There are over 51 million people with disabilities in the United States, including 13-16% of families who have children with special needs. This document discusses the importance of special needs planning to ensure proper care and financial support for those with disabilities. It outlines government support programs and challenges families may face, including maintaining eligibility for benefits and ensuring long-term care. Directly distributing assets or relying only on family can jeopardize benefits and long-term support. The document recommends working with an advisory team that includes attorneys, financial advisors, and others to establish trusts, powers of attorney, and other tools to protect privacy, assets, and quality of care for the special needs beneficiary.

1. Special Needs Planning First Thursday Workshop April 2, 2009

2. The Need 51.2 million with disabilities 13-16% families children with special needs (2002 census) Autism — 1 in 150 births; 1-1.5 million (Autism Society of America)

3. Support Programs Entitlement programs Social Security Medicare Means-tested programs SSI (Supplemental Security Income) Medicaid

4. Challenges Provide for all of family without jeopardizing special needs beneficiary’s eligibility Supplement government benefits and enhance quality of life for special needs beneficiary Treat family equitably

5. Challenges Ensure sufficient funds are available to continue care of special needs beneficiary after death of parent(s) Provide proper supervision and management of assets for special needs beneficiary

6. Mistakes Direct distribution Disinheriting Relying on other family members Failing to protect privacy and dignity of special needs child Choosing the wrong professional advisor for help

7. Direct Distribution Entitlement programs very limited Needs-based programs Direct distribution leaves beneficiary ineligible Inheritance must be spent down before re-qualifying

8. Disinheriting Attempt to protect government benefits Government benefits provide minimal levels of support Special needs child relies on parents more than the other kids do Short-sighted planning

9. Relying On Others May be temporary help, but many long-term drawbacks May not have the financial resources May not have emotional resources Risk of that person’s divorce, creditor problems, incapacity, or death

10. Privacy and Dignity Unnecessary exposure of affairs in public forum (Probate Court) Predators may learn of special needs beneficiary’s assets, disabilities Relying on government assistance alone provides only very basic support Fails to protect the dignity of the beneficiary

11. Choosing Wrong Professional Advisors not experienced in this area can do more harm than good Experienced advisors can help maximize resources available Team approach critical

12. Key Support Team Members Advisor who identifies the need Litigation attorney, if relevant Special needs planning attorney Financial advisor Tax accountant

13. Key Tools General Durable Power of Attorney with appropriate special needs provisions Durable Healthcare Power of Attorney HIPAA Authorization Revocable Living Trust with appropriate special needs provisions Detailed letter of intent Special Needs Trust (state specific)

14. Special Needs Trust Discretionary Supplemental Litigation related

15. Special Needs Trust Self-settled [(d)(4)(A) trust/Medicaid Payback Trust] Pooled account [(d)(4)(C) trust] Third party-settled

16. Uses of SNT Funds Special medical needs Clothing Entertainment Personal grooming Etc.

17. Key SNT Players Advisory Board Advocate Trustee

18. Advisory Board 3-12 people Formal board with informal powers Advise trustee Keeps key extended family members involved

19. Advocate Family member or professional Ensures quality of care is acceptable Makes recommendations regarding living arrangements and therapeutic regimens

20. Trustee Controls all the assets in the SNT Bank, professional, family member, friend Critical that qualified person is named Others can be advisors

21. Trustee Professional trustee often the solution Acting alone or as co-trustee Family members usually focused on care, not finances Assets under management may be significant Assets must last for lifetime care of beneficiary

22. Taxation Distributions taxable to the beneficiary Retained earnings taxable to the trust Accountant key member of the team

23. Funding How much is enough? SNTs typically funded with as much as $2M Source? Savings, financial planning Life insurance

24. Insurance Term insurance not the solution Need for insurance does not end Permanent policies ensure the trust funding regardless of how long the insured lives Survivorship policies particularly popular Tremendous opportunities for the planner

25. Team Approach Extended family—after parents gone Care Supervision Advocacy Coordination of efforts, support

26. Team Approach Professional Advisors Attorney Financial Advisor Life Insurance Advisor Accountant Bank/Trust Department Coordination of efforts is critical

27. Law Offices of David G. Ledbetter 1695 Service Road NE Grand Rapids, Michigan 49503 (616) 459-3333 [email_address] [email_address] [email_address] [email_address] [email_address]