For a family with a child or sibling who has an intellectual or developmental disability, planning for the future involves more than the usual considerations. What will happen to our authority as parents when our special needs child reaches the age of majority? How can we provide for them without affecting their eligibility for benefits? Who will look out for their best interests when we no longer can?
There are a few common mistakes in future planning for dependents with disabilities that should be avoided. The first is leaving gifts or inheritances directly to a person with special needs. In addition to affecting eligibility for benefits, this leaves the person open to fraud, undue influence or mismanagement.
Conversely, disinheriting the special needs family member and relying on other family members to be ready, willing, and able to provide for them. Despite the best of intentions, circumstances (both foreseeable and unforeseeable) such as bankruptcy, health, or money issues and outside influences may prevent family members from pitching in when needed.
Another is assuming that physicians, caseworkers, and financial professionals will always work freely with the family. HIPAA and other privacy laws and policies come into play once a person with special needs reaches the age of majority, which is eighteen (18). Keep in mind that at eighteen, only the patient can consent to or refuse a medical procedure, absent a guardian or designated agent.
These issues can be daunting, but there are many good solutions available, with proper planning. The sooner that they are addressed, the better.
First and foremost, an adult with an intellectual or developmental disability that renders them unable to manage their own personal and financial affairs should have a Guardian appointed by the Court when he or she reaches the age of majority. The Guardian will have the authority to manage personal affairs and to make health care decisions. With some limitations, the Guardian may also be authorized to manage financial matters.
This requires a Court proceeding, usually brought in the Surrogate’s Court. To protect the rights of the disabled person, professional certifications and background checks are required and the process can therefore take several months to complete, so the best time to start is well before the person’s eighteenth (18th) birthday.
The family should also consider creating a Special Needs Trust (SNT), a legal arrangement in which assets are placed in trust for the special needs person without affecting eligibility for benefits. An SNT can be “first party,” created with the person’s own assets, such as proceeds of a lawsuit or an inadvertently directed inheritance, or “third party,” created with gifts or inheritances that are specifically directed to the trust by others.
There are significant differences that affect whether a provider of benefits, such as Medicaid, can assert a claim for reimbursement (“pay back”), so these trusts need to be drafted carefully. Third party trusts can be created in a Last Will and Testament or by separate Trust Agreement. Some first party SNTs require a Court order.
For many families, participating in one of the various Community Trusts or Pooled Trusts that are maintained by social services organizations and advocacy groups may be an economical and practical alternative to a privately created and managed SNT. Of course, the terms of any Trust agreement must be carefully reviewed to be sure the Trust meets the needs of the person.
For disabled adults with a source of income or assets which would otherwise render them ineligible for benefits, an ABLE Account may also be a solution. Achieving a Better Life Experience (ABLE) Accounts are created under Federal law and permit a disabled adult to accumulate up to $100,000 while retaining benefits eligibility.
Just as important as the planning that is done for the disabled person, is the planning that other family members should put into their own affairs. This includes Wills, Trusts when appropriate, Powers of Attorney, and Health Care Proxies. These documents will ensure that the disability of their loved one does not create difficulty, delay, or additional expense in the event of their own death or incapacity.
Families with loved ones who have special needs require specific legal and financial advice and representation that is tailored to those needs. Proper planning will bring peace of mind and is an important step in assuring that the person with special needs will live life to its fullest potential.
James Burdi is a partner in Vishnick McGovern Milizio LLP’s Wills, Trusts, and Estates and Elder Law Practices, concentrating in Trust and Estate Planning and Administration. He heads the firm’s Special Needs Planning subpractice. He can be reached at [email protected] and 516.437.4385 x130.
