My daughter Erica has a disability that will prevent her from providing for herself. My wife and I worried endlessly, as do most parents of a child with a disability, about ensuring her safety and prosperity after we are gone. Using just three strategies, we took care of that worry.

Consequently, Erica will have close to an additional $1.9 million dollars measured in today’s dollars to support her over her lifetime. Using the same strategies, someone with a $500,000 IRA can provide their child with an additional $239,000.

The Three Strategies are:

1. We formally established Erica’s status as disabled.
This can be achieved after a successful processing of a Social Security Insurance (SSI) or Social Security Disability Insurance (SSDI) application. This critical step is what qualifies her as an Eligible Designated Beneficiary (EDB) thus enabling her to stretch distributions from the inherited Roth IRA and IRAs over her lifetime. For a successful SSI application, Deborah suggests three keys:

• First, use the language of “I CAN’T” in your application, specifically describing what your child cannot do. Second, include letters from your child’s doctors that explain how their disability prevents them from performing the activities of daily living.
• Finally, keep in mind that SSI has asset limits, so your child can only have ready access to up to  $2,000.
• If you submit the application the month after your child turns 18, the Social Security Administration won’t include your income or assets in the application, provided you do not have any joint bank accounts with your child.

2. We optimized our Roth IRA planning.
Roth IRA conversions can make the biggest difference for many families with a disabled child. $1,297,500 of the $1,890,544 savings for Erica came from us doing Roth conversions and
contributions.

3. We drafted an optimized estate plan with appropriate wills, trusts, and IRA,401(k), and Roth IRA beneficiary designation forms. We drafted a trust that allows the trustee to “stretch” the inherited Roth IRA over Erica’s lifetime. To do that, the trust must be drafted to meet four specific technical conditions. If even one mistake is made and the IRS looks at it, it will trigger a massive
tax acceleration for the beneficiary. An error of this type will jeopardize all your efforts to protect your beneficiary.

Additional Ideas:

• We are also taking measures to ensure that our estate is administered appropriately after our death.
• Consider a Special Needs Trust that allows your child to receivebenefits from your inheritance without jeopardizing his/hereligibility for government aid.
• Use an ABLE account—a tax-free savings account that can funddisability expenses—to save and invest money for your disabledchild without affecting eligibility for government benefits. An ABLE account is somewhat like a Section 529 Plan.
• Plan for your child to inherit certain 401(k), 403(b), or othertypes of non-IRA retirement plans. In some situations, you canhave your child convert the balance or a portion of the inheritedretirement plan to an inherited Roth retirement plan. This little-known strategy is particularly profitable if you are in a highincome-tax bracket and your child will be in a low tax bracket.