When a family member has a mental illness, it can have a profound effect on everyone. Parents of an adult child with a severe mental illness are well aware that helping them maintain their health can be complicated. What is also complex is planning for their future care. Fortunately, certain tools are in place which can be of assistance in planning for an adult child with serious mental health issues.
Public Benefits
Depending on their condition, an adult with a severe mental illness may not be able to work or meaningfully provide for their needs. In cases such as this, the person may qualify for public benefits which can provide some income and medical coverage for their care. However, these benefits are income-sensitive meaning that if a person has too many valuable assets or too much money, they will no longer be eligible to receive them. What can further complicate matters is that the benefits usually do not cover all of the recipient’s expenses. Fortunately, with careful planning, parents can help supplement public benefits without endangering their child’s eligibility.
Special Needs Trust
Parents who want to provide for their adult child with a mental illness without granting them unrestricted access to their assets may be able to do so using a special needs trust. A special needs trust is a kind of trust which is created to support the care of a person with a qualifying disability including certain mental health diagnosis. The manner in which the trust is constructed permits the trust assets not to be considered for purposes of the beneficiary’s public benefits. There are specific limitations on how these trust can be used and requirements as to how they must direct payment to the beneficiary. Also, depending on the type of special needs trust created, when the beneficiary dies the trust assets may either be taken by taken by the government for reimbursement or could be passed to their heirs. Therefore, it will be important to meet with a qualified estate planning attorney to ensure your special needs trust is set up correctly.
MiABLE Accounts
Another way to supplement public benefits for an adult child with a qualifying mental health condition is through a Michigan Achieving a Better Life Experience (MiABLE) account. A MiABLE account is a tax-free savings account which is available to individuals with significant disabilities who became disabled on or before their 26th birthday and are eligible to receive SSI; are eligible to receive SSDI, or have been diagnosed by a qualified physician with a physical or mental disability resulting in marked and severe functional limitations that is expected to last no less than 12 months.
A MiABLE account holder can save up to $100,000.00 without impacting most of their public benefits. Also, $14,000.00 per year can be added to the account without the holder’s benefits being affected. The account holder can use funds from their MiABLE account on “qualified daily living expenses.” These expenses include a broad range of items such as include education, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial management and administrative services and some other expenses approved by the IRS.
Caring for an adult child with a mental illness can be challenging. By preparing for the future parents can have the peace of mind of knowing that their child’s needs will be addressed now and going forward. We have experience helping families plan for their estates and the future of their loved ones. Contact us online or by phone if we may be of assistance.