Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Planning For A Loved One With Special Needs


Published on

  • Be the first to comment

  • Be the first to like this

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>