Social Security, Adult Children, Lessons Learned and a Heads Up
If you follow my Facebook page at all, you may have seen the status below. I wrote it out of aggravation but mostly because it was something that I unknowingly did (or didn’t do) that I wanted to share it in the hopes of keeping someone from making the same mistake.
If you did read the status earlier, do not stop here. There is more to the story and it only gets worse, so please read on…
Before I get to that I want to say that I always did everything for DC ahead of time. I never waited until the last minute for anything. I wanted everything in place for the time when I was no longer around to look after him. When you are a single parent of a child with no siblings and you begin to get older, this moves to the forefront of your mind. If you have followed this blog for any length of time, you know that this something that completely occupies my mind.
Here is the beginning of the story. The account in question as it turns out, had a cash out value of $2600.00. Owning the account in question was technically my fault, not for lack of doing my due diligence but more for the lack of not receiving the correct information from people who were supposed to know. But really, even if this was something that I had not checked into or something that I had forgotten about, this was a mistake – a plain and simple mistake.
We had our annual Social Security assessment the other day.
I may be the most unorganized person in the world, but not when it comes to my child. I go out of my way to make sure everything is done on time and properly. 12 years ago we had the paperwork drawn up for his “Special Needs” Trust – that will be funded with a “second to die” policy. I made sure NOTHING was in his name. I made sure that everyone knew not to buy him savings bonds or leave money to him in their will. When DC turned 18, we had to apply for SS in order to apply for Title 19, in order to keep our DDS (Department of Developmental Services) caseworker and DDS funding for his work program and for future placement when I (and his Dad) am gone as he will most likely be living in a group home because there is no one else.
Years ago through my job, I purchased a life insurance policy for myself. It was one of those policies that they offer at a very low premium that never increases even if you leave the employer that you purchased it through. DC was an infant at the time.
They also talked me into a policy for DC. When they first brought it up, I though it was odd. Why would anyone buy a policy on their child?
It was explained to me that the benefit of buying it then and at an even smaller premium than my own was that when he turned 18, I could turn it over to him. It would be his policy to do with what he wished. He could cash it out for the cash value or he could keep it as his own life insurance at the same premium. He was an infant at the time so of course I did not know that when he was 18 he would not be able to understand money, hold a regular job, tell time or even understand what a life insurance policy is.
Because he does not understand any of this I never transferred it over to him. The premiums were paid electronically all of these years from my checking account and the premiums were combined with mine and so small that I really just didn’t pay attention any more – I really just forgot about it. I would get a statement once a year, but other than that, it was not anything that was on my mind. I had at one time planned on closing it since, not having transferred it over to him made it of no benefit to him, but since it was not his account and there was no urgency to close it, I just let it go. I was involved with so much other paperwork at the time, this was the last thing on my mind.
I DID mention this account to anyone and everyone that asked, the attorney who did our trust, and SS when we had our re-determinations. The only reasons I would not have mentioned it every single time were, 1. it didn’t happen to be a question they asked at that particular time or 2. because I had been told that since I did not turn it over to him, he had absolutely no rights to the account. I was the owner, it was not his account.
For some reason during our last re-determination this policy became an issue. Again, as I never turned it over to him, I am the account owner. If he were capable of understanding what a policy is and said “Oh let me cash this out.” he would not be able to do so because I am the owner of the account. No one could do anything with this policy but me. But, because it exists, and he is the insured even though he does not own or will ever benefit from the account and could not access the cash out value or even be given any information about the account due to privacy laws – I was told that his benefits would be suspended until I could get the account closed, spend the money and prove I had spent it on him. Which is fine, I could do that, but these things are what my nightmares are made of. I am glad this happened while I am alive to fix it, but what if it happened later when it accumulated even more money?
I did just that. I closed the account, spent the money on things that he would be needing anyway. I sent all of the information to the Social Security office and I hoped that because I got the account closed and the money spent before the deadline his benefits would not be interrupted.
Well, I received a letter yesterday with the the results of the review. The good news is that his benefits will not be suspended because I was able to close the account and spend the money.
The bad news?
Because he had over 2000.00 in resources (that could not be withdrawn or accessed by him <I am going to keep saying that>, in an account that was not his and he was not the owner of) we have to pay back 12,000.00 – I’ll spell that out for you – Twelve Thousand Dollars – in benefits that he received between his last re-determination (May 2015) and this current re-determination in September 2016. Because he had 600.00 too much during that time period, he should not have been able to collect Social Security benefits and it has to be paid back.
My choices are – Write a check for 12,000.00 (they want it all in one lump sum, not in payments) or they will deduct 73.00 from his monthly checks. He will be paying this back for 13 years!
Listen, I am one for following the rules – always and for everything – I admit that I can be a little bit obsessive about it at times and I fully admit that this was my fault, an honest mistake. I was not keeping it a secret – if I had, they would not have known about it. I was sure there would be some sort of penalty to pay and being that this was my mistake, I was perfectly willing to pay it to keep his benefits in place so I do not have to worry about him later.
It is unfortunate that this system we have for people with disabilities is set up so these people (our children) are required to live in poverty. It is designed that way. I understand that in order to maintain this level of poverty recipients can not have over $2000.00 at any given time. People make mistakes, honest mistakes. We as parents should not have to live in fear that we may have over-looked something or that a family member might leave our children money against our wishes and without our knowledge, make them a beneficiary on a life insurance policy or in this case, have an account that was supposed to be fine because HE WAS NOT THE OWNER and had no rights to the account – and so many other scenarios that I can’t even come up with now that are out of our control (Give me a few days to obsess about what else can happen and I am sure I can add to that list of “what if’s”). I agree that there should be consequences and penalties for errors. I don’t believe that my child who was not responsible for any of this should be made to pay back 12K in Social Security benefits for the next 13 years. I would have been perfectly willing to transfer that $2600.00 from the account (that he had no rights to and could not access) directly to Social Security.
Although I do believe in following the rules and owning up to my mistakes, twelve thousand dollars for a 600.00 dollar mistake seems a bit extreme.
So the moral to this story is:
If you believe you are being careful and following every rule, you may find out otherwise.
If you’ve done your due diligence and looked into anything that may be a problem, you probably need to look further.
If you have a question about anything you or your child have and even if you are told that it is fine – it may not be fine after all.
I am sure that this will not be the end of the story but I just wanted to share it to possibly save someone else from making the same mistake.
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My apologies if this is littered with typos or half sentences – anger does not enhance my already poor proofreading skills in the least…
Originally posted at Taking It A Step At A Time
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