Building Your Assets and Wealth
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The Basics
Many people with disabilities have low income and limited assets. It can feel hard to change this if you get public benefits, because programs like Supplemental Security Income (SSI) and Colorado Works have rules about saving money, and there are common myths that you can't get benefits and save for your future.
However, there are steps you can take to start building your assets:
- Programs like ABLE accounts, Individual Development Accounts (IDAs), and Plans to Achieve Self-Support (PASS) can help you save money or make investments without risking your public benefits.
- Special Needs Trusts are another way to build up assets without losing disability benefits.
- Tax credits, such as the Earned Income Tax Credit (EITC), can help you make the most of your income. You can get free help filling out your taxes to make sure that you get the tax credits you deserve.
Try one or more of these steps, so that you can save money and become more self-sufficient over the long-term.
ABLE accounts let people who have disabilities that began before they turned 26 keep money in a special tax-advantaged account. They can also allow you to save money without losing your public benefits:
- The first $100,000 in an ABLE account does not count against the $2,000 Supplemental Security Income (SSI) resource limit.
- None of the money in an ABLE account counts for Health First Colorado (Medicaid), SNAP (formerly Food Stamps), and most other public benefits programs.
Learn more
ABLE Accounts
ABLE accounts help people with disabilities save money without losing benefits.
Finding the Right Job for You
Get some tips and resources that make it easier to find a job or career.
Housing
Section 8, public housing, and other programs help pay for housing.
Building Your Assets and Wealth
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Why Assets Matter
It's hard to think about building assets for the future when you get public benefits and don't have much income. Furthermore, programs like Supplemental Security Income (SSI) and Colorado Works have resource limits that make it hard to save money.
However, there are ways of building your assets, even if you are on public benefits and have low income.
Building your assets means saving money or making investments by putting money in the bank, buying stocks, putting money into a retirement account, or buying a home. It’s important to build your assets, because assets help you:
- Become financially secure and more independent
- Deal with unexpected expenses that may come up, and
- Achieve your goals, like paying for school, going on vacation, buying a computer, starting a business, or owning a home.
Financial Literacy
"Financial literacy" means having a general understanding of how to manage your money. Over time, financial literacy can help you do big things, like pay for college, buy a house, or have money during old age. It can also help you stay away from scams and be ready for unexpected expenses and difficult life events.
Financial literacy is especially important for people with disabilities, because they often:
- Spend more on everyday activities
- Have high medical costs, and
- Get public benefits that have rules and restrictions about money and assets.
- Find a nonprofit that does financial literacy workshops, like an Individual Development Account program or a housing counseling agencies approved by the U.S. Department of Housing and Urban Development.
- Check out Money Management International for general information. (Some MMI services are free, but you may have to pay a fee for others.)
- Check out the links to financial literacy resources provided by the Colorado Society of Certified Public Accountants.
- Check out the links to personal financial literacy K-12 teaching resources provided by the Colorado Department of Education.
- Explore Economic Literacy Colorado's list of links to personal financial literacy resources for K-12 students.
- Check out the Enrich financial literacy tool by the Colorado Workforce Development Council.
Learn more
ABLE Accounts
ABLE accounts help people with disabilities save money without losing benefits.
Finding the Right Job for You
Get some tips and resources that make it easier to find a job or career.
Housing
Section 8, public housing, and other programs help pay for housing.
Building Your Assets and Wealth
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ABLE Accounts
A tax-free ABLE account lets people with disabilities save money without affecting their benefits. It also allows family and friends to give them money to use for a variety of expenses.
If you have a disability that meets Social Security’s standards (there are separate disability standards for children or youth, for adults, and for blindness) and your disability began before you turned 26, you can open an ABLE account. This can help you:
- Build assets in an account that has tax advantages. Your investments in an ABLE account won’t be taxed, so your wealth will grow faster. If you work and save earned income in your ABLE account, you may qualify for the federal Saver’s Credit. If you have your ABLE account with Colorado ABLE, you may also get a state tax deduction for contributions you make.
- Use your savings on many types of expenses. There are rules about spending the money in your ABLE account, but there’s also a lot of flexibility.
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Save up money without losing benefits. Many benefits programs have resource limits, but:
- You can have up to $100,000 in your ABLE account and keep getting Supplemental Security Income (SSI) benefits, as long as you meet all other SSI rules. If you go over $100,000, SSI benefits will stop, but they will start up again if your ABLE account drops back below $100,000 and you won't have to reapply.
- No matter how much you have in your ABLE account, the money in it won’t affect Health First Colorado (Medicaid), Colorado Works, the Health First Colorado Buy-In Program For Working Adults With Disabilities (Medicaid Adult Buy-In), Supplemental Nutrition Assistance Program (SNAP), and most other programs with resource limits.
The bottom line: An ABLE account means that you can save up money without losing your benefits. It also allows family and friends to give you money without affecting your benefits.
ABLE account rules are introduced below and covered in detail in DB101's ABLE Accounts article.
You definitely qualify for an ABLE account if you get benefits like Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI), Childhood Disability Benefits (CDB), Health First Colorado (Medicaid) (based on your disability), or the Health First Colorado Buy-In Program For Working Adults With Disabilities (Medicaid Adult Buy-In), because they all use SSA's disability standards (there are separate standards for children or youth, for adults, and for blindness). If you don’t get disability-based benefits, you may be able to “self-certify” (with a doctor's letter) that your disability meets SSA’s standards.
Opening an ABLE Account
An ABLE account is easy to set up, and you don't need a lawyer or other advisor. You can open your own ABLE account or, if needed, it can be opened for you by a parent, a legal guardian, or someone with a valid power of attorney.
Some states offer ABLE accounts and others don’t. Colorado's ABLE account program is Colorado ABLE.
If you qualify for an ABLE account, you can open one in any state that offers a nationwide program. Although you can only have one ABLE account at a time, you can switch your ABLE account from one state program to another. The ABLE National Resource Center lets you see the ABLE account options in different states, compare programs from three different states, or search by ABLE account features.
Rules about ABLE Account Money
There are two limits on how much can be put in an ABLE account in a calendar year:
- Up to $17,000 from any source (including your family and friends, your benefits, and other unearned income
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Another $13,590 from your own earned income (if you have a job).
- Note: If you or your employer make contributions to a retirement plan set up by your employer, you might not qualify for the extra ABLE contribution amount based on having a job (you can still make regular ABLE contributions). If you aren't sure about this, ask your ABLE account program or check with a tax expert. Get more information about this rule from the ABLE National Resource Center.
Note: This means that if you earn $13,590 or more, you could have a total of up to $30,590 go into your ABLE account in a year. If you earn less than $13,590, the most you can contribute is equal to the amount you earned that year plus $17,000.
Important: Colorado ABLE will automatically stop accepting deposits for the rest of the year once $17,000 has been deposited in the account (unless you submit paperwork to deposit more than that amount). Not every state does this automatically, so if you have your ABLE account in a different state, you may need to keep good records, to make sure that too much money isn’t put into your account.
The money in an ABLE account must be used for certain qualified expenses, like basic living expenses, health and wellness, education, job training, or housing. Many expenses qualify. It's your job to make sure an expense qualifies, and to keep records of how you use your ABLE account money.
If you take money out of an ABLE account but do not use it for qualified disability expenses, you might have to pay income tax on it plus a 10% penalty, and it could affect SSI and other benefits.
Learn more about the rules for spending ABLE money in DB101's article on ABLE Accounts.
An ABLE account:
- Is easier (and cheaper) to open and manage than a trust
- Provides tax benefits (as long as any money withdrawn is spent on qualified disability expenses)
- Gives you more control and more choices
- Lets you use the money for housing expenses without making SSI benefits go down
- Can be opened after age 65
- Can be used to pay for basic living expenses
- Can accept up to $17,000 in total deposits each year
- Has no limits on contributions
- Does not require that your disability began before you turned 26
- Any money left in the trust when you die does not have to be used to repay Health First Colorado (Medicaid), if the trust was set up by someone other than you (a Third Party Trust), with their money
- The money in a Special Needs Trust does not have to be spent on qualified disability expenses, but it can't be used for housing or basic living expenses.
The bottom line: Because of the limits on contributions to an ABLE account, you cannot replace a trust with an ABLE account. Instead, use them both as part of your overall asset-building strategy. Learn more about Special Needs Trusts.
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You can put up to an extra $13,590 of your earnings into your account (on top of the regular $17,000 that is allowed). The $13,590 must be from your own earnings – it cannot be contributions from others or money you get from benefits or other unearned income.
- Note: This means that if you earn $13,590 or more, you could have a total of up to $30,590 go into your ABLE account in a year. If you earn less than $13,590, the most you can contribute is the amount you actually earn that year plus $17,000.
- You may qualify for the Saver’s Credit when you file your federal taxes and, if you have your ABLE account with Colorado ABLE, for a state tax deduction when you file your state taxes.
- The Colorado ABLE program will automatically stop accepting deposits for the rest of the calendar year once $17,000 has been deposited in the account (unless paperwork is submitted to deposit more than that amount). However, not every state ABLE program does this automatically. If you have your ABLE account in a different state, you might need to make sure that too much money isn’t put into your account each year (even if it is other people making the deposits). Check with your ABLE program if you have questions about this.
Learn more
ABLE Accounts
ABLE accounts help people with disabilities save money without losing benefits.
Finding the Right Job for You
Get some tips and resources that make it easier to find a job or career.
Housing
Section 8, public housing, and other programs help pay for housing.
Building Your Assets and Wealth
- The Basics
- Why Assets Matter
- ABLE Accounts
- Individual Development Accounts
- Plans to Achieve Self-Support
- Tax Credits and Tools
- Trust Funds
- Next Steps
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Individual Development Accounts (IDAs)
If you save money in an Individual Development Account (IDA), the IDA program’s sponsor or financial institution will match the money you save. The match may be anywhere from one to four times the amount you deposit. For example, if your IDA program has a 2:1 match and you deposit $50 into your account, the program will add an additional $100 towards your savings goal, so that your total savings for that month will be $150!
To open an IDA:
- For most IDA programs, your annual income must be 200% of the Federal Poverty Guidelines (FPG) or less ($29,160 per year for individuals). Some programs have higher limits, and you may qualify if your income is 65-85% of the median income in your area.
- You must have earned income from a job or your own business
- You have to take financial literacy classes about things like money, debt reduction, developing a savings plan, credit, and investing; and
- Depending on the program, you may also need to be a U.S. citizen or permanent resident.
You also have to use the IDA to save money for an approved goal. IDA programs usually allow one of the following goals:
- Buying a first home
- Paying for education or training costs, or
- Funding a small business.
Most IDA programs only let you save a limited amount of money in your account, usually $4,000 to $6,000. This includes the money you deposit plus the matching funds. Once you reach the limit, you won’t be allowed to deposit any more money into the account. IDA programs also limit how long you can save (usually three years).
IDAs can be funded by government agencies, private companies, nonprofits, and individuals. Depending on how your IDA program is funded, the money you save may count against the resource limits for programs like Supplemental Security Income (SSI) and Colorado Works.
If you get benefits from a public program, it is very important to find a federally-funded IDA program that will not count against the program's resource limit. Otherwise, you may lose your benefits. Before you open an IDA, talk to a certified benefits counselor about this issue.
If you get SSI and enroll in an IDA program, ask your IDA caseworker to write a letter saying that you can be in the IDA program without losing your SSI benefits. The letter should mention the “Exclusions Under Other Federal Statutes” clause. If you get SSI, take that letter to Social Security, give a copy to your local county human services department, and keep a copy for yourself.
Finding and Applying for an IDA
Once you’ve decided to do an IDA, you must take several steps to enroll in an IDA program:
- Decide how much money you plan to save and what you are going to do with it. You could use the money for something that will help you with your education, with your small business, or with buying a home.
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Find an IDA program in your area: Prosperity Now provides a map of financial programs by state, including IDAs.
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Note: There aren't as many IDA programs as there used to be. Some are still active, but it can take a bit of effort to find one that is accepting applications.
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Find out as much as you can about the IDA program you are considering.
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How is the program funded? Is it federally funded?
- If the IDA program is federally funded, money deposited and matched in that account will not be counted by SSI or Health First Colorado (Medicaid). That means it will not impact your benefits.
- If you enroll in an IDA that is not funded by the federal government (for example, an IDA funded by a nonprofit or private company), the money in your IDA may cause you to lose your SSI and Health First Colorado (Medicaid) benefits.
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Does the program fund your goal?
- Federally funded programs only let you save for small businesses, higher education, and the purchase of a first home.
- Some privately funded IDAs may let you save for other goals, like buying a new computer or car.
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How is the program funded? Is it federally funded?
- Go to an orientation meeting to learn more about an IDA program that interests you.
- If you decide to enroll, give the required personal and financial information to make sure you qualify for the program.
After you have been accepted into an IDA program, you will be given an IDA caseworker who will help you with your account. You’ll open a savings account with a bank or credit union that is tied to your IDA program. Depending on the program, you may need to deposit a certain amount of money into your account each month.
For some IDAs, there is a minimum amount of time that you must be enrolled before the matching funds start to add up. For example, the minimum could be 6 months for a business or educational goal. Once you have met the minimum requirements — you’ve saved the agreed upon amount every month for six months and you’ve taken the financial literacy workshops — you can spend your money.
Some IDAs will put money directly in your savings account for you to spend. Other IDAs don’t put money in your savings account. Instead, they calculate how much they owe you in matching funds and make a payment to the school, business, bank, or whomever you need to pay to achieve your goal. This is to avoid any illegal or fraudulent behavior.
In any case, the matching money cannot be used until you have met all requirements, are in good standing, and are ready to spend it.
Learn more
ABLE Accounts
ABLE accounts help people with disabilities save money without losing benefits.
Finding the Right Job for You
Get some tips and resources that make it easier to find a job or career.
Housing
Section 8, public housing, and other programs help pay for housing.
Building Your Assets and Wealth
- The Basics
- Why Assets Matter
- ABLE Accounts
- Individual Development Accounts
- Plans to Achieve Self-Support
- Tax Credits and Tools
- Trust Funds
- Next Steps
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Plans to Achieve Self-Support
Usually, if you get Supplemental Security Income (SSI) benefits and have income from a job or from another benefits program, like Social Security Disability Insurance (SSDI), your SSI benefits amount will go down. Also, if you save up too much money in a bank account or build your assets in any other way, you could lose your SSI benefits if you go over SSI's resource limit ($2,000 if you’re single, $3,000 for couples).
Social Security’s Plan to Achieve Self-Support (PASS) program lets people who get SSI earn more money and save that money in a special type of account. There are two main benefits:
- You can save up resources without losing your SSI benefits.
- The income you put into your PASS won’t be counted as income by SSI, so it won't make your benefits amount go down.
The money that you save has to be used for a work-related goal you choose, such as:
- The cost of school or training
- Starting a business, or
- Paying for equipment, support services, and other expenses related to your work goal.
Note: If you already go to college or have a job, you can set up a PASS to help pay for your current work, school, or health expenses.
Most people who do a PASS already get SSI benefits. However, some people who don't get SSI can also do a PASS, if the PASS plan will help them qualify for SSI.
Here are a couple of examples of how this could work:
- If you don’t qualify for SSI benefits because of your SSDI benefits, you might be able to put the money you get from SSDI into a PASS. Once you put the SSDI money into the PASS, it will no longer count as income for SSI and you could qualify for SSI benefits.
- If you don't qualify for SSI benefits because of the resource limit, you may be able to move your savings into a PASS and become eligible.
Applying for a PASS
To set up a PASS, you must:
- Get SSI benefits or become eligible for SSI benefits as a result of an approved PASS application.
- Have a source of income other than SSI (for example, SSDI benefits or wages from a job) or have resources over $2,000 that you can use to fund your PASS.
- Choose a work goal that will help you earn enough money to lower your SSI benefits or get off SSDI benefits altogether.
- Write a plan that shows how saving a certain amount of money will let you reach your work goal. A Social Security PASS specialist can help you write your plan.
- Be under age 65. If you are 65 or older, you may be able to set up a PASS if you were getting SSI benefits based on disability or blindness in the month before your 65th birthday.
On the PASS application form, you must describe your goals and how you plan to achieve them. This description should be detailed enough to convince Social Security that:
- You have a clear plan
- The plan is realistic, and
- If you complete the plan, your need for SSI benefits will go down or you won't need SSDI at all.
If you do not yet have a clear goal or way to achieve it, try working on one with an organization like the Division of Vocational Rehabilitation (DVR), Blind and Low Vision Services (BLVS), or an Employment Network (EN) through the Ticket to Work program.
A PASS specialist is an expert who can help you with every step of the PASS application process. To contact the Littleton, Colorado PASS Cadre (serving all of Colorado), call 1-888-824-4384, ext. 29911.
To learn more about PASS, you can also talk to a certified benefits counselor.
Using a PASS
After Social Security approves your plan, they'll send you instructions about how to keep good records and make sure your PASS funds and expenses are separate from your other money. Follow these rules carefully.
If a medical situation or some other issue comes up that impacts your ability to continue your PASS, talk to your PASS specialist about your options. You may be allowed to put your PASS on hold for up to 12 months without having to re-apply.
Once you have an approved PASS plan, you will put money into your PASS account that you can later use to pay for expenses related to your work goal.
You cannot put any money you get from SSI into your PASS account. You can use money from:
- A job
- A spouse or parent
- Your SSDI benefits, and
- Most other sources.
Learn more
ABLE Accounts
ABLE accounts help people with disabilities save money without losing benefits.
Finding the Right Job for You
Get some tips and resources that make it easier to find a job or career.
Housing
Section 8, public housing, and other programs help pay for housing.
Building Your Assets and Wealth
Try It
Tax Credits and Tools
Tax credits can help you save money and build assets. A few important credits include:
- The Child Tax Credit (CTC)
- The Credit for the Elderly or Disabled
- Colorado Home Modification Tax Credit, and
- The federal and state Earned Income Tax Credits (EITCs).
To get any of these tax credits, you must file your taxes!
If you have limited income, don't pay someone to do your taxes. If you made $60,000 or less last year, you can use a Volunteer Income Tax Assistance (VITA) center to file. With VITA, certified volunteers help prepare your taxes and make sure you get any credits you qualify for. Most sites also offer free electronic filing (e-filing). VITA sites are often at community centers, libraries, schools, shopping malls, and other convenient locations. Find a local VITA center or call 1-800-906-9887.
If you prefer to file your own taxes online, you can do that for free if you made less than $73,000 last year. Learn more about the IRS Free File program.
Tip: Always keep all your W-2 forms and a record of who you have worked for during the year. Then, file your taxes, even if your income is low enough that you don't have to file — you can only get a tax credit if you file your taxes.
Child Tax Credit (CTC)
The Child Tax Credit (CTC) gives parents with children under age 17 up to a $2,000 tax credit for each child. Eligible families must be working and earning at least $2,500 a year.
Note: If you get Supplemental Security Income (SSI) benefits and get money from a CTC, you should spend it within 12 months. After 12 months, Social Security will count that money toward SSI's resource limit.
Credit for the Elderly or Disabled
If you or your spouse is a U.S. citizen who got taxable disability income and was permanently and totally disabled during this tax year, you may be eligible for the Credit for the Elderly or the Disabled.
Colorado Home Modification Tax Credit
Colorado residents with an illness, impairment, or disability can get a tax credit of up to $5,000 per person to retrofit their home for greater accessibility and independence. To get the tax credit, the retrofit must be completed in tax years from 2019 to 2023. Learn more about the Home Modification Tax Credit.
Earned Income Tax Credits (EITCs)
If you have low income, Earned Income Tax Credits (EITCs) may help lower your federal and state income taxes. Even if you don’t earn enough money to owe federal and state income taxes, you may be able to get the federal and state EITCs. Many people who qualify for EITCs don’t get them, because they don’t know they could or they don't file their taxes.
To qualify, you must have income from employment, self-employment, or employer-paid disability benefits that is below certain limits and you must file your federal and state taxes.
The amount you get from your EITCs depends on your Adjusted Gross Income (AGI), whether you are married, and the number of children you have. For 2023 (filing taxes by April 2024), the federal EITC ranges from $2 to $7,430.
The Colorado EITC is 20% of the Federal EITC, or $0 to $0. For example, if your federal EITC is $4,000, your Colorado EITC is $800.
|
No Children |
1 Qualifying Child |
2 Qualifying Children |
3 or More Qualifying Children |
---|---|---|---|---|
Single |
AGI limit: $17,640
Max credit: $600
|
AGI limit: $46,560
Max credit: $3,995
|
AGI limit: $52,918
Max credit: $6,604
|
AGI limit: $56,838
Max credit: $7,430
|
Married (filing jointly) |
AGI limit: $24,210
Max credit: $600
|
AGI limit: $53,120
Max credit: $3,995
|
AGI limit: $59,478
Max credit: $6,604
|
AGI limit: $63,698
Max credit: $7,430
|
* Figures are for tax year 2023 (filing by April 2024). |
General requirements:
- You must meet adjusted gross income requirements (see table above).
- You must have earned income from employment, self-employment, or employer-paid disability benefits that you got before retirement.
- You must have a Social Security number valid for employment.
- You cannot file your taxes as “married filing separately.” If you are married, you must file a joint tax return.
- You must be a U.S. citizen or resident alien. If not, you must be married to a U.S. citizen or resident alien and filing a joint tax return.
- You must live in the U.S. for more than half of the year.
Age requirements:
- If you are claiming qualifying children, you can be any age.
- If you’re not claiming a qualifying child, you must be 25 to 64 years old.
Additional requirements:
- You cannot claim foreign income or a foreign housing deduction using Form 2555.
- You cannot have more than $11,000 in investment income (for 2023).
- You cannot be the dependent of another person.
- You cannot be the qualifying child of another person.
Qualifying Children
A child must meet some requirements to be considered a “qualifying child” for an EITC:
- Relationship: The child must be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of these (for example, your grandchild, niece, or nephew).
- Residence: The child must live at the same residence as you for more than half the year and have a valid Social Security number.
- Age: At the end of the tax year, the child must be 18 or younger. Or, if going to school full-time, the child must be 23 or younger. The only exception is if your child is permanently and totally disabled, in which case there is no age requirement.
A qualifying child can only be listed on one tax return for an EITC.
How to Get an EITC
To claim a federal EITC, you must file a federal tax return, IRS Form 1040. If you have a qualifying child, be sure to attach a Schedule EIC.
To calculate the value of your EITC, you can use the Earned Income Credit Worksheet in your 1040 instruction booklet. Or you can ask the IRS to calculate it for you by noting an “EIC” on the Earned Income Credit line on your tax return.
To see whether you qualify for an EITC and how much you might get, use the IRS EITC Assistant.
To claim a state EITC, you must file a state tax return. Learn more about the Colorado Earned Income Tax Credit.
You must have earned income to qualify for an EITC. Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI) do not count as earned income. You can, however, get SSI or SSDI benefits and claim an EITC, as long as you also have earned income.
If you're on SSI, spend any money you get from an EITC within 12 months. Otherwise, that money will count toward SSI's resource limit, unless you save the money in an Individual Development Account (IDA), a Plan to Achieve Self-Support (PASS), or an ABLE account.
Learn more
ABLE Accounts
ABLE accounts help people with disabilities save money without losing benefits.
Finding the Right Job for You
Get some tips and resources that make it easier to find a job or career.
Housing
Section 8, public housing, and other programs help pay for housing.
Building Your Assets and Wealth
Try It
Trust Funds
A trust is a legal arrangement in which a person or organization manages assets for someone else. The trust's assets can then be used to make payments for that person's expenses. The person whose expenses are paid for by a trust is called the “beneficiary” and the person or organization who is managing the assets is the “trustee.” Many kinds of assets can be put into a trust, such as cash, stocks, bonds, and real estate.
Some kinds of trusts (called Special Needs Trusts, Supplemental Care Trusts, or Supplemental Needs Trusts) can be set up to hold assets for a person with a disability. When in a Special Needs Trust, the assets do not affect the person's eligibility for programs like Supplemental Security Income (SSI), Health First Colorado (Medicaid), and Section 8. That means that if you are the beneficiary of a Special Needs Trust, your trust can have more assets in it than the resource limits for benefits programs usually allow. This can let you be more secure financially without losing your benefits. For more details, see Social Security's information about Special Needs Trusts and SSI eligibility.
The trust must be set up correctly. If your Special Needs Trust is not set up correctly, the assets in your trust might be counted toward public benefits resource limits and you could lose your public benefits. And after you die, the type of Special Needs Trust that was set up determines whether or not the assets in the trust have to be used to repay the government for any Health First Colorado (Medicaid) expenses.
Special Needs Trust Rules
While public benefits, such as SSI, Health First Colorado (Medicaid), and HUD housing benefits, offer basic support for food, shelter, and medical care, a Special Needs Trust can be used to pay for other things. For example, money from the trust could be used to pay for your recreation expenses, telephone bill, education, and vacations. Money from a Special Needs Trust should not be used for expenses that are already paid for by one of your public benefits, or this might affect your benefits. Some Special Needs Trusts say specifically that the money cannot be used to pay for these types of expenses.
Additionally, the funds in some types of Special Needs Trusts can be used to benefit only you; no one else can benefit from the trust unless it is what is called a Third Party Trust. And while the trust is typically set up to help you, payments should not be made directly to you. Payments made directly to you count as income and may affect your benefits.
Only the trustee can handle the money from the trust. When you need to pay a provider for something that is not food or shelter, the trustee will pay the money from the trust directly to the provider. In some cases, the trustee may give you regular monthly cash payments, to increase your sense of independence, but the trustee must make sure the the amount you are given does not exceed the income limits for your public benefits.
The three most common types of Special Needs Trusts are:
- Disability Trusts (also called Self-Settled Trusts)
- Pooled Trusts, and
- Third Party Trusts.
Each type of trust has its advantages and disadvantages, and the right type for you depends on your specific circumstances. These types of trusts are explained below.
Note: If you get (or are applying for) Health First Colorado (Medicaid) and a trust is set up to benefit you, the trust must be reviewed (and for some types trusts, officially approved) by Health First Colorado (Medicaid).
Trusts are complicated. Contact an attorney who specializes in them so that you can get advice about which type of trust is right for you and how to set it up. If you don't do things right, you could have serious problems.
Find an attorney through the Special Needs Alliance or the Colorado Bar Association.
Disability Trusts
Disability Trusts, sometimes called Self-Settled Trusts, are used if you have accumulated assets, inherited assets, or gotten assets from a court settlement. In these situations, you actually own the money.
A Disability Trust can be set up by you, your parent, grandparent, or legal guardian, or by a court. To qualify, you must be under 65 years old and must have a disability that meets Social Security's standards. If your disability doesn't meet these standards, you cannot have this type of trust.
After you die, any money left in the Disability Trust will be used to pay back the state for the total amount of money it spent on Health First Colorado (Medicaid) benefits for you. If money is still left over after the state has been paid, the trustee will give it to whomever is listed to get the money after you die.
Pooled Special Needs Trusts
A Pooled Trust can be set up by you, your parent, your grandparent, or your legal guardian, or by a court. Also called Self-Settled Pooled Trusts, this type of trust uses the assets from different people and puts them into a large investment fund. Although the funds are pooled (used together), you still have your own separate account. To have a Pooled Trust, you must have a disability that meets Social Security's standards and be under age 65 (or if you are 65 or older, you might have to wait a period of time before you get benefits from the trust).
A Pooled Trust is set up through a nonprofit organization. The nonprofit organization will administer the Pooled Special Needs Trust, take care of all the tax preparation, make investment decisions, and act as the trustee.
A Pooled Special Needs Trust can be set up so that after you die any money left in the trust is used to pay back the state for the amount of money it spent on Health First Colorado (Medicaid) for you. Or, in some cases, the remaining money can be kept ("retained") in the trust.
Third Party Trusts
A Third Party Trust can be set up by your parent, your grandparent, your legal guardian, or the court, using their own money, including money coming as an inheritance. As long as the trust is set up correctly (with money from other sources and not your own money), a Third Party Trust does not have to repay the government for any Health First Colorado (Medicaid) expenses.
Parents usually set up and supply the money for Third Party Special Needs Trusts, often through their wills and sometimes by purchasing life insurance payable to the trust. These types of trusts are often set up for a child with a disability, but they can also benefit a child or children (or other person or other people) without a disability. A parent can set up a trust for a child of any age, from a baby up to a senior. For example, a mother who is 90 years old could set up a trust for her 65-year-old daughter.
Other family members, such as grandparents, aunts, and uncles, can also put money into this type of trust. The only person who cannot place money into this type of trust is you, the person who will be the beneficiary of the trust.
Some parents place their property in a "living" trust and leave instructions that a separate trust will be created for their child upon their death. This type of trust is often effective immediately. Anyone can give money to the trust by either writing a check or writing a will naming the trust as the beneficiary.
If you get SSI, the money from a Third Party Special Needs Trust should not be used for housing, food, or medical expenses. Housing and food are considered "basic needs" under Social Security laws. If you are getting free housing or food from someone else, including a family member or a trust, your SSI benefits can be reduced or stopped.
Note: Money from an ABLE account that is used for housing or food will not reduce SSI benefits. An ABLE account can be used in combination with a Special Needs Trust. Learn more about ABLE accounts.
When creating a Third Party Special Needs Trust, whoever sets up the trust must decide who will get any assets that are left in the trust after you die.
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ABLE Accounts
ABLE accounts help people with disabilities save money without losing benefits.
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Housing
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Tax Help
Volunteer Income Tax Assistance (VITA) centers help people file their taxes for free. Find a local VITA center or call 1-800-906-9887.
Benefits and Legal Help
Disability Law Colorado (DLC) offers information, referrals, and resources for self-advocacy, and sometimes provides free or low-cost legal services to selected people with disabilties whose civil or human rights have been violated.
The National Organization of Social Security Claimants Representatives (NOSSCR) provides referals to attorneys and paralegals who represent people who think they've been unfairly denied Social Security benefits.
Asset Development Programs
ABLE Accounts
Colorado's ABLE account program is Colorado ABLE. Learn more about ABLE accounts and compare different state ABLE programs at the ABLE National Resource Center.
Individual Development Accounts (IDAs)
Each IDA program has its own application process. To find an IDA program in your area, Prosperity Now provides a map of financial programs by state, including IDAs.
Plans to Achieve Self-Support ( PASS)
The PASS application is complex. Get help with it from a PASS specialist. To contact the Littleton, Colorado PASS Cadre (serving all of Colorado), call 1-888-824-4384, ext. 29911. You can also talk to a certified benefits counselor to learn more about PASS.
The Earned Income Tax Credit (EITC)
IRS Publication 596 is a comprehensive guide to the EITC. The IRS EITC Assistant can help you see whether you qualify for an EITC and how much you might get.
The Colorado Department of Revenue provides information about the Colorado Earned Income Tax Credit.
The Child Tax Credit (CTC)
Get information about the CTC from the IRS.
Special Needs Trusts
The Special Needs Alliance can help you find an attorney who specializes in Special Needs Trusts.
The Social Security Administration has excellent information about Special Needs Trusts and SSI eligibility.
Colorado Home Modification Tax Credit
The Colorado Department of Local Affairs explains the Home Modification Tax Credit, which gives residents with an illness, impairment, or disability a tax credit of up to $5,000 per person to retrofit their home for greater accessibility and independence.
Ticket to Work
Social Security’s Ticket to Work Program helps people with disabilities who get Social Security benefits re-enter the workforce and become more independent. The Ticket to Work Program offers free access to employment-related services, such as training, transportation, and vocational rehabilitation. You can call the Ticket to Work Help Line at 1-866-968-7842 or 1-866-833-2967 (TTY).
Get Help with Your Benefits
A trained Benefits Planner can help you understand your benefits programs. Exactly who you need to contact depends on your situation and the benefits you get.
View DB101's full list of experts who can help you understand different benefits.
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ABLE Accounts
ABLE accounts help people with disabilities save money without losing benefits.
Finding the Right Job for You
Get some tips and resources that make it easier to find a job or career.
Housing
Section 8, public housing, and other programs help pay for housing.