Special Needs Trusts | Littman Krooks, LLP - Part 2
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Inheritance: When a Child Has a Developmental Disability

June 16th, 2014

As a child with developmental disabilities grows older, parents begin thinking about how to secure their loved one’s financial future as the care they need can be expensive. While government programs and community resources provide essential help, significant family resources are often needed as well. Planning an inheritance for a child with a developmental disability requires special considerations. Here’s why:

A direct gift or bequest may not be appropriate, for two major reasons:

  1. The individual may not be capable of managing significant assets without assistance;
  2. It may be necessary to maintain eligibility for government programs that have income and asset limits

One alternative to a direct gift is making a gift to a family member, such as a sibling, who can  be trusted to use the assets in the best interests of the individual with a disability. However, the family member must be willing and able to take on that responsibility and the gift would then become part of his or her estate, leaving it open to be lost in a divorce or claimed by creditors.

Another alternative is a special needs trust, which can help the individual with special needs maintain eligibility for government programs, while making funds available to enhance his or her quality of life. Creating a special needs trust is a complex task that should be done with the assistance of an estate planning attorney, experienced with special needs issues.

Interested in learning more about Special Needs Trusts? Click on the links below:

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Financial Benefits Designed to Support Families Who Have Children with Special Needs

May 23rd, 2014

It is of the utmost importance that families with special needs take full advantage of benefits that are available from the government and the community. Sometimes families resist accepting these benefits out of a belief that they are only intended for low-income families. While there are income and asset requirements for some programs, your family should take advantage of any benefits you are eligible for, as it is in your interests and actually honors the intent of the programs.

Raising kids is expensive, and families with children who have special needs may have additional costs, such as medical expenses, therapy, modifications to a home or vehicle, and adapted recreation or child care. The costs may seem daunting, but they are easier to handle with proper financial planning.

A special needs trust is one of the most important financial tools to consider for a special needs child. This type of trust allows you to set money aside, or receive it as a gift from a family member or settlement from insurance, without worrying that it will affect the child’s eligibility for public benefits such as Supplemental Security Income (SSI) or Medicaid.

In addition to a special needs trust, building your family’s personal savings is even more important than it is for most families. You may have to pay for therapy or other treatments. Even if you believe that certain services should be covered by insurance or provided by your school district, resources may be required to advocate for the right to those services. In addition to services needed during childhood, families will want to plan for their child’s adulthood. Once public education and its attendant benefits are no longer available, the question of where the adult with special needs will live and what he or she will do becomes paramount. Proper financial planning done as early as possible will make this process much easier, and a financial adviser can be extremely helpful in creating that plan.

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Service Dogs: What to Do if Your Service Dog is Denied Public Access

April 15th, 2014

Individuals with disabilities who have service dogs should be prepared with knowledge of the law when they enter business establishments. If a dispute occurs over access to the business, then individuals will need to assert their legal rights in a clear and calm manner.

The Americans with Disabilities Act (ADA) prohibits privately owned businesses that serve the public from discriminating against people with disabilities. These businesses are required to permit access to individuals with disabilities and their service animals. (Note that the ADA does not require churches, private clubs or private homes to permit access to service animals.)

If access is initially denied, the first step is to clearly state that the dog is a service animal and that the Americans with Disabilities Act permits access. Although most people are familiar with guide dogs for the blind, some people may not know about other types of service animals, so a simple statement of the facts and the law may suffice to gain access.

The business is allowed to ask two specific questions: “Is this a service dog required because of a disability?” and “What task is the dog trained to perform?” An individual with a service animal should be prepared to answer these two questions satisfactorily, and be aware that there is no requirement to answer further questions.

Some people with disabilities carry copies of the U.S. Department of Justice’s ADA Business Brief on Service Animals with them, for instance in a pocket of the service dog’s vest. The Brief is a simple statement of the law from the federal government that may convince a business employee who is resistant. Individuals with disabilities are not required to carry this notice, or any other permit or license, with them.

If access is ultimately denied, then the individual should comply, but follow up with the business owner to remedy the situation. Reasonable remedies to ask for include training for employees regarding service animal access, or a sign on the door that confirms that service animals are permitted. If a business owner continues to deny access, then a complaint may be filed with the U.S. Department of Justice.

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The Differences between 504 Plans in Public Schools vs Colleges & Universities

January 31st, 2014

It is important for students with disabilities who plan to attend college, and their parents, to understand how their legal rights related to their disability will change in a post-secondary education environment.

In public elementary and secondary schools, students with disabilities may receive services under the Individuals with Disabilities Education Act (IDEA) or the Rehabilitation Act of 1973. The IDEA does not apply in the workplace or in post-secondary education, so services available under IDEA, such as an individualized education program (IEP), are not available in college. However, services under Section 504 of the Rehabilitation Act may continue at the post-secondary level.

First, it should be noted that while Section 504 only applies to schools that receive federal funding, most colleges and universities do, and private post-secondary schools that receive no federal funding are still required to provide similar accommodations to students with disabilities, under Title III of the Americans with Disabilities Act.

Section 504 prohibits discrimination based on disability, meaning that the needs of students with disabilities must be met as adequately as the needs of students without disabilities are met. Colleges and universities must provide accommodations for students with disabilities. As a practical matter, this may include accessibility of classrooms, dormitories and other buildings; additional time on tests; substitution of some course requirements; interpreters or readers; adapted computer terminals and other services. Such services must be provided unless a fundamental alteration of the program or an undue financial or administrative burden would result.

Students with disabilities going from high school to college will need to advocate for their own needs more than ever. If the university has a disability support office, the student will need to make contact with that office to explain his or her needs. If a student has a history of accommodations in high school, then documentation of this should be provided to college or university officials. Most of all, students will need to be persistent, keeping a record of who they talked to, and continuing to press the matter until the needed accommodations are received.

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How Special Needs Families Can Save Money and Plan for Their Financial Future

January 21st, 2014

Parents of a child with special needs know that there are many expenses for their child and sometimes seemingly not enough resources to attend to them. Financial planning is definitely more complicated for special needs families, but planning carefully and taking advantage of certain money-saving strategies can make the task easier. Here are ten suggestions for how special needs families can save money and plan for their financial future:
1. Remember to Take Care of Your Own Needs

The logic of the airplane oxygen mask applies here: flight attendants instruct parents to affix their own masks first before assisting a child, because you cannot help your child if you are not protected. Likewise, parents are not actually helping their child if they spend money incautiously on the child’s care without also doing the necessary planning for their own retirement. Special needs children are more likely to be at least somewhat dependent on their parents as adults, so it is a help to them for their parents to be financially secure in retirement.
2. Consult with a Financial Planner or Special Needs Attorney

All families can benefit from assistance with financial planning, and this is all the more true for families with special needs. Navigating the complexities of public benefits, taxation and estate planning is not something that should be attempted without guidance. Spending money really will save you money.

3. Make Use of Public Benefits

Many families with significant resources or with higher-functioning special needs children may balk at taking advantage of public benefits such as Supplemental Security Income or Medicaid. However, these benefits are not just for low income families. The programs represent one way our nation takes care of its citizens, including people with disabilities. Just as one would not hesitate to take advantage of any legal tax breaks available, so one should access any public benefits that one has the right to.

4. Create a Special Needs Trust

A special needs trust allow families to set money aside for a child’s special needs without giving the money directly to the individual, which would trigger disqualification for needs-based public benefits. Proceeds from a life insurance policy can be directed toward a special needs trust, and the funds can be used for such things as out-of-pocket medical expenses, personal care aides, education and recreation.

5. Plan Your Estate

Estate planning for special needs families should involve the whole family. Grandparents should be informed that leaving money directly to a special needs grandchild may adversely affect eligibility for public benefits and should therefore be directed to a special needs trust instead. Guardianship in the event of the death of both parents is particularly important and should include a care guide communicating a special needs child’s individual care needs and personal tastes.
6. Be Prepared to Advocate for Insurance Coverage

Treatments for children with special needs may or may not be covered by health insurance. For example, speech therapy should be covered, if the need is medical rather than behavioral. However, getting the insurance company to pay may involve careful and persistent communication with doctors, therapists, and one’s insurance provider. If your child needs respite care, be prepared to advocate for coverage.

7. Find and Make Use of Community Resources

Seek out any and all resources available for special needs families in one’s local community. Nonprofit organizations often provide their own resources or assist families in finding the help they need.
8. Coordinate with Other Special Needs Families

Families with special needs should not try to go it alone. Companionship with other special needs children can be supportive and fun for kids and parents can benefit by sharing resources. Group activities are more economical and provide crucial moral support for families.

9. Make Use of Tax Deductions and Credits

The Internal Revenue Code provides for several tax deductions and credit available for special needs families. Deductions may be allowable for medical and therapy expenses, specialized foods and legal expenses. Tax credits that are particularly useful for special needs families include the child and dependent care credit and the earned income credit. Consult a tax professional in order to make the most of these advantages.

10. Plan Ahead for Your Loved One’s Adulthood

Just as parents plan for their own retirement, so must they plan for their loved one’s life as an adult. Will the child remain living with the parents? If so, will in-home support be needed? If a young adult with special needs is planning to move into a group home or other independent living arrangement, then research should be done well ahead of time in order to be placed on any necessary waiting lists and to budget appropriately.

This post was first contributed by Marion Walsh to Friendship Circle.


Who Will Take Care of My Child with Special Needs When I am Gone?

January 9th, 2014

Join Bernard A. Krooks of Littman Krooks LLP and Ryan Platt of A Special Needs Plan (moderated by Keith Caldwell, founder of Failuretoplan.com) to present a live webinar for families on  special needs planning.
For details or to participate, please register by clicking here. To join the Facebook Event page, click here.

Who Will Take Care of My Child with Special Needs When I am Gone?

This is the question that kept me up one night a few years ago.  Not having an answer to this question is what started me on my journey of discovery for my family and it was the idea behind the creation of the website www.FailuretoPlan.com. I needed answers so that I could sleep comfortably knowing that if something were to happen to me that night, there was a plan in place that would take over and protect my family when I could no longer.

But, my child has autism and I have always been concerned about his future. It wasn’t that I didn’t want to plan for my child’s future because his future weighed heavily on me — I just didn’t know what to do or where to go for expert guidance and direction.  I was so busy with speech therapy, OT, IEPs, typical IEP’s for my special child and the sports leagues, practices, student government activities of my oldest child…

…Overwhelmed at times doesn’t begin to describe how I felt and days quickly turned in weeks which turned into months and, then, into years.  No long term planning was getting done with all of this activity in my life.  Can any of you reading this relate?

For me, to create a truly comprehensive plan, I had to come to terms with my own mortality and the fact of the matter is that ignoring the inevitable will not delay its’ coming.  If you fail to plan, you are planning to fail and failure was not an option for my child and my family.  Making no decision is a decision onto itself. Your little child with special needs will become an adult with special needs in the blink of an eye.

No one wants to talk about our mortality but everyone should.  Finding a team of professionals to help you navigate through the special needs planning process is a critically important task for all caregivers.  Through my own research, I learned of A Special Needs Plan – a leading expert of comprehensive special needs planning and Littman Krooks – the premier special needs planning legal firm in the country.

I spoke to both Bernard Krooks of Littman Krooks and Ryan Platt with A Special Needs Plan and  what struck me most about each of them was their sincere interest in wanting to help educate parents on the planning process.  I brought up my idea to create a series of online interviews that could help walk a parent through the key elements of preparing a plan for their special child and they both readily agreed.   We have completed several of these interviews already and you can watch and listen to them on our website.  Each one is about 25-30 minutes long.

It was important to me that what I learned on my journey, I would be able to share with other parents and caregivers.  Utilizing social media platforms makes it easy to document my learning and make it available to you through YouTube and other social media outlets.  You can watch the “live” interviews on YouTube or Google+ as they take place and ask questions of Ryan and Bernard live on the day of our interviews.

If one of your goals is to finally get your special needs plan completed in 2014, I would encourage you to listen to our previous interviews and put the upcoming ones on your calendar so you can learn how to set up a plan for your family in the new year.

Visit www.FailuretoPlan.com/video-training to watch previous interviews and find more planning resources as well as join the  Special Needs Children Community on Google+.


Letter of Intent

July 15th, 2013

Reprinted with permission of the Special Needs Alliance


The Voice is the e-mail newsletter of The Special Needs Alliance. This installment was written by Special Needs Alliance member Amy C. O’Hara, Esq., and her co-author, Sheryl Frishman, Esq. (former counsel to Littman Krooks LLP). Amy is an attorney with the New York law firm Littman Krooks LLP, concentrating in special needs planning, trust administration, guardianships, elder law, and estate planning and administration. Amy is an active participant of the Special Needs Alliance publications committee and is a member of the New York State Bar Association. Sheryl’s practice is devoted entirely to the advocacy and life planning needs of children and adults with disabilities and their families. She is immediate past President of the Board of Directors of Westchester Arc. Sheryl also serves on the Board of Governors and Legal Committee of NYSARC Inc.

Letter of Intent

No one else knows your child as well as you do, and no one ever could. You are a walking encyclopedia of your child’s history, experiences, habits, and wishes. If your child has special needs, the family’s history adds a helpful chapter to your child’s book, one detailing his unique medical, behavioral and educational requirements.

What would happen if you suddenly became unable to provide your child with the necessary supports he needs? Without you, your child would become dependent on other caregivers who simply do not possess all of your personal knowledge and insight. However, there are steps you can take now to minimize the natural disruption and disorientation that will occur upon your death or if you become unable to care for your child during your lifetime.

First and foremost, you should appoint a legal guardian for any child who is not expected to be able manage personal financial or medical decisions without assistance. Second, you could prepare a letter of intent to help loved ones and your child manage a difficult transition when you no longer are the primary caregiver. A letter of intent is an important planning tool for parents of children with special needs (including adult children), and also may be useful when planning for minor children who are not expected to face special challenges.

Although a letter of intent is one of the most important estate planning documents a parent can prepare, it is not a formal legal document that must be created by an attorney. The goal of a letter of intent is to memorialize your knowledge of your child’s needs so that you may guide future caregivers, guardians and trustees in providing the best possible care to your child. Simply put, a thoughtful letter of intent ensures that those who come after you need not waste precious time figuring out the best way to manage and care for your child.

The letter of intent may be addressed to anyone you wish – for example “To Whom it May Concern,” “To my Guardian(s), Trustee(s) and Executor.” At minimum, the letter should address the following points:

Family History: Where and when you were born, raised, and married, including anecdotes about your own siblings, grandparents, and other relatives or special friends. A description of your child’s birth and his connections to specific family members or friends will complement your account of favorite memories and feelings about your child.

General Overview: A brief summary of your child’s life to date and your general thoughts and hopes about the future for your child.

Daily Schedule: Because levels of functionality vary for each child and future caregivers may fail to recognize this fact, it is important to include a list of your child’s daily routines, favorite activities, and events or tasks he loves or hates. Because a child’s ability to contribute to even the most mundane aspects of family life builds self-esteem, it is important that the letter mention whether your child can help with tasks like doing the dishes or raking leaves. Alternatively, if your child loves “swiffing” the floor but folding clothes frustrates him, make sure future caregivers have this information.

Food: Describe your child’s diet, including his favorite foods and any specific manner in which the food should be prepared or served. Be certain that the letter also includes a list of foods to which your child is allergic, simply does not like or otherwise may react adversely due to medication.

Medical Care: Describe in detail your child’s disability, medical history and allergies, as well as current doctors, therapists and hospitals. Detail the frequency of your child’s medical and therapy appointments and the purposes and goals of these sessions. List current medications, including how they are administered and for what purpose, and be careful to describe all medications that have not worked for your child in the past.

Education: Detail your child’s educational experiences and describe your desire for your child’s future education, including regular and special classes, specific schools, related services, mainstreaming, extracurricular activities and recreation. Discuss your wishes regarding the types of educational emphasis, i.e., vocational, academic or total communication, and name any specific programs, teachers, or related service providers that you prefer to be part of your child’s overall life plan.

Benefits Received: List the types of governmental benefits your child receives, including Medicaid, Medicare, SSI/SSDI, Supplemental Nutrition Assistance Program (food stamps), and housing assistance. Detail the agencies’ contact information, identification numbers for your child’s case(s), the recertification process for each benefit, including important dates and other reporting requirements.

Employment: Describe the types of work and work environments your child may enjoy; i.e., open employment with supervision, a sheltered workshop or an activity center. List any companies of which you are aware that provide employment in the community and may be of specific interest to your child.

Residential Environment: Describe your child’s living arrangements with family, friends or other organizations. If your child will be unable to continue living with these individuals after you stop being the primary contact for his care, describe what you consider to be the best alternative arrangements. For instance, explain whether you prefer that your child live in a group home or institution located in the same community, the preferred size of the institution, or that your child have a single room or roommate.

Social Environment: Mention the types of social activities your child enjoys, i.e., sports, dances, or movies. Indicate whether your child should be given spending money and, if so, how he has spent money in the past. The letter of intent also should note whether your child takes and/or enjoys taking vacations and, if so, whether he has a favorite travelling companion.

Religious Environment: Specify your child’s religion and any local place of worship your family attends. List all local clergy that may be familiar with your child and your family. Describe your child’s religious education and indicate whether this is of interest to your child.

Behavior Management: Describe any current behavior management program that is having a positive impact on your child and discuss any other behavior management programs that were unsuccessful in the past.

Final Arrangements: List your desires for your child’s final arrangements, including whether you have planned for a funeral, cremation or burial, and any cemetery, monument, religious service or specific clergy to officiate the proceeding.

Other Information: Include any other information that you believe will provide the best possible guidance to the person who assumes responsibility for caring for your child.

Once you prepare, sign and date the letter of intent, you should review the document annually and update it as necessary. It is important that you let your child’s potential future caregiver know the letter of intent exists and where it can be accessed; even better, you can review the document with the caregiver on an annual basis. The letter of intent should be placed with all of your other relevant legal and personal documents concerning your child.

The letter of intent can be a difficult and extremely emotional document to write, as it often is the first time parents actually envision their child with special needs navigating this world without them. However, once it is completed, the first important step has been taken toward creating a detailed road map for future caregivers and trustees. As a parent of a child with special needs, you also may be relieved to know that you are ensuring the highest quality of life for your child by laying the foundation for as seamless a transition as possible after you are gone.

Reprinted with permission of the Special Needs Alliance – www.specialneedsalliance.org.


Special Needs Trusts: Answers To Frequently-Asked-Questions

February 15th, 2013

(This article was written by Kaitlin Ahern and highlighted an interview with Bernard A. Krooks, Esq. It was featured in NY Metro Parent (March 2013)

If you’re thinking of creating a special needs trust or supplemental needs trust for a loved one, first read these answers to frequently asked questions, including how to set up the trust, who can access it, and what benefits an SNT has compared to other options.

Wondering whether to set up a special needs trust (sometimes called a supplemental needs trust) for your child, or just fuzzy on some of the details? Here, Bernard A. Krooks, founding partner of Littman Krooks LLP, answers some frequently asked questions about these trusts, including first party SNTs and third party SNTs.

Q: What is a special needs trust?

A: There are different types, and it generally depends upon whose money is being used. You have two choices: Either the person who has a disability—the kid who got injured in a car accident, a child who has autism and his grandparents left him money—sets up the trust, which is called a first party special needs trust. In this case, the person setting it up is putting the money in. The second kind is set up by someone else—a parent, grandparent, uncle, sibling, or anyone else other than the one with the disability. That’s called a third party special needs trust. In this case, someone else is looking to improve the quality of life for the person with the disability.

The rules are much different for each type, so make sure you know which kind you have.

In the case of a third party special needs trust, the reason someone would set it up is to ensure a better quality of life for someone else who has disabilities, without compromising their ability to obtain government benefits. If you left them the money outright, you might disqualify them for needs-based benefits such as Medicaid. But if you put that money into a trust, it doesn’t disqualify them, it provides for professional management of your money, and you can make sure the person gets what they need.

Q: Can any lawyer create an SNT?

A: No. If your toe hurts, you don’t go to a cardiologist, you go to a podiatrist. Almost half our cases are referrals from other lawyers, because they recognize this is not something a general practitioner can do—you have to do this full time. Make sure you hire a lawyer that has a focused practice area in special needs trusts.

Q: Who is allowed to set up a special needs trust?

A: For a first party trust, there are limitations. The individual can’t set it up—it has to be a parent, grandparent, guardian, or the court, using the individual’s money. That person sets it up, then the control gets handed over to the trustee, who may or may not be the same person that set it up.

Anyone can set up a third party special needs trust. You don’t have to be a guardian or even a relative. And anybody can be a trustee. If you’re including the trust in your will, you will need somebody else—a family member, lawyer, accountant, or the bank—to be a trustee. Many banks have formed special needs departments with an expertise in special needs trusts. A lot of people use family members because of cost, and a lot use professional trustees so the money gets invested professionally. If you do both, you get professional money management, and you also get an individual touch. You can have more than one trustee, but be careful of the fees—you don’t want to deplete the trust’s assets.

Q: When is the best time to set up an SNT?

A: The sooner the better, since you could become incapacitated or die at any time. Why wait?

Q: What happens if you set up an SNT in New York and then move to a different state?

A: It may or may not work if you move. If the trust is drafted properly, it should work in both states. But if you know you’re going to move, it’s wise to have the trust reviewed by a lawyer in a different state, just to make sure you’ll get the full benefits of the trust under that state’s laws.

Q: By creating an SNT for a child, does that make you a legal guardian for the child?

A: No. Absolutely not.

Q: If a family has two or more children with special needs, can one SNT cover both of them?

A: It depends, and it’s really the choice of the parents. You can set up one for each, but then the money from trust A will only be utilized for son A, and trust B is only for son B. Which may be good. But if you put it in one pot, you can give it to one or both when they need it. So if you want to make sure each kid gets the same amount, create two separate trusts. If you want to make sure the money is used however it’s needed, set up one trust.

Q: Who can access the trust funds?

A: The trustee has complete, unfettered discretion. The child will not be able to demand the money. You’re relying on the trustee to know when the child needs it.

Q: If a family is wealthy and not too concerned about receiving governmental benefits, would you still recommend they set up an SNT for their child?

A: Yes, we do this all the time. You never know whether or not you’re going to need government benefits. Draft a trust with a great deal of flexibility, including a provision to give the trustee the authority to purchase something for the child even if it means it will disqualify them for Medicaid and other benefits, as long as the trustee determines that it will best benefit the child. That way, you can have your cake and eat it too.

Visit the full article at NY Metro Parents


Guest Post: 2013 Top 10 New Year’s Resolutions, From MyAutismTeam Parents

January 17th, 2013

This post was featured on the blog for myautismteam.com.

With each new year, this is a time to take stock of your accomplishments, or ponder those projects that will make it to the “to-do” list in 2013.

And no New Year is complete without resolutions. Resolutions can take many forms; from the above mentioned project list to personal improvements in ourselves. At MyAutismTeam, we wanted to hear from the parents about their own resolutions. We surveyed over 35,000 parents on MyAutismTeam about their resolutions and what they are envisioning for 2013.

One of the resounding resolutions for parents this year will be to take a moment for themselves. From making an effort for laughter to making time for spouses and exercise, parents recognize that they give their best to their children when they are at their best. While simple in theory, such small acts go a long way, as a study from the Journal of Autism and Developmental Disorders has shown that parents (mothers in particular) are prone to feeling a sense of chronic stress that is similar to that of soldiers in combat.* This stress can often translate into health issues leading to additional stress, etc.

However, parents are taking note. In an effort to avoid and reduce stress, parents are choosing to focus on the positive. Concentrating on their children’s strengths and new therapies, parents are choosing to make 2013 a time to learn. In a year when autism was front and center, parents are also taking action and vowing to be stronger advocates for their children and more engaged in their progress. The top ten resolutions from the survey are listed below.

Top 10 Resolutions for 2013 by Parents with Children on the Autism Spectrum

  1. I will develop my child’s areas of strength.
  2. I will take things one day at a time.
  3. I will be a stronger advocate for my child at his/her school or with healthcare providers.
  4. I will explore new therapies for my child.
  5. I will be part of a strong social network for emotional, social, and informational support.
  6. I will make more time for my spouse and myself.
  7. I will exercise more.
  8. I will start looking at things from my child’s perspective.
  9. I will manage my own anxieties about social situations with my child.
  10. I will be vigilant in monitoring and managing my child’s progress.

In the busy days ahead, don’t forget your resolutions to help you get through to the next. Did your resolutions make the list? If not, share them with MyAutismTeam at http://www.myautismteam.com today.

To follow MyAutismTeam on one of their social media platforms, click below:

  • Blog: http://blog.myautismteam.com

For more information on special needs planning or special needs advocacy, please visit www.specialneedsnewyork.com.


529 Plans Offer Tax Benefits for College Savings

December 26th, 2012

College savings plans known as ‘529 plans’ are gaining in popularity, with over 2 million new participant families in the past five years, but they remain relatively little-known. A recent Edward Jones survey found 62 percent of parents surveyed did not know what a 529 plan is.

A 529 plan is a college savings account that allows investments to appreciate, earn interest and dividends, and be withdrawn free of federal income taxes provided the funds are used to pay for higher education for a designated beneficiary. This includes tuition, books, fees and room and board at most colleges, universities, graduate schools, and vocational schools throughout the country.

The designated beneficiary of your 529 plan account need not be related to you. It can be set up for a child, grandchild, friend, or even yourself. The minimum contribution is just $25.

Capital gains tax rates may see significant increases in the near future, which would make 529 plans all the more attractive for their tax-free growth potential.

Contributions to 529 plans may not be deducted from federally taxable income, but many states, including New York, allow state tax deductions. New York allows deductions for 529 contributions of up to $10,000 per individual or $20,000 per couple. Contributions are subtracted directly from your gross income for tax purposes, meaning you do not have to itemize deductions to save on state taxes.

Also of interest to some is the fact although assets within a 529 plan may be reclaimed, they are not considered part of the contributor’s gross estate for estate tax purposes, allowing the plans to be used for estate planning purposes.

New York’s 529 program allows investors to choose from three age-based investment options that each gradually become more conservative as the beneficiary nears college age. Alternately, investors may design and manage their own investment strategy by allocating assets among 13 individual portfolios.

For more information, visit www.specialneedsnewyork.com

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