As many as one in three households in the U.S. have a family member with special needs, but it can be difficult to figure out how to finance their care without jeopardizing funding they receive.
That’s where banks and other financial institutions come in, typically with the help of a custodian.
For example, at Zions Bank, a disabled person can open any full-service checking account — or a savings account, if defined in the legal paperwork — if they present with the custodian who has been appointed via a trust, said Lindsay Hendrix, branch manager for the downtown Boise main branch.
“We would follow in accordance with how it’s laid out,” she said, allowing the custodian to perform transactions on behalf of the beneficiary.
Moreover, not all accounts have to have trusts, Hendrix said. If a custodian has been appointed by an agency, for example, the bank could set up an account using the award or custodian appointee letter.
Either way, the disabled person can then receive direct deposit funding, such as from a government agency.
Wells Fargo Advisors considers itself a leader nationwide for providing services to people with disabilities and their families, said Jesse Ward, branch manager, vice president and investment officer in Pocatello. “Every year, we have a conference devoted solely to educating advisors on the special needs space,” he said.
What complicates the issue is some families believe giving their disabled child funding, such as an inheritance, will jeopardize government benefits, Ward said, adding that he has a disabled sibling himself.
“One of the common themes that people will do is called ‘disinheriting,’” he said. “It isn’t always because they can’t provide for the child, but they don’t know if their children will be able to provide the same level of care.”
But that isn’t true, Ward said. “There are opportunities so that child can receive their inheritance,” he said. “It won’t affect their benefits, and they will have the same standard of living they’re accustomed to. It’s really important for those of us educated in that world to get that message out to people.”
For example, the Stephen Beck Jr., Achieving a Better Life Experience Act of 2014, also known as the ABLE Act, provides some assistance. ABLE, or 529A accounts, are tax-advantaged savings accounts for disabled individuals and their families, funded up to $100,000.
In addition, there is the option of a third-party special needs trust, which is typically funded by friends and family.
“It’s really important to know the distinctions between those accounts and how they can be used,” Ward said.
With such accounts, disabled people can continue to receive government benefits, work at a job, and enjoy a higher standard of living than they might otherwise, Ward said.
“This is really a way for them to enjoy the same rights you and I enjoy,” he said. “It’s important to continue to be able to work, but there’s a high likelihood they’re not going to make the same amount of money you and I can. The government, recognizing that, has made ways for that to take place.”
It’s important for the financial institution managing the account to know what the money can and can’t be used for, Ward emphasized. Third-party trusts, in particular, cannot be used for basic care such as shelter or clothing, but it can be used for entertainment, and for living expenses beyond the basic necessities of life.
Ward noted that the number of people diagnosed with a disability is increasing. Also, these accounts can also be used for people recovering from drug and alcohol issues.
“There are so many ways this can help people, and it’s been a challenge to get the word out,” he said.
This article was edited on April 11 to modify Jesse Ward’s affiliation.