Planning for Individuals with Disabilities Boston Estate Planning Council Harry S. Margolis, Esq. Margolis & Associates Boston & Framingham Lawrence B. Cohen, Esq. Palmer & Dodge Boston Harry S. Margolis, Esq. Margolis & Associates Boston & Framingham Lawrence B. Cohen, Esq. Palmer & Dodge Boston

Common Concerns of Parents of Children With Special Needs How can I protect my child’s future? Can I be sure she has an advocate when I am no longer around? Can I leave my child sufficient funds and still be fair to my other children? Is there any way to preserve the funds my child receives from a PI settlement? Who should manage the funds?

Common Mistakes Leaving assets directly to a disabled child. Leaving assets to other children or other family members. Insufficient funding of trust. Poor choice of trustee. No planning. No guidance for trustee.

Preserving Public Benefits Social Security Disability Income (SSDI) Supplemental Security Income (SSI) MassHealth (Medicaid) Medicare Public Housing

Special Needs Trusts Supplemental Needs Trust (d)(4)(A) or “Payback” Trust (d)(4)(C) or Pooled Trust Pooled Third-Party Trust

Drafting Considerations Self-Settled vs.Third-Party Trusts Discretionary vs. restrictive SSI issues Statement of grantor’s intent Other beneficiaries? Escape clause?

7 Steps to Protect a Personal Injury Settlement 1 Set up a supplemental needs trust so client can continue receiving public benefits 2 Structure the settlement in an annuity 3 Or create a trust with an independent trustee 4 Or do both for the best long-term investment return 5 Use a pooled (d)(4)(C) trust 6 Weight settlement towards loss of consortium plaintiffs 7 Hire a special needs specialist to determine the best strategy in the particular case

Common Errors by SNT Trustees and Grantors Distributing more than $20 a month to SSI beneficiaries Commingling the beneficiary’s funds with trust funds Keeping poor records Failure to give trustee letter of instructions Leaving disabled family member as beneficiary of IRAs and other accounts Not reviewing the estate plan at least once every five years Forgetting about savings bonds Not telling the state or federal agency about the trust Not using a professional trustee

Jim and Sarah Jefferson Two children, daughter healthy, son mentally ill Jim and Sarah are in their early 60s and approaching retirement Son lives in halfway house with some assistance Son does not work, but has in the past Son receives SSDI ($400/month), SSI ($250/month) and Section 8

Their Plan SNT for son Question of who should be trustee: daughter, other family member, professional trustee? Question of how to fund trust: Life insurance? Standby (d)(4)(A) trust

Gary Judson 45 years old Disabled in car accident Receives SSDI, Medicare and MassHealth Settling lawsuit for $1 million after attorney’s fees and expenses PI attorney concerned about Gary preserving public benefits, quickly spending money

Solutions Structured settlement Trust Professional trustee (d)(4)(A) trust Spending plan (3% rule)

Contact Information Lawrence B. Cohen Palmer & Dodge Boston 617/ Harry S. Margolis Margolis & Associates Boston and Framingham 617/