Disability estate planning attorneys: ABLE accounts vary in terms of benefits to clients



by Cynthia Price
Legal News

There are both joys and sorrows inherent in being the parent of a child with disabilities, but one concern is unavoidable:?how to ensure the child has enough resources.

Fortunately there are a number of options available to such parents or guardians, and one  new tool in the toolbox is the ABLE (Achieving a Better Life Experience) account.

So say attorneys Dan Blauw and Sarah Kirkpatrick, who gave a presentation on Feb. 11 to the Probate Section of the Grand Rapids Bar Association.

The Section exists to provide both information and social interaction for GRBA members who practice Trusts and Estates law. Sometimes in collaboration with other organizations such as the Western Michigan Estate Planning  Council, the Section offers educational opportunities, including regularly scheduled lunches with speakers as well as occasional seminars.

The Section’s chair, Beth A. Swagman — a solo practitioner in estate planning who holds both a J.D. and a Masters in Social Work — introduced Blauw and Kirkpatrick after about 30 attending attorneys partook of a buffet lunch at the University Club.

Blauw and Kirkpatricks tag-teamed their presentation, one of many they have done on ABLE accounts. Though both work under the firm name Daniel L. Blauw PLC, they specialize in a team approach in practice as well, which helps make their services cost-effective. The firm handles all aspects of disabilities law as well as other estate planning and probate matters.

Blauw started the highly informational session out with an overview of the types of plans available to those who want to contribute to the financial well-being of a person with disability.

He knows whereof he speaks, because in addition to starting his own firm in 1999, he has decades of non-profit experience and still serves as the pooled trust representative for the Hope Network Foundation Pooled Trust.

Blauw was formerly director of The Arc Kent County. The Arc is a chapter of a national advocacy group created by parents of children with intellectual and developmental disabilities in 1950 as a reaction against the common advice of the day, to institutionalize the child.

Interestingly, the history of The Arc Kent County began even before the national Arc, when parents started the Lincoln Foundation in 1947, creating a school as well as many other services.

Prior to The Arc, Blauw worked for Legal Aid of Western Michigan. He received his law degree from Valparaiso University and his undergraduate degree from Hope College.

Blauw explained that sheltering funds through estate planning is necessitated by the constraints around the sources of benefits for people with disabilities. Supplemental Security Income (SSI) is needs-based and requires an asset limit of $2000; it comes with Medicaid.

SSDI, or Social Security Disability Insurance, is based on payment of taxes to FICA (Federal Insurance Contributions Act) by either the benefits recipient or a qualitying relative. There is no asset limit, and though it comes with Medicare, SSDI recipients can also apply for Medicaid, which brings in the $2000 asset limit.

Options for staying below the asset limits entail creating either third-party or first-party funds, with the first-party funds branching off again into two types.

Parents and others fund the Third-Party Special Needs Trust (SNT), and choose a trustee for it. The First-Party  or Self-Funded SNT is funded by money from the person with the disability. A Freestanding First-Party SNT may be set up by parents, grandparents, or guardian(s) of the person, or by the courts. The Pooled Trust model is a master trust set up by a non-profit, where the non-profit serves as trustee.

Another difference between the two first-party types is that in a freestanding trust, any remainder must go to reimburse Medicaid, whereas with a pooled trust, the recipient or parents/guardian may decide where the remainder goes.

Many people have more than one type of trust.

Sarah Kirkpatrick followed Blauw and talked more specifically about ABLE?accounts.

Kirkpatrick, who graduated from Cornerstone University summa cum laude, and from Regent University School of Law, clerked for the Hon. Jane Beckering of the Court of Appeals, after a stint as associate counsel for the Department of Veterans Affairs in Washington, D.C.

She joined Daniel L. Blauw, PLC, in 2012. Her interest in disabilities law stems in part from having a brother with severe disabilities, which gives her a unique understanding. She is on the board of Indian Trails Camp, which serves people with disabilities.

Kirkpatrick noted that the new ABLE accounts, enacted by the U.S. Congress in 2014, are administered by the state. Michigan just passed its own ABLE?Act in Oct. 2015, so it is a work in progress.

They are available to people whose disability resulted from a condition that began prior to the person turning 26.

ABLE accounts are relatively easy to set up, and in Michigan donors to the accounts may claim an income tax deduction, but there are a number of disadvantages: any given person may only have one account (unlike the 529 college savings accounts to which they are often likened); there is a $14,000-per-year cap; after death, the remainder must go back to Medicaid.

Whether the fact that the benefits recipient owns the account and, in most cases, is in control of it is seen as an advantage depends on circumstances.

However, Kirkpatrick emphasized, none of that means ABLE accounts are never useful. Kirkpatrick demonstrated that by going through a number of scenarios — “This is an area that we’re noodling through,” she noted — and indicating where she thought they would benefit clients.

The Probate Section continues its  luncheon programming on March 24, when Judge David Murkowski, Chief Judge of the Kent County Probate Court, will give an update on current happenings in probate law.