Question: As the holidays are upon us, my son will be receiving cash as holiday gifts from grandparents and aunts and uncles. We are currently preparing to ensure he can receive government benefits as he will be turning 18 in February. Will these gifts be a problem for him being able to qualify for government benefits?
Your question has multiple layers to it, and unfortunately cannot be answered with a simple “yes or no.” Let me first begin by saying I am glad you are thinking about and being cautious regarding how to protect your son’s eligibility for government benefits. The government benefits you will be applying for at his age 18 will help provide him a monthly income, health care, long term support and services, and possibly housing; however, you must stay within the rules.
One of those rules is a maximum allowable resource allowance, which continues to be quite low. You son will lose access to most, if not all, the benefits listed above if he is found to have more than $2,000 in non-allowable resources. These resources can include the sum of checking, savings, investment, custodial, CD’s, and even retirement accounts (if he has been working at all). Although this number is low, there is hope.
If the gifts your son receives will total more than $2,000, but will be less than $15,000, then you should consider using an ABLE Account. ABLE stands for Achieving a Better Life Experience and is an account that is allowable in the eyes of the government. This means that your son can have more than $2,000 in his name as long as it sits in an ABLE Account. Please be aware that you will not be able to open an ABLE account at any and every financial institution.
The legislation that made it law requires that individual states administer their own state ABLE account. The legislation that created the account does, however, allow you to use any ABLE account from any state regardless of where you live. Each state’s program offers benefits, and you will need to determine which one has the design that best suits the needs of your son.
Click here to find out more
CAUTION: It is critical to understand the distribution rules of an ABLE account to ensure that when your son uses money from the account it qualifies as a disability expense. If it does not, it is possible that the account (and/or the distribution) will lose its exempt status and be counted as income or as an asset against your son and place his qualification for certain government benefits in jeopardy.
If your son’s gifts total more than $15,000, you will not be able to use the ABLE account for any gift amounts over $15,000. The ABLE account has an annual contribution limit of $15,000, which means the maximum contribution in any calendar year can only be $15,000. If this is an issue, then you will need turn to a tool called a Special Needs Trust.
This tool will require the services of a qualified attorney to design, write and create this unique trust, and then once created you are able to open an account at a financial institution to deposit money for your son’s benefits.
This article was featured in Issue 95 – Managing Autism Together