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Planning For A Loved One With Special Needs

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Planning For A Loved One With Special Needs

  1. 1. Planning for a Loved One With Special Needs Todd Whatley, CELA Collier Moore, J.D., LL.M. Taxation 4700 S. Thompson, C-103, Springdale, AR 72764 479-750-1101
  2. 2. What is Elder Law <ul><li>Elder Law is a relatively new and unheard of area of the law. As the name implies, Elder Law encompasses many issues regarding the elderly, but it also has as a focus on planning for all individuals with special needs regardless of age. </li></ul><ul><li>Elder Law includes: </li></ul><ul><ul><li>Estate Planning </li></ul></ul><ul><ul><li>Guardianship </li></ul></ul><ul><ul><li>Long-Term Care (Medicaid) Planning </li></ul></ul><ul><ul><li>Special Needs Planning </li></ul></ul>
  3. 3. What Does Planning Involve? <ul><li>Preserving your child’s financial security and quality of life </li></ul><ul><li>Addressing key issues: </li></ul><ul><ul><li>Understanding the role of public benefits </li></ul></ul><ul><ul><li>Making decisions about the future </li></ul></ul><ul><ul><li>Using estate planning/trusts to protect assets </li></ul></ul>
  4. 4. Part 1: Understanding Public Benefits
  5. 5. Public Benefits at a Glance Financial Benefits Supplemental Security Income (SSI) Social Security (SS) & Social Security Disability Insurance (SSDI) <ul><li>Not means tested but subject to work credits or parents’ eligibility </li></ul><ul><li>Means tested: Limited income and assets </li></ul>
  6. 6. Public Benefits at a Glance Medical Benefits Medicaid <ul><li>Automatic with SSI </li></ul><ul><li>Must apply for SS/SSDI </li></ul>Medicare <ul><li>After two years of SSDI </li></ul>
  7. 7. Supplemental Security Income (SSI) <ul><li>Must meet SSA’s definition of “disability” and have limited assets/income </li></ul><ul><li>Provides monthly income for food/shelter </li></ul><ul><li>Gateway to Medicaid / in-home support services </li></ul>
  8. 8. Social Security (SS) / Social Security Disability Insurance (SSDI) <ul><li>Social Security for individuals: </li></ul><ul><ul><li>Disabled before age 22 and </li></ul></ul><ul><ul><li>With parents eligible based on their work record who are retired, disabled or deceased </li></ul></ul><ul><li>SSDI for individuals with work record </li></ul><ul><li>Social Security benefits may reduce or eliminate SSI benefits </li></ul>
  9. 9. Medical Assistance & Support <ul><li>Medicaid: </li></ul><ul><ul><li>SSI recipients receive automatically </li></ul></ul><ul><ul><li>Covers “medically necessary” services, equipment, hospitalization </li></ul></ul><ul><ul><li>In-home services needed to live at home: personal care, housekeeping, cooking, transportation to doctors </li></ul></ul><ul><li>Medicare: </li></ul><ul><ul><li>Medical coverage, including doctors, hospital, skilled care </li></ul></ul>
  10. 10. How Benefits Work Together SSI Medicaid SSDI Medicare
  11. 11. Part 2: Making Decisions About the Future
  12. 12. Case Study: Nathan <ul><li>Current situation: </li></ul><ul><li>18-year-old with Down Syndrome </li></ul><ul><li>Lives with mom </li></ul><ul><li>Income from work programs, SSI, Social Security (from dad who is deceased) </li></ul><ul><li>Limited personal assets (clothing, tv) </li></ul><ul><li>Qualifies for Medicaid </li></ul>
  13. 13. Case Study: Nathan <ul><li>Future situation: </li></ul><ul><li>Who will make health care decisions? </li></ul><ul><li>Who will make financial decisions? </li></ul><ul><li>Where will he live? </li></ul><ul><li>How will his medical expenses be paid? </li></ul>
  14. 14. What Plan Could Nathan’s Mom Make? <ul><li>Possible Options: </li></ul><ul><li>Make no decisions/plans </li></ul><ul><li>Leave money to Nathan </li></ul><ul><li>Disinherit Nathan </li></ul><ul><li>Leave money to a future caregiver </li></ul><ul><li>Establish third-party SNT for Nathan </li></ul><ul><li>Establish first-party SNT for Nathan </li></ul>
  15. 15. Part 3: Creating an Effective Plan for Your Child
  16. 16. What Steps Should You Take Today? Step 1: Envision Your Child’s Future <ul><li>Planning ahead makes a difference: </li></ul><ul><ul><li>Where and with whom will your child live? </li></ul></ul><ul><ul><li>What type/level of care will be required? </li></ul></ul><ul><ul><li>Will a guardian/conservator be necessary? </li></ul></ul><ul><ul><li>Who else will be involved? </li></ul></ul><ul><ul><li>What kind of lifestyle is desired? </li></ul></ul><ul><ul><li>What unforeseen challenges could arise? </li></ul></ul>
  17. 17. <ul><li>Lays out goals/expectations: </li></ul><ul><ul><li>Details preferences, needs, wishes, both medical and personal </li></ul></ul><ul><ul><li>Lists key people in child’s life </li></ul></ul><ul><li>Helps guide: </li></ul><ul><ul><li>Family members </li></ul></ul><ul><ul><li>Trustees </li></ul></ul><ul><ul><li>Caregivers </li></ul></ul><ul><ul><li>Others </li></ul></ul>What Steps Should You Take Today? Step 2: Create a Memorandum of Intent
  18. 18. <ul><li>Monthly income: </li></ul><ul><ul><li>SSI, SSDI, Social Security, earned/unearned income </li></ul></ul><ul><li>Monthly living expenses: </li></ul><ul><ul><li>Housing, food, transportation, medical, recreation, etc. </li></ul></ul><ul><ul><li>Consider how any shortfall will be met </li></ul></ul>What Steps Should You Take Today? Step 3: Estimate Income & Expenses Income - Expenses = Shortfall
  19. 19. <ul><li>Provides supplemental funds for living expenses not covered by other income sources </li></ul><ul><li>May be established by parents: </li></ul><ul><ul><li>Through will </li></ul></ul><ul><ul><li>Through living trust </li></ul></ul><ul><li>“ Living” SNT lets others contribute </li></ul><ul><li>Trustee has discretion over distributions </li></ul>What Steps Should You Take Today? Step 4: Utilize a Third-Party SNT
  20. 20. The SNT Trustee Responsibilities <ul><li>What are the trustee’s responsibilities? </li></ul><ul><ul><li>Invests/manages assets </li></ul></ul><ul><ul><li>Distributes funds </li></ul></ul><ul><ul><li>Keeps books </li></ul></ul><ul><ul><li>Files tax returns </li></ul></ul><ul><ul><li>Hires advocates and care managers, etc., as needed </li></ul></ul>
  21. 21. Selecting an SNT Trustee <ul><li>Who should be the trustee? </li></ul><ul><ul><li>Parent with professional co-trustee </li></ul></ul><ul><ul><li>Corporate or other professional trustee </li></ul></ul><ul><ul><li>Successor trustee </li></ul></ul>
  22. 22. What Parents Should Do <ul><li>Create Memorandum of Intent </li></ul><ul><li>Calculate future financial need </li></ul><ul><li>Establish SNT through will or living trust </li></ul><ul><li>Fund SNT with life insurance </li></ul><ul><li>Name SNT as beneficiary of accounts, plans, etc. </li></ul><ul><li>Reduce taxable estate </li></ul>
  23. 23. What Your Child Should Do <ul><li>Sign Advance Directives, if legal capacity </li></ul><ul><li>Have a legal guardian appointed: </li></ul><ul><ul><li>When child without mental capacity becomes an adult and parents want to maintain legal responsibility </li></ul></ul><ul><ul><li>Court appoints legal guardian </li></ul></ul>
  24. 24. What If Your Child Has Assets? <ul><li>Establish a First-Party SNT: </li></ul><ul><li>Provides funds for living expenses not covered by other income sources </li></ul><ul><li>Maintains eligibility for public benefits </li></ul><ul><li>Must be established by parent, grandparent, legal guardian or the court </li></ul><ul><li>State must be reimbursed from the trust for all Medicaid expenses </li></ul>
  25. 25. Get Started Today <ul><li>Understand your child’s eligibility for public benefits. </li></ul><ul><li>Make plans for the future to maximize public and private resources for your child’s benefit. </li></ul><ul><li>Make the SNT a key part of your estate plan. </li></ul><ul><li>Contact a special needs attorney for the assistance you need. </li></ul>Elder Law Practice of H. Todd Whatley, P.A. 479-750-1101
  26. 26. Ask the Trustee… <ul><li>A properly prepared plan can give parents an assurance that their child’s benefits will be preserved, but in reality, how does such a plan work towards meeting your child’s needs after you are gone? </li></ul>

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