Sheri R. Abrams, P.C., Attorney at Law
Social Security Disability &
  Special Needs Trusts News from
 Sheri R. Abrams, P.C. Attorney at Law
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In This Issue
When Should You Apply for Social Security Disability Benefits?
What If I Took Early Retirement From Social Security at Age 62 and Then I Change my Mind?
Why Should You Create A Special Needs Trust Before Your Special Needs Child Turns 18?
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Issue: # 12 July 2009
Picture of Social Security Card and Dice

Welcome to the twelfth edition of our newsletter.  In these monthly newsletters we will be showing you how not to gamble with your or your patients/clients Social Security Disability and/or SSI benefits.  We will also be providing you with useful information on Wills, Living Wills, Powers of Attorney and Special Needs Trusts.
When Should You Apply for Social Security Disability Benefits?
Social Security Card
You should apply for Social Security Disability benefits as soon as you believe that your mental or physical illness will keep you from working for at least 12 months. 
Because of the serious backlog of cases nationwide, it can take one to two years from the time you first file your claim to have your case decided favorably.  Therefore, you should not wait until you have been out of work for a year. 
Certain rules and limitations apply to Social Security disability claims limiting the amount of any award for past due benefits.  Generally, you cannot be awarded past due benefits for more than one year prior to the date of your application, no matter when you became disabled. 
Therefore, early filing is very important.
For more information on Social Security Disability benefits please click here.
What If I Took Early Retirement From Social Security at Age 62 and Then I Change my Mind?
Treasury Check
If you elected to take Social Security retirement benefits before your full retirement age and are now thinking that this may have been a mistake, there may be an answer.
Once you reach full retirement age, you can pay back the money you have received and reapply for full retirement benefits.  Although you can collect Social Security retirement benefits between age 62 and your full retirement age, if you do, your benefits will be lower.  For example, if you were born in 1944 and decide to retire at age 62, four years before your full retirement age of 66, your total benefit reduction is 25 percent.  If your full benefit was to be $1,000 a month, your reduced benefit will be $750. 
However, a little-known provision of Social Security allows you to withdraw your application for early benefits and reapply for your full benefits. The catch is that you must be able to pay back all the money you received so far.  However, because you do not have to pay any interest on the benefits you received, if you can find the money to repay the benefits, it may be worth it. You could think of it as an interest-free loan.
Why Should You Create A Special Needs Trust Before Your Special Needs Child Turns 18?
Scale of Justice
Often, parents of children with special needs don't consider creating a special needs trust until their child turns 18 or sometimes even later, when the child requires government benefits like Medicaid or Supplemental Security Income (SSI).
But special needs trusts are tremendously versatile instruments that can do much more than simply protect a person's access to government benefits. There are several reasons why parents don't have to wait until their child turns 18 to create a special needs trust for the child's benefit.

Estate planning:  The number one reason to create a special needs trust before a child turns 18 is the same reason parents of children without special needs should have an estate plan -- to provide stability and security for their family members should something happen to them. Creating a special needs trust before a child needs it ensures that the trust is there when it is needed, regardless of what happens to the trust's creators. If parents of a child with special needs unexpectedly pass away having created a special needs trust, their estates will be held for the benefit of their child with special needs in a way that offers maximum flexibility for the child.

Gifts:  Parents may want to establish a special needs trust for their minor child so that the child's relatives can fund it with gifts. In fact, this may be preferred, because the special needs trust will provide proper management of those assets. Older relatives intending to leave an inheritance for a child with special needs can also give the bequest directly to the trust. Planning ahead guarantees that if the child requires government benefits when he or she is older, he or she will not have large amounts of money in his or her name that could affect his or her eligibility.
Life insurance:  Sometimes, parents of a child with special needs want to purchase a life insurance policy that will help pay for their child's care long after they are gone.  Properly created special needs trusts can hold life insurance policies and manage the proceeds from those policies once the parents have died.  Life insurance trusts are also good ways for parents with larger estates to reduce their estate tax liability. The earlier parents start funding the life insurance policy, the greater the benefit for their child with special needs. Since this funding can begin well before a child turns 18, it makes sense to create a special needs trust to hold the policy and its proceeds, even though the child is not yet receiving government benefits.

Home ownership:  Special needs trusts can own homes for people with special needs, reducing the risks of placing property into the hands of someone who may not be able to properly maintain a home.

Care management:  These trusts can provide care management as well as a structure for family involvement in the daily activities of a person with special needs.  In addition, an experienced special needs attorney can serve as a great resource for families seeking additional care options for their children.

Planning early and constantly updating and improving a special needs trust can be the difference between a moderately useful trust and an incredibly effective one.  In most cases, the trust will be unfunded during the parents' lives, whether the child is over or under age 18, but having it available can be important for the reasons outlined above.
A qualified special needs attorney, such as Sheri Abrams, can help parents of younger children create and manage a suitable special needs trust that works for their child before, and after, the child turns 18.
For more information on establishing a Special Needs Trust please click here.
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We provide legal services in the areas of Social Security Disability Law and prepare Wills, Special Needs Trusts, Living Wills, Health Care and Financial Powers of Attorney for clients in Virginia, DC and Maryland, and we are always happy to provide FREE friendly phone advice.
If you refer someone who becomes a client, we will treat you to a great cup of coffee (you will receive a FREE Starbucks Gift Card).
If you, or someone you know, is involved with an educational event or support group that would benefit from a presentation on Social Security Disability Law, Wills, Living Wills, Powers of Attorney or Special Needs Trusts, please call us at (703) 934-5450.