Jack and Mary have five children, one of whom suffers from Down Syndrome.
While their son, Michael, is able to complete basic tasks, such as eating and dressing, he lacks the ability to live on his own. At age 20, Michael has the mental capacity of a much younger child. He is unable to make decisions regarding finances, and has proven to be vulnerable to scams and others who seek to take advantage. He requires constant supervision. Jack and Mary have cared for Michael since he was born, without outside assistance.
Upon reaching age 60, Jack and Mary began to contemplate Michael’s future. “All of his brothers and sisters have small children and jobs,” Mary said. “I’m not sure any of them would be willing or able to care for Michael. I really don’t want him placed in an institution, but who else will care for him? And my friend Melissa told me that we need to engage in all sorts of legal wicky-whack to ensure he has money to live on. Apparently, if we leave him any money in our will, he may lose his Medicaid and Social Security benefits.”
“The answer is simple,” Jack said. “We can’t die.”
Mary snorted. “Wrong answer. I think we need to see an attorney.”
The best way to ensure the well-being of children with special needs is through estate planning. And in the case of children who are unable to live independently, pre-planning is especially important. Generally, that planning should include the selection of a guardian as well as providing a means for continued financial support. For example, it is not always possible to find a family member capable of taking care of someone with certain deficits. In those cases, it may be necessary to arrange for a group home or other setting to provide shelter and care. In addition, children with special needs often access government assistance programs, such as Social Security and Medicaid. An inheritance could have a detrimental impact on the income qualification for those benefits. In such cases, it may be necessary to disinherit the child or create a Special Needs Trust.
A Special Needs Trust is designed to supplement, not replace, a disabled person’s government benefits. Unfortunately, when a trust supplements benefits provided by a government program, those government benefits may be reduced. Essentially, assets placed in the trust are managed for the benefit of the disabled person. However, because the assets are in the name of the trust, rather than the disabled individual, their value is not counted toward the asset limit placed on those seeking to qualify for government aid. The trust can be used to fund needs not covered by government benefits, including the purchase and maintenance of a van or automobile (for transport of or use by the disabled individual), medical equipment, furniture and household goods, entertainment (TV, movies, radio, cable, computers, recreational activities, etc.), assistive technology and telephones, medical insurance, alternative medical treatment, a Care Manager, home care and personal services, education, and/or taxes.
An attorney can provide valuable advice on how to proceed. Generally, the planning process involves the following steps:
- Collect information on the child’s diagnosis, treatment, and special needs, as well as all resources and programs utilized to meet those needs. It is also important to create a file of the child’s personal information, such as his or her birth certificate, account numbers for government assistance programs, a Social Security card, emergency contacts, and school, work, and/or military records.
- Collect information on current legal guardians/parents, including marriage, divorce, birth, and/or death certificates, legal documents, insurance policies, financial accounts and information, titles to real or personal property, and passwords to, or the location of, information filed digitally.
- Meet with family. Before making decisions regarding guardianship or the continued care of a disabled child, it is important to meet with potentially affected family members. This not only assists with decisions regarding guardianship, it will also provide a better sense of what type of financial planning is required.
- Create a statement of intent. Generally, this is a statement of a parent’s desires concerning the disabled child in the event the parent is incapacitated or dies, including such issues as continuing care, quality of care, employment, guardianship, financial support, and related issues. Make sure to address the “don’t wants” as well as the “do wants.” For example, you don’t want your child placed in an institution or foster care,you do want them to reside with a family member or friend.
- Create a plan. Work with an attorney, medical advisors, social workers, financial advisors, and others to create a plan for the continued care of your child, addressing such issues as guardianship, shelter, education, and financial support. It will then be necessary to explore and determine which legal and financial strategies will best meet your needs and the needs of your child. For example, it will be necessary to appoint powers of attorney for healthcare and to manage finances, designate temporary and permanent guardians, and potential payees for the child’s government benefits. If the child is over 18, certain additional legal formalities must be observed, including the creation of a will and an Advanced Healthcare Directive, and the execution of a HIPAA release. You will also be required to provide instructions activated upon the child’s death, including organ and tissue donation, and funeral planning.
Review the plan. Changes in your child’s age, health or treatment, government program requirements, and/or laws regarding relevant legal issues necessitate a regular review of your estate plan. This will ensure your child receives the care to which you believe they are entitled. It is important to note that eligibility for benefits may change after a child reaches age 18, and that needs to be addressed in your estate plan.