Investing for disabled relative

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techszewski
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Joined: Fri Aug 07, 2015 11:28 pm

Investing for disabled relative

Post by techszewski » Fri Sep 21, 2018 10:24 pm

Hi, I've read a few threads of people who have relatives with SSI or SSDI benefits. The key issue being that a disabled person can't have much for assets in order to qualify for benefits, which makes issues involving inheritances tricky. I have managed a relative's inheritance as trustee of a family trust. If I want to invest on behalf of my relative with the intent of preparing for any type of major health expense not covered by MedicAid in the next ten years what would be the best approach? Total Retirement Index Fund? ETF? Conservative something?

My relative is 53 in fairly good health and doing well living in Section 8 housing while attending a day program for mentally disabled adults.

I know it may not have been the wisest choice given the extra taxes it may incur, but I have lumped his inheritance (50k) with my own investments for the time being.

Going forward, what makes the best sense to grow his 50k into a safety net for medical/health issues in the next decade. He is fortunate to live in a state with decent benefits for the mentally disabled, although each year there are more cuts in programs and adjustments to medication costs.

Much thanks in advance for anyone any suggestions! :happy

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celia
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Location: SoCal

Re: Investing for disabled relative

Post by celia » Fri Sep 21, 2018 10:47 pm

Start by seeing what directions the trust gives relative to this person. See if the trust has a section for "Special Needs" which describes what the trust money can be spent on (so that other benefits are not impacted). See a lawyer if you have any questions on understanding it.

Once you know what the spending requirements/allowances are, you will have a better idea of the timeline horizon you have. But with a trust (or will), you always have a fiduciary duty to do what is the best for involved parties, which is usually more conservative than if you were investing for yourself.

techszewski
Posts: 12
Joined: Fri Aug 07, 2015 11:28 pm

Re: Investing for disabled relative

Post by techszewski » Sat Sep 22, 2018 12:08 am

The trust is very flexible and kind of vague. No real restrictions are placed on how the money is used, only that, first, it does not endanger his disability benefits and second, that the money is used for his personal care and comfort.

johnra
Posts: 176
Joined: Sun Dec 28, 2014 12:07 pm

Re: Investing for disabled relative

Post by johnra » Sat Sep 22, 2018 12:20 am

Look at ABLE accounts...they allow up to 100K in assets in the name of the disabled person tax free

techszewski
Posts: 12
Joined: Fri Aug 07, 2015 11:28 pm

Re: Investing for disabled relative

Post by techszewski » Sat Sep 22, 2018 7:48 am

Thanks for the info on the ABLE accounts. A quick search for what's available in MA for the disabled is a Fidelity run program with what appears to be some high fees: "Fees range from 0.57% of assets to 0.94% of assets"

Wouldn't it be wiser to invest the money in a Vanguard index fund with fees around .13? Are the tax-free contributions really worth it? I looked at a few of their portfolio options and even the moderate risk option only predicted a 4% yield after 10 years.

b4real
Posts: 131
Joined: Wed Mar 05, 2014 6:19 am

Re: Investing for disabled relative

Post by b4real » Sat Sep 22, 2018 11:22 am

I am trustee of a trust that created another trust for a disabled person's inheritance share. I opened a trust account at Vanguard for the disabled person and distributed their share to the account. AFAIK, the trust assets are not subject to reporting for consideration of the disabled person's eligibility for medicaid or SS disability and are not subject seizure. The trust instructs me to invest and spend as I see fit for the benefit of the disabled person.
techszewski wrote:
Fri Sep 21, 2018 10:24 pm
I know it may not have been the wisest choice given the extra taxes it may incur, but I have lumped his inheritance (50k) with my own investments for the time being.
Did the trust gave you the authority to do this?

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