CMP Financial Planning

Planning for the Housing Needs of Your Child With a Disability


By Barry Jamieson

Planning for the Housing Needs of Your Child With a Disability

The current and future housing needs of a child with a disability are of particular concern to special needs families and are a critical part of any special needs plan. Families want to know that the physical needs of their child will be taken care of in a suitable and safe living environment. They also want their adult child to live as independently as possible. How much support your child with a disability needs depends on the level and extent of the disability, but their living environment certainly plays a role in what kind of support is needed. This article discusses issues related to the housing needs of your adult child with special needs. The focus of this article will be on those children with disabilities who could potentially live independently with minimal support and whose assistance would be provided primarily by family members and friends. Subsequent articles will focus on housing options for those individuals who need government assistance in providing support.

Staying in the family home

The family home for many is the largest asset they have to pass on to their child with a disability. Many special needs families choose to have their loved one continue to live in the family home as long as possible for reasons of economic necessity, safety, and concern for their child’s well being. Families can help the child save by charging rent and setting aside those dollars in an ABLE account. The family home also has the advantage of providing a stable, familiar environment while your loved one develops independently through work and other community activities.

The family home can also be a cost effective option after the parents die and the adult child is living on their own. The family can arrange for the ownership of the family home through a Special Needs Trust (SNT) upon the death of the parents to provide continuity for the adult child. Since the home is owned by the SNT and the child has a beneficial equity interest in the home, their SSI benefit would not be impacted if the child lived in the home rent free. Payments made from the trust for the upkeep of the house as well as payments for utilities and property taxes would affect SSI payments since these expenses are considered in-kind support and maintenance by Social Security.

Owning a home other than the family Home

Many adult children with a disability could potentially be living independently from their families but do not do so because of the number of physical and emotional barriers that exist in making such a move. Impediments include safety concerns and lack of suitable housing. The Easter Seals “2016 Living with a Disability Study” shows that 30% of children with disabilities have the life skills necessary to live independently, but only 17% actually do. It is beneficial to address these obstacles to independent living early rather than when there is a crisis (e.g. parent disability or death), for delaying a decision will limit living options to what is available at that moment. The advantage of time is that the family is able to guide the housing selection and transition process.

Buying a home can present a number of challenges, not the least of which is coming up with funding to make the purchase. Home ownership, however, does offer the advantage of being able to pick the neighborhood in which your loved one will live in. Home ownership also provides a measure of pride and responsibility for you child. Similarly, as discussed in connection with owning the family home, it is preferable to have the newly purchased home owned through the SNT. Although it is possible to purchase the home in the child’s name without impacting Medicaid eligibility, owning the home through a trust does protect the property from your child’s creditors. Importantly, the sale of the home would not affect the child’s eligibility. Since the child is considered to have an equitable interest in the SNT, living rent free in the home will not be considered an in-kind gift of housing and thus would not impact SSI benefits.

The regular costs of maintaining and renovating the home need to be carefully considered in order to protect the trust from underfunding . A “typical” real estate rule of thumb suggests budgeting annually at least 1% in costs of the home purchase price. Arguably this percentage could be higher for persons with disabilities. After including the costs of insurance and property taxes and lawn care, the total budget for housing as percentage of the home price might run as high as 4% annually. Finding suitable room mates who could help share in these costs by paying rent would help in lowering the overall costs of home ownership. Families could arrange for their home to be donated to a housing corporation upon the parents’ death in order to to provide an assurance that the home will be properly maintained in the future. It is important that such arrangements be discussed with the housing corporation before gifting the home to assure that the terms negotiated in such a transfer are suitable to the needs of the loved one and the family.

Renting

If you decide that home ownership carries too much responsibility and/or is too costly to manage, then you will need to find an appropriate home or apartment to rent. Finding affordable housing units that can accommodate persons with disabilities is a challenging task. Unfortunately, the housing that is most affordable is often also the least accessible. The American with Disabilities Act for the most part does not apply to private residential housing; however, the Fair Housing Act does provide some protection in terms of negotiating the terms of the lease. Landlords are required to negotiate with you regarding modifications needed to accommodate your loved one, but they are not required to pay for the modifications . Probably the better bet is to look for apartments that are by law required to meet certain accessibility requirements and are therefore more likely to be suitable for your adult child.

Finding a suitable living environment can be a daunting task for anybody, but the search is even more complicated when taking into account the unique needs of a person with a disability. Planning in advance will increase the available options for your loved one and give the family time to provide the necessary supports in the transition to independent living. Consulting a special needs estate attorney and financial planner before making such a decision will help families craft a solution that best serves the housing needs and overall interests of their loved one.

References:
1. Finding Apartments for Disabled Apartment Hunters, Updated July 24, 2018. https://www.apartmentguide.com/blog/finding-apartments-for-disabled-apartment-hunters.
2. Suitable Housing Options for Your Special Needs, http://www.specialneeds.com/legal-and-trustees/general-special-needs/suitable-housing-options-your-special-needs.
3. Tripp, Amy, R., Owning a Home with a Special Needs Trust. May 24, 2017. https://blog.thearc.org/2017/05/24/owning-home-special-needs-trust/.
4. Krame, Evan J., The Voice Newsletter (Special Needs Alliance), January 2014. https://www.specialneedsalliance.org/the-voice/special-needs-trusts-and-home-ownership-a-trustees-concerns.
5. McCarten, James, Special Needs Alliance, 2016 https://www.specialneedsalliance.org/a-place-of-her-own/.
6. The Promises and Pitfalls of Home Ownership for People With Special Needs. https://specialneedsanswers.com/the-promises-and-pitfalls-of-home-ownership-for-people-with-special-needs-13994.