Financial Planning for People with Disabilities

by Barbara Faron LMSW, CPRP


Financial planning and affordable, prudent management of resources for people with disabilities is available to individuals and families through Federation's Financial Management Program. Family members often wonder, "What will happen when I am not around? How can I protect the future of my loved one?" Individuals on Social Security disability benefits receiving one-time unexpected inheritances or other payments need not be forced to spend down the extra income frivolously to retain their eligibility for the services they need. There are alternatives. There is much that can be done to protect resources for the future and the more you know about them the better.

The Financial Management Program originated to meet the need for Social Security Representative Payee services for individuals who, on the basis of a psychiatric evaluation, were found to be unable to manage their money, often because of problems with substance abuse in addition to serious mental illness. Serving Suffolk County, the program is designed to assure that client funds are spent to maintain basic necessities of life such as food, clothing, and shelter.

During the course of operating the Financial Management Program we learned that sometimes clients find themselves with large one-time payments that can be placed in a trust to preserve the money for long-term use without disrupting eligibility for benefits. Using a trust makes a big difference. For example, Patrick (not his real name) received a large retroactive SSI payment in the fall of 2008 which would have made him ineligible for Medicaid. He was referred to Federation and learned that he could create a trust that would enable him to use some of the money to achieve one of his long-term goals: owning a car. After careful research with his financial manager Patrick purchased his car in January, 2009 and took driving lessons paid for by his trust.

Often people try their own solutions, leading to major problems. Michael's (name changed) sole surviving parent died without the benefit of advanced planning. An inheritance made Michael ineligible for SSI benefits and Medicaid coverage. Following the advice of a family friend, Michael invested the money in the stock market. By law, the income was reported to the government, and Michael's SSI income was eventually stopped. By that time he owed an SSI overpayment of approximately $20,000. Fortunately, Michael learned of Federation's Community Trust B which allows disabled individuals to fund a trust account on their own behalf. After repaying his overpayment to SSI and funding the Trust with the balance of his inheritance, Michael re-applied for SSI benefits and was approved. In the last 5 years, Michael has been able to use funds in the Trust to purchase a car, pay for auto insurance, and purchase furniture for his apartment as well as pay for medical expenses not-covered by Medicaid. He remains eligible for SSI and Medicaid and resides in a Section 8 apartment. As Michael says, "I don't really live any differently, but I feel better knowing the money is available."

The establishment of a special needs trust is a serious legal matter that requires the assistance of an attorney with expertise in this area. There are several different options and rules change. Federation has become expert in administering trusts that ensure the long-term financial future of individuals with serous disabilities. For more information contact Joseph Ortloff, Financial Management Program at jortloff@fedoforg.org.


November, 2012