TEAM Resource Library Topic: Lawyers and Trusts
What should you be doing now to protect your child’s future? A common concern for parents of children with special needs centers around the possibility of facing a day when both parents are no longer capable of caring for their child. Of course, the big decision is “who” will take over in caring for your child. There should also be major concerns for “how” your child will be cared for. These are both very big decisions that could have major adverse consequences if you do not plan ahead.
The major decision of “who” will care for your child should be addressed in a Last Will and Testament as well as in a Durable Power of Attorney. The designations set out in these documents will assist a judge in determining who
should become guardian for your child should you pass away or become incapacitated. The judge’s final decision will be based on the best interest of your child, but your written instructions will carry a significant weight in shaping how a judge makes that decision.
The harder, more complicated decision for a parent may be “how” your child is cared for. In particular, if proper planning is not in place, your child’s needs-based benefits could be jeopardized. For instance, should your child be a recipient of SSI and Medicaid (or one of the Medicaid Waiver programs), then it is imperative that any inheritance going to your child be placed into a special trust to ensure that your child does not lose his/her benefits. The same holds true for any inheritance your child receives from other family members. The key concept to remember is that SSI and Medicaid are needs-based programs. Should your child receive money or property, your child can lose these benefits since your child now has resources that must be utilized for his or her care. This may be a devastating result to your child. So, what can you do? The answer is surprisingly simple: PRE-PLAN!
The best thing for you to do right now is put a plan in place that will address your child’s needs. In putting a plan in place, remember that there are three primary issues to consider. (1) Who is going to be responsible for your child? (2) How can you leave money to your child to ensure continued public benefits? (3) How can you make sure that your child is properly cared for in a manner that you desire? Each of these elements must be addressed now in order to prevent potential catastrophic results from occurring when you pass away or become incapacitated. First, make sure that you’ve executed a Last Will and Testament and a Durable Power of Attorney that specifically states the person(s) that you want to serve as the guardian of your child if you were to pass away or become incapacitated. This signed statement of your intent is vital in expressing your preference for a future time where you may unable to speak. Of course, the individual you choose depends on your context and your child’s needs. However, some general things you should consider are the age of the individual, the location of the individual, the individual’s other responsibilities, and, most importantly, the current relationship that exists between your child and the individual. As things can change over time, it is important to periodically review the designation to ensure that the chosen individual remains your first choice.
Secondly, make absolutely sure that any property you leave to your child does not jeopardize his/her needs-based benefits programs. One way to achieve this goal is through a Third-Party Special Needs Trust. Basically, this is a document created by a donor for the purpose of setting aside money or property for a person with special needs without jeopardizing SSI or Medicaid. For example, suppose that a child’s parents and grandparents wanted to leave money to a child with special needs. If left outright (meaning a direct transfer of the property to the child), the child’s benefits would be terminated if the gifts ran over the SSI/Medicaid resource limitation. However, if a Third-Party Special Needs Trust were established, this would allow for both the parents and grandparents to leave money to the Trustee of the Trust rather than directly to the child. The Trustee could then utilize the funds for the benefit of the child through his/her lifetime while maintaining the child’s SSI/Medicaid. Likewise, a parent may utilize life insurance to provide a lump sum of cash to the Trust to benefit the child. Regardless of the manner in which funds are placed in the Trust, the Trust will be there to ensure that your child will enjoy a more enriched quality of life without terminating SSI/Medicaid.
Finally, and often most critically for the parent, how can you make sure that your child is properly cared for in a manner that you desire? For instance, how will the new guardian and the Trustee of a Special Needs Trust know that your child loves nothing more in the world than going to Razorback baseball games? How will they know the benefit and the importance of sending your child to certain summer camps? How will they know all of those small, everyday details of your child’s life in your absence? The short answer is that they won’t. Because of this, parents are encouraged to make a Memorandum of Intent that outlines all of these details. While the Will, Durable Power of Attorney, and Special Needs Trust are vital components to planning, they are primarily legal documents. As such, they address the legal components of naming a guardian and protecting the money left to your child. Unfortunately, they often fail to provide guidance for those who are now faced with the responsibility of caring for and providing for your child. These individuals are going to be in desperate need of direction and guidance. As such, there’s no better way to provide direction than to have specific instructions from the parent. You cannot be replaced, but you can certainly help to ensure that your child’s quality of life is maintained.
In taking each of the steps above, parents can have peace of mind, knowing that a thorough plan is in place to address each of their child’s needs. However, parents should also use caution in making sure that all of these components are drafted and executed properly. In particular, Special Needs Trusts are highly complex tools that certainly will be scrutinized by Social Security and/or the Department of Human Services. Because of this scrutiny, it is absolutely imperative that parents work with an attorney who deals with these matters on a routine basis and understands the drafting requirements and pitfalls that exist with these tools. You should seek an attorney with the experience and credentials that amply demonstrate his or her knowledge of these documents and the various reviewing agencies. Quality matters! Unfortunately, many individuals discover too late that a particular document fails to meet the required legal criteria. The damage has already been done, and the child’s benefits are terminated. This is a devastating result for a child, particularly when his/her parents had attempted to take the necessary steps to prevent this result.
Thank You to Elder Law Attorney Collier Moore for the content above.
The Moore Law Firm: (479) 419-9490, www.ArkansasPlanning.com
From childhood to adulthood…What happens when your child turns 18?
It seems very natural for children to grow up, gain independence and eventually care for themselves. The legal term for this progression from parent guardianship to independence is Emancipation. But, what happens when grown children are not able to care for themselves? What happens if there are not adequate support systems in place to address their needs? Thinking about these questions is understandably very emotional for parents.
If parents know that their son or daughter is not able to make informed decisions, they should ensure that either guardianship or another legal care alternative is in place by the child’s 18th birthday. A Guardianship is a legal protective arrangement that is obtained because other alternatives are inadequate to meet a person’s health and safety needs. As a general rule, parents should begin thinking of guardianship or other care alternatives when their child turns 17 (Kopley, 2011). Because matters of guardianship are legal issues, parents will need an attorney or other legal representation.
For more information visit the National Guardianship Association at www.guardianship.org.
Consider the following when looking for an attorney:
- How much experience does the attorney have in Elder Law? (Elder Law relates to matters regarding special needs planning)
- When will the legal process be complete?
- How much money is expected up front (the retainer for services)?
- When will the remainder of the fee be due?
Reference:
Cf: Kopley, Elise, Intellectual Disability and Guardianship, Massachusetts Guardianship Association, 2011, http://www.massguardianshipassociation.org/information/intellectual-disability-and-guardianship/