2/6/2018 ESTATE Planning for the Special Needs of Disabled AdultS, and Elders Facing Long-Term Care Costs Caring for Caregivers November 15, 2016 Presented by Donald D. Vanarelli, Esq. _______________________________________ Recipient, Lifetime Achievement Award By New Jersey State Bar Ass’n, Elder and Disability Law Section Certified Elder Law Attorney Accredited Veterans Attorney Founding Member, Assn. of Special Needs Planners Named to the NJ “Super Lawyer” list for 10 yrs, 2007-2016

2/6/2018 Statistics An estimated 20.3 million families, or about 30% of all families in the United States, have at least one family member with a disability. Some 3.8 million families, or 5.5% of all families, have one or more children with disabilities.

2/6/2018 Planning for Parents of Persons with Developmental and Other Chronic Disabilities

Questions Faced by Parents of Children With Disabilities 2/6/2018 Questions Faced by Parents of Children With Disabilities 1. Who will care for my child when I am no longer able to do so? 2. Will my own medical needs and the cost of my own care needs deplete my assets so that little or nothing will be left for my disabled child? Can I prevent that from occurring? 3. Can my child maintain eligibility for SSI, Medicaid, DDD services, housing subsidies and other needs-based governmental benefits?

Nature and Use of Guardianships 2/6/2018 Nature and Use of Guardianships A guardianship is a legal mechanism designed to provide surrogate decision-making and financial management for a person who is not able to govern him/herself. AN application for guardianship of a disabled child is made when the child attains his/her maturity at age 18.

Characteristics of Guardianships 2/6/2018 Characteristics of Guardianships Involuntary. Imposed by Court. Only for persons who are legally incompetent - medical evidence needed. Alternate voluntary arrangements - either not made or ineffective.

Appointment of Guardians 2/6/2018 Appointment of Guardians All guardians in New Jersey are appointed by the Superior Court. The process for appointment of a guardian begins when a person, usually a family member, files a petition in Court asking that a person be declared incapacitated and a guardian appointed.

Superior Court Guardianship Petition 2/6/2018 Superior Court Guardianship Petition 1. Order to Show Cause. 2. Verified Complaint. 3. Medical Evidence - written statements from two (2) doctors required. 4. Financial Statement - nature and extent of incompetent’s estate.

Hearing in Superior Court 2/6/2018 Hearing in Superior Court 1. Notice of Hearing - to incompetent, next-of-kin and other interested persons. 2. Incompetent’s Legal Counsel - appointed by the Court. 3. Report by the incompetent’s counsel - submitted to the Court. 4. Hearing Date - Contested or Uncontested. 5. Letters of Guardianship Issued.

Types of Guardianships 2/6/2018 Types of Guardianships 1. Guardian of the Person. 2. Guardian of the Estate. 3. Plenary Guardianship. 4. Limited Guardianship.

Voluntary Substitute Decision-Making 2/6/2018 Voluntary Substitute Decision-Making Representative Payeeships (SSA, SSI) Joint Tenancies (Inc. joint bank accts.) Powers of Attorney Advance Medical Directives (Living Wills) Do Not Resuscitate (DNR) Orders Revocable and Irrevocable Trusts Family Limited Partnerships and Limited Liability Companies

Public Benefits Basics 2/6/2018 Public Benefits Basics Benefits Based Benefits Based on Financial Need On Work History) •Social Security •Supplemental Security Income(SSI •Medicare •Special Education •Medicaid •Food stamps, legal aid, and utility assistance •Section 8 Housing •DDD Support Services

Supplemental Security Income (SSI) 2/6/2018 Supplemental Security Income (SSI) SSI is a federal program, administered by the states, for US citizens or qualified aliens who are either aged (age 65 or older), blind or disabled, and who meet the financial limitations of the program. In New Jersey, those eligible for SSI are also eligible for Medicaid.

Providing for Persons with Disabilities: Special Needs Trust Basics 2/6/2018 Providing for Persons with Disabilities: Special Needs Trust Basics Purpose - To preserve the disabled person’s eligibility for needs-based governmental benefits while providing assets which may be used to supplement public benefits in order to improve the disabled person’s quality of life.

Elements of a Special Needs Trust 2/6/2018 Elements of a Special Needs Trust A Special Needs Trust (SNT) is drafted specifically so trust assets are not considered to be “countable resources” in determining the disabled person’s eligibility for public benefits based on need.

Elements of a Special Needs Trust 2/6/2018 Elements of a Special Needs Trust The SSA describes a discretionary trust as “a trust in which the trustee has full discretion as to the time, purpose and amount of the distributions.” If the beneficiary has no discretion over the distributions, the trust is not counted in determining SSI eligibility.

Elements of a Special Needs Trust 2/6/2018 Elements of a Special Needs Trust Assets in a SNT will not count as a resource for public benefits purposes. The assets in the SNT may be used to supplement the beneficiary’s needs not covered by public benefits without a reduction or elimination of those public benefits.

Examples of Permissible SNT Expenditures 2/6/2018 Examples of Permissible SNT Expenditures Education Travel Expenses Newspaper and Magazine Subscriptions Personal Care Services Home Care Services Non-covered Medical Expenses Vacations Companions

Special Needs Trusts vs. Support Trusts 2/6/2018 Special Needs Trusts vs. Support Trusts If needs-based public benefits are either not needed or not anticipated by the disabled beneficiary, no need to establish a SNT. If public benefits are not an issue, it may be appropriate to establish a support trust to provide financial oversight and administration for the disabled person’s behalf.

Basic Types of Special Needs Trusts 2/6/2018 Basic Types of Special Needs Trusts 1. Self-Settled Trust 2. Third Party Trust

2/6/2018 Self-Settled SNT 1. Established with the assets of the disabled person - proceeds of a personal injury award, inheritances or gifts received before the creation of the trust. 2. Trust must be established by a parent, grandparent, guardian or a court. 3. The disabled person can be the only beneficiary of a self-settled SNT. No remainder beneficiaries may be named in the trust instrument.

Self-Settled SNT (cont’d) 2/6/2018 Self-Settled SNT (cont’d) 4. Self-settled SNT must be inter vivos and irrevocable. 5. Medicare and Medicaid liens must be paid before funding. 6. Self-settled SNT can be established only if the beneficiary is under age 65. 7. “Pay-back” provision required.

2/6/2018 Third Party SNT 1. Established with assets owned by a third party for the benefit of the disabled person. 2. Usually established and funded by the parents, relatives or friends of the disabled adult child as part of an estate or gifting plan. 3. Other children can be named as remainder beneficiaries after death of disabled person.

Third Party SNT (cont’d) 2/6/2018 Third Party SNT (cont’d) 4. Third Party SNT may be revocable and inter vivos, irrevocable or testamentary. 5. No need to pay Medicare or Medicaid liens before funding. 6. No age limit for disabled beneficiary. 7. “Pay-back” provision NOT required.

2/6/2018 The Golden Rule The Golden Rule in SNT Planning - the trustee should make payments on behalf of the beneficiary directly to third party vendors for equipment or services which are not food or shelter. For example, distributions directly to a retailer for a radio or television, to an airline for a plane ticket, or to a companion/aide for services rendered are not income to the beneficiary and will not effect eligibility for public benefits.

Thank You For Your Attention Asset Protection 2/6/2018 Thank You For Your Attention Questions or Comments?