social Security immediately. This makes your daughter eligible to claim SSDI-DAC.
Your daughter *does not* qualify for medicare yet. She will qualify once she has received SSDI-DAC for 2 years.
 
Be careful with SSDI-DAC and medicaid eligibility. SSDI-DAC payments are typically over the SSI limit, and it makes you ineligible for the medicaid as it counts as income. Many states has specific provisions in medicaid eligibility to allow the the eligibility to continue for this specific situation (e.g. CT, where I live) and many states do not (e.g. OH). You should research your state laws in this regard.

SSDI-DAC and medicare are lifelong once they kick in, and are *not* income based. The benefits for SSDI-DAC start at 50% of the primary beneficiaries PIA, and goes to (I think) 75% after primary beneficiary's death.

529a (i.e. ABLE accounts)
Despite the 100k limit, they have a massive advantage - they can pay for housing expenses without impacting medicaid eligibility.
If you are in a HCOLA area then this is a huge thing.
Perhaps you can have the ABLE Account funded yearly with SNT up to the 15k limit and use that for housing.

Special Needs Trust
They are indispensable. My plan is to pay off our house in another 10-11 years and transfer that to the SNT.
Further, I'll likely fund the SNT with sufficient money to fund the following:
1. A yearly $15k contribution to ABLE account. This can pay "housing expenses" like RE Taxes, utilities etc for the house held in the Special Needs Trust.
2. Other expenses as detailed here: https://www.nolo.com/legal-encyclopedia/how-special-needs-trust-funds-can-be-used.html

"Eligibility rules" are really finicky for SSI and Medicaid. However, once your daughter qualifies for SSDI-DAC, and Medicare - then there are no more income eligibility rules. However, there may still be other state and local benefits that may be impacted. So, is the whole SNT/ABLE setup still necessary? I don't know yet, and is a future research topic for me.

I had opened a bogleheads thread on this: https://www.bogleheads.org/forum/viewtopic.php?t=283668

Your daughter is only 7 right now. I'd suggest that you spend some time researching estate planning topics - maybe a little bit every week for a few years. This will make sure that once you are ready to go to a lawyer to actually create the SNT etc - that you have a good idea of exactly what your goals are.