They should also be apprised of how remaining funds will be distributed upon the beneficiary’s death. They should understand that their contributions are not tax deductible, regardless of how their donations are used. It’s good practice to explain to potential crowdfunding donors how their money will be spent. Even if an SNT or ABLE account has been established beforehand, funds may be payable only to the individual who established the campaign account. Only funds that are spent in the same month in which they’re received won’t be counted as resources, though they could result in a one-month overpayment if the beneficiary is on SSI.Īnother workaround is to arrange for the crowdfunding website to make payments directly to a vendor or service provider-with the exception of expenses for food or shelter, which will cause reductions in SSI.īut not all crowdfunding sites have flexible disbursement policies. But timing must be carefully coordinated. If some of the money being raised is for immediate needs-such as an accessible van-a planned spend down can avoid benefit eligibility problems. If it’s anticipated that relatively modest funds will be raised, a pooled SNT, which combines many sub-accounts for efficiency, might be a possibility.Īn important consideration is that, upon the individual’s death, funds remaining in a first party or pooled SNT, as well as an ABLE account, would be subject to claims by Medicaid for services performed. If the crowdfunding campaign is established and managed by others, a third party SNT might be an appropriate vehicle. If the beneficiary is establishing their own crowdfunding account and is under the age of 65, they should look at creating a first party SNT. There are several types of SNT to evaluate. For example, the sister of a potential ABLE beneficiary lacking capacity would not be able to establish an account for him unless she has a valid power of attorney or is his guardian/conservator. In addition, if the beneficiary lacks capacity to establish or manage the account, those duties can only be performed by a parent, conservator/ guardian or agent under a valid power of attorney. The onset of the beneficiary’s disability must have been prior to their turning 26, and no more than $14,000 can be deposited in the account annually. For that reason, separate campaigns should be established if money is to be raised for caregivers, as well as individuals receiving public benefits.ĪBLE accounts won’t work for everyone. Funds held in SNTs and ABLE accounts should be used for the sole benefit of individuals with disabilities. The ideal process is for the crowdfunding site to make deposits directly into one of those instruments, so it’s best to establish them before launching the campaign.
Subject to differing regulations, funds held in either an SNT or ABLE account are not considered when establishing benefit eligibility. To prevent the reduction or termination of benefits, individuals and their families should consult a special needs attorney about the possibility of using a special needs trust (SNT) or ABLE account to protect both the money raised and qualification for essential programs. If the crowdfunding account is set up to benefit multiple individuals, such as an individual and family caregivers-the person receiving public benefits would have their portion of the money counted as a resource. If the beneficiary is a minor, checks received by the child’s parents would have the same result. Even if someone other than the individual with special needs creates and manages the account, the beneficiary’s means-tested benefits could be affected. If the crowdfunding account is established by the person with disabilities, or if the funds are intended to be distributed directly to them, the money will almost certainly be considered unearned income by SSA and other agencies.īecause the Social Security Administration (SSA) hasn’t published rules that specifically address crowdfunding, there are gray areas. Crowdfunding can easily put them over that. To maintain eligibility for Supplemental Security Income (SSI), Medicaid, food stamps and Section 8 housing, a beneficiary must have limited financial assets─$2,000 in the case of SSI and Medicaid. But without planning, such funds can wreak havoc with the means-tested benefits that are often critical to financial security, health and overall quality of life for someone with serious disabilities.
In such cases, family, friends and members of the general public want to help pay for medical treatments, home renovations or the many other expenses faced by someone with special needs and their caregivers. Crowdfunding, with websites such as GoFundMe, has increasingly been used to raise money on behalf of individuals with disabilities.
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