Hi, Does anyone know the rules for spending down a custodial account so it's less than $2,000, prior to applying for SSI for difficult child when he turns 18. He'll be 17 next May. We live in California. I'm think it's acceptable to spend it on a computer, classes, camps, but not sure about medication, or clothing, or if we need to replace our TV also. Thanks in advance.
SSI Eligibility when 18, and spending down custodial account before then
- Thread starter MICHL
- Start date
If the child is not yet on SSI then there are not a lot of rules about how that money can be spent except that it can't be given away.
If the child will be receiving Medicaid benefits then there are separate rules from Medicaid that apply to spending down prior to going on Medicaid. You should look at the information on the Social Security website The United States Social Security Administration. It gives lots of information that apply to this situation. It should be fine if you do the things you mentioned in your post.
Here is some information I excerpted from info for caseworkers who are supervising trusts for foster children. This same info applies regardless of the state because this info is based on social security rules.
You might want to review this information and consider the other options it covers.
SSI Asset Limitations and Spending Down Accounts
SSI is a needs based benefit with an asset limit of $2000. Trusts may not exceed
$2000 for children who receive SSI. Certain assets are excluded from this provision, including
normal possessions such as clothing, books, electronic equipment, etc. It is important to note that
children who do not receive SSI are not subject to an asset limit so their accounts may exceed
$2000.
Ideally, create a spending plan—with the child's input where possible—that
addresses the child's specific needs so that purchases are designed to improve the child's life, not
just empty the trust account. Children receive SSI because they have a disability so advocates
should look for ways to spend SSI money to ameliorate the effects of that disability. SSI money can
be spent on tutoring for kids with learning disabilities or who are behind in school because of
frequent moves. It can be spent on therapies that are not otherwise covered by Medicaid. It can be
spent for music or art lessons or sports equipment and after school activities.
Tools for Preserving Assets in Excess of $2,000 for Youth with Disabilities
Rather than spending down the child's funds, there are tools which may be utilized to
preserve the assets and make them available for children when they reach the age of 18. These
tools include:
PASS Plans
If a youth has a source of income other than SSI, he or she may be able to accumulate assets in
excess of $2,000 in a PASS plan. PASS, (Plan for Achieving Self Sufficiency), is a Social Security
program designed to allow people with disabilities to accumulate and use assets for the purpose of
enhancing their employment opportunities without jeopardizing their SSI (and as adults, their
disability) benefits. The money must be saved for a specific job related purpose such as to purchase
a vehicle to drive to work or to purchase work related tools. A PASS plan must be approved by the
Social Security Administration before money can be set aside. It is important to note that SSI
money cannot be saved in a PASS plan.
Special Needs Trusts
If a youth with disabilities receives a large sum of money, and if he or she will require expensive
care and services, the advocate should consider a special needs trust. Money in a special needs
trust does not count as an asset for purpose of government benefits, such as SSI and Medicaid.
Depending on who created the trust and what money went into it, the money left in the trust after
the disabled person dies may be sent to Medicaid for its medical assistance. The money can be used
only for limited purposes.
Pooled Trusts
Pooled trusts are a good alternative if the funds available do not justify the cost of creating and
managing a special needs trust. A nonprofit pooled income special needs trust is run by a nonprofit
organization that invests and manages money from many people. Upon the death of the disabled
individual, the balance is either retained in the trust for the nonprofit association or is paid back to
Medicaid for its medical assistance. The money can be used only for limited purposes.
HOW ARE
If the child will be receiving Medicaid benefits then there are separate rules from Medicaid that apply to spending down prior to going on Medicaid. You should look at the information on the Social Security website The United States Social Security Administration. It gives lots of information that apply to this situation. It should be fine if you do the things you mentioned in your post.
Here is some information I excerpted from info for caseworkers who are supervising trusts for foster children. This same info applies regardless of the state because this info is based on social security rules.
You might want to review this information and consider the other options it covers.
SSI Asset Limitations and Spending Down Accounts
SSI is a needs based benefit with an asset limit of $2000. Trusts may not exceed
$2000 for children who receive SSI. Certain assets are excluded from this provision, including
normal possessions such as clothing, books, electronic equipment, etc. It is important to note that
children who do not receive SSI are not subject to an asset limit so their accounts may exceed
$2000.
Ideally, create a spending plan—with the child's input where possible—that
addresses the child's specific needs so that purchases are designed to improve the child's life, not
just empty the trust account. Children receive SSI because they have a disability so advocates
should look for ways to spend SSI money to ameliorate the effects of that disability. SSI money can
be spent on tutoring for kids with learning disabilities or who are behind in school because of
frequent moves. It can be spent on therapies that are not otherwise covered by Medicaid. It can be
spent for music or art lessons or sports equipment and after school activities.
Tools for Preserving Assets in Excess of $2,000 for Youth with Disabilities
Rather than spending down the child's funds, there are tools which may be utilized to
preserve the assets and make them available for children when they reach the age of 18. These
tools include:
PASS Plans
If a youth has a source of income other than SSI, he or she may be able to accumulate assets in
excess of $2,000 in a PASS plan. PASS, (Plan for Achieving Self Sufficiency), is a Social Security
program designed to allow people with disabilities to accumulate and use assets for the purpose of
enhancing their employment opportunities without jeopardizing their SSI (and as adults, their
disability) benefits. The money must be saved for a specific job related purpose such as to purchase
a vehicle to drive to work or to purchase work related tools. A PASS plan must be approved by the
Social Security Administration before money can be set aside. It is important to note that SSI
money cannot be saved in a PASS plan.
Special Needs Trusts
If a youth with disabilities receives a large sum of money, and if he or she will require expensive
care and services, the advocate should consider a special needs trust. Money in a special needs
trust does not count as an asset for purpose of government benefits, such as SSI and Medicaid.
Depending on who created the trust and what money went into it, the money left in the trust after
the disabled person dies may be sent to Medicaid for its medical assistance. The money can be used
only for limited purposes.
Pooled Trusts
Pooled trusts are a good alternative if the funds available do not justify the cost of creating and
managing a special needs trust. A nonprofit pooled income special needs trust is run by a nonprofit
organization that invests and manages money from many people. Upon the death of the disabled
individual, the balance is either retained in the trust for the nonprofit association or is paid back to
Medicaid for its medical assistance. The money can be used only for limited purposes.
HOW ARE
