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The Hidden Rules of 529 Plans: What Happens When a Trust Owns the Account?

When it comes to saving for college, 529 plans are one of the most powerful tools available. They offer tax-deferred growth and tax-free withdrawals when used for qualified education expenses. But while these accounts are generally straightforward, things can get more complicated when a 529 plan is owned by a trust. Let’s break down what happens when a trust, not an individual, is the account owner, and why that matters. The Role of the Custodian in a 529 Plan In a typical 529 account, the custodian (often a parent or grandparent) maintains full control over the account. This means they can: Select and change the beneficiary (i.e., the student who will use the funds), Decide how much money to contribute, Determine when to withdraw funds and for what purposes. Importantly, custodians usually do not owe fiduciary duties to the beneficiary. That means they can change the beneficiary to someone else (as long as the new beneficiary is a qualified family member) without the o...
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Understanding the Recent Changes to SSI Rules in Simple Terms

Several important changes to Supplemental Security Income (SSI) went into effect in September 2024. This blog may be a little delayed in covering them, but I believe it is never too late to try and simplify complex policies. My goal here is to break down the updates into plain language and explain them with everyday examples. Whether you are a parent, caregiver, or someone navigating SSI yourself, I hope this post makes things a little easier to understand. If you have a loved one on SSI, or if you receive SSI yourself, you know how stressful it can be to follow all the rules. One small mistake can lead to reduced benefits, and that’s the last thing any family needs. But here’s some good news. The Social Security Administration announced a few important changes that will make life a bit easier for SSI recipients and their families. Here’s what’s new, and why it matters. Renting from a Parent or Child Just Got Simpler In most states, when an SSI recipient rents from a pare...
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Does My High-Functioning Child Need a Guardian? Finding the Challenging Balance Between Independence and Support

 For parents of higher-functioning children with disabilities, one of the key decisions when their child turns 18 is whether guardianship is necessary. While the goal is often to help children live as independently as possible, there are situations where additional support may be needed, particularly in making significant decisions. Striking the right balance between independence and support is crucial, and careful planning can help ensure the best choices are made for the child’s future. I often suggest to parents that they start by creating a list of the pros and cons of guardianship. It’s a helpful way to explore how guardianship might fit into your child's life and what kind of role you would like to play in their future. Here are a few questions to consider: Will the Parent Need to Step in for Important Decisions? As parents, it's natural to want your adult child to feel independent and capable, and sometimes there's a concern that guardianship may carry a stigma...
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Five Most Common Estate Planning Mistakes that Parents of Children with Special Needs Make

1.   Procrastinating Estate Planning Altogether   For many parents with children with special needs, estate planning feels very overwhelming, and it’s easy to put it off for another day. Unfortunately, delays can be costly, leaving your child unprotected in case of an unexpected event.  If both parents pass away without a proper plan in place, a direct inheritance can disqualify them from vital public benefits. The only option in such circumstances may be to establish a trust with a Medicaid payback provision, meaning that any remaining assets in the trust must be paid back to the state after the child’s death. Furthermore, these trusts can be very restrictive.   Additionally, nominating a guardian is crucial. Unlike typical children, special needs children may require a guardian even after they reach the age of legal adulthood. Without proper planning, the court may step in to make decisions for your child — decisions that may not align with your wishes. ...
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Is a Special Needs Trust Necessary for My High-Functioning Child?

When parents think about estate planning for their high-functioning child with special needs, they often assume that a Special Needs Trust (SNT) isn’t necessary, especially if the child is not likely to be receiving public benefits like Supplemental Security Income (SSI). However, planning for your child's future goes beyond government assistance. What happens if you unexpectedly pass away? Who will manage your child’s inheritance, and will it be protected from financial exploitation or poor decision-making? The truth is, that setting up an SNT can provide vital protection and peace of mind, even for high-functioning children who are largely independent. A well-structured trust can safeguard their financial future, ensuring that your child has the support they need to navigate adulthood with security and confidence. Whether it's protecting assets from creditors, preventing misuse of funds, or simply providing financial oversight, a Special Needs Trust is a powerful tool in yo...
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The Importance of Healthcare Proxy and HIPAA Waiver For Young Adults

When your child turns 18, it's a moment of pride and transition. They're stepping into adulthood, gaining independence, and making decisions for themselves. But as exciting as this milestone is, it’s easy to overlook one critical detail: the change in legal authority over their healthcare decisions. Many of us with children who have special needs are familiar with the importance of establishing guardianship. However, when it comes to our typical, newly turned 18-year-olds, we often forget to consider an equally important step — ensuring they have a healthcare proxy in place. Why is a Health Care Proxy Important? Once your child turns 18, they are legally recognized as an adult, meaning you no longer have the automatic right to make medical decisions for them, even in emergencies. While they may still rely on you for emotional support, financial advice, and countless other things, if they are unable to make decisions due to illness or injury, healthcare professionals canno...
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Why You Need Guardianship When Your Child with Disability Turns 18

As parents, navigating the transition to adulthood for a child with disabilities can be overwhelming, especially when it comes to legal responsibilities. When your child turns 18, they are legally considered an adult, which often comes as a surprise to many parents. This shift can create significant challenges, particularly in making medical and educational decisions. Here’s why securing guardianship is crucial for parents of disabled children as they reach adulthood. Understanding Legal Capacity Once a child turns 18, they are presumed to have the legal capacity to make their own decisions, regardless of their cognitive abilities. This means that if your child has an intellectual disability, they may not be able to provide informed consent for medical treatments or make important life choices. In such cases, having a legal guardian is essential to ensure that decisions can be made on their behalf. Does My Child Need a Guardian? Deciding whether to become your child’s legal guardian ...
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