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How special needs planning helps create love that lasts a lifetime

Gertie Munholland at cheerleading practice
Gertie Munholland at cheerleading practice

Resources to help create a financially secure life for those with disabilities.

Gertie Munholland was just three days old when she was adopted. Her parents, Heidi and Nick Munholland of Milliken, Colorado, knew before the adoption that she would be born with Down syndrome.

While all parents worry about their children’s health and development, the Munhollands recognize, as Heidi says, that as “special needs parents,” there might be additional issues to deal with over the years. And one of those issues is being prepared for whoever dies first.

According to the Centers for Disease Control and Prevention, one in four U.S. adults lives with a disability.

Many of those with disabilities need help managing their daily lives and are cared for by their families. There are government programs and financial vehicles that can help support medical and personal necessities for now and into the future. But how do caregivers decide among the available options? And how do caregivers plan for a day when they may no longer be able to provide care? To ensure loved ones are taken care of, it’s important to work with an attorney and a financial advisor to determine the best way to navigate the system to ensure that loved ones are taken care of.

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Support for caregivers
Thrivent clients with membership can use our Caregiver Resources to find local support and tools.

See the options

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Special needs planning

Before adopting Gertie, who is now 16, the Munhollands had a financial strategy should something happen to one or the other of them. But Heidi and Nick needed a plan to ensure continuous care for Gertie should something happen to both of them.

Jeffrey Solomonson, a Thrivent financial advisor, “was able to help us out and connect us with everything,” Heidi says. He laid out the available options, which included first- and third-party special needs trusts and Achieving a Better Life Experience (ABLE) accounts.

First-party special needs trust

A first-party special needs trust is funded with assets from the disabled individual, such as from an inheritance in their name. At the individual’s death, proceeds in a first-party trust will be required to first reimburse each state’s Medicaid program from which the beneficiary received benefits. That may deplete the assets in the account. If additional funds remain after Medicaid is reimbursed, the balance can be distributed to other remainder beneficiaries.

Third-party special needs trust

A third-party special needs trust is funded with assets from other loved ones, such as with proceeds from a life insurance policy. Typically, no payback is required from a third-party trust at an individual’s death.

Funds in either type of special needs trust may be used for a wide variety of expenses, including:

  • Education
  • Travel and recreation
  • Assistive and electronic equipment and appliances
  • Companion assistants
  • Vehicles

Special needs trusts are meant to supplement but not replace benefits an individual receives, making it especially important that a trust be properly drafted to accomplish its goals of preserving benefits.

Achieving a Better Life Experience (ABLE) account

An ABLE account offers individuals a tax-advantaged way to save money without affecting their government benefits.

 How it works:

  • The disability must have happened before age 26.
  • Annual contributions are limited to the annual gift tax exclusion ($18,000 in 2024) for the person with disabilities, and earnings grow tax deferred.
  • Once the account’s value exceeds $100,000, Supplemental Security Income is suspended until the balance drops below $100,000.
  • Upon the death of a person with disabilities, any amount remaining in the account after Medicaid reimbursements goes to the deceased person’s estate or a beneficiary and could be subject to income taxes.

The Munhollands also wanted to protect Gertie and themselves with life insurance. As Thrivent clients with membership, the Munhollands were able to gain access to membership benefits providing them with resources and tools to support their family. As Gertie was not eligible for life insurance, they applied for Thrivent’s uninsurable child life insurance, a benefit of membership to eligible clients. It’s a $10,000 policy for children who have been declined for life insurance. Gertie met eligibility requirements and was approved.

“We wanted to help make sure funeral costs would be taken care of if something happened to her,” Heidi says. “And if she outlives us, it will go into her trust. If you don’t have these things in place, you worry about your kids.”

Explore 3 Thrivent membership benefits

Helpful resources for special needs families.
Reduce work and worry through personalized guidance for all your caregiving needs in one place.
Eligible children who have been declined for other life insurance can get $10,000 of coverage.
Give to organizations who promote respect and raise awareness for those living with disabilities.

Remember self-care

Caregivers often face burnout as they navigate bureaucracy, daily life with an individual with a disability and their own lives. While creating a financial strategy can reduce stress, it’s important for caregivers to attend to their own personal and emotional needs. Take a walk, get a massage, visit a friend.

Take advantage of community-based programs through county waiver programs that contract with local respite providers. They may provide, among other things, respite care, or a person that is a trained care provider. Thrivent clients with membership can use our Caregiver Resources to find support and tools in your area.

Support groups can offer time away for the children and activities for parents. And grandparents and other relatives and friends can play a large role, too.

“It’s important to plan and be excited about your child’s future,” Heidi says. “It’s actually been cool to have our strategy flow and to know it’s covered and we don’t have to worry about it. It allows us to enjoy all the time we have together.”

It’s important to plan and be excited about your child’s future. It’s actually been cool to have our strategy flow and to know it’s covered and we don’t have to worry about it.
Heidi Munholland, Thrivent client

Get started on a plan unique to your situation

Every person with a disability has a unique story. It’s important to work with a knowledgeable professional who can help you find a solution that best fits your situation.

If, for example, a grandparent wants to leave money to a grandchild with a disability, it’s a better option to leave the money to a third-party trust rather than give the money directly to their grandchild. Otherwise, the money would be the grandchild’s asset and could push that grandchild over the income threshold and disqualify them for any government benefits.

Aside from government funding, each state also has its own programs. “Most states’ Health and Human Services websites discuss medical assistance as well as resources for housing assistance and health care plans,” says Cheryl Krinke, a dedicated planning strategist and attorney at Thrivent. For example, her state has Minnesota Supplemental Aid (MSA), “which provides some cash assistance for basic needs. Someone eligible for MSA also may be eligible for the MSA Housing Assistance program.”

To best understand the trust options, parameters, fees and tax implications of your choices, you need a good team, which should include a lawyer and a financial advisor.

We are here to help

Do you have a loved one with disabilities? Connect with a Thrivent financial advisor to create a special needs plan that considers the overall well-being of your family.

The members’ experiences may not be the same as other members and does not indicate future performance or success.

Thrivent and its financial professionals do not provide legal, accounting, or tax advice. Consult your attorney or tax professional.

Member benefits, programs and activities are not guaranteed contractual benefits. You should never purchase or retain any insurance or annuity products simply to be able to participate. Participation is subject to applicable Terms and Conditions.

This contract has exclusions, limitations and terms under which the benefits may be reduced, or the contract may be discontinued. For costs and complete details of coverage, contact your licensed insurance agent/producer.