1. Planning for a Loved One With Special Needs
with [Insert Presenter Information Here]
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2. Disclaimer
The following presentation is meant for education only and not meant as a substitute for legal counseling.
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3. Why Plan?
Planning for a loved one with special needs is about enhancing that person’s quality of life to the maximum extent possible and protecting them only as much as necessary to not limit or restrict their potential.
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4. Benefits of Planning Provide Financial Security
Leverage Means Tested Public Benefits
Select Proper Team to Provide Lifetime Management
Plan for Appropriate Housing
Provide Ongoing System for Advocacy
Plan for Caregiving Needs
Coordinate Entire Extended Family's Planning
Protect Beneficiary from Predators
Preserve Assets for other Heirs
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5. Successful Planning Includes
Having the right team of advisors to advocate for the needs of your disabled loved one
Making sure your plan has the flexibility to deal with issues in a changing environment
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6. Part 1: Creating an Effective Plan for Your Loved One
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7. What Steps Should You Take Today? Envision Your Loved One’s Future
Planning ahead makes all the difference:
Where and with whom will your loved one live
What type/level of care will be required?
Will a conservator or guardian be necessary?
Who else will be involved?
What kind of lifestyle is desired?
Consider potential future challenges?
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8. What Steps Should You Take Today? Create a Memorandum of Intent
Lays out goals/expectations:
Details preferences, needs, wishes, both medical and personal
Lists key people in loved one’s life
Helps guide:
Family members
Trustee
Caregivers
Others
The next step is writing it all down.
The Memorandum of Intent should include ample information to help anyone involved in your loved one’s future care understand the loved one’s unique personality, strengths, challenges, needs, etc. It also should provide details about all aspects of the loved one’s lifestyle, including medical and rehabilitation needs, recreational activities, educational expectations and work goals. For example, under “Residential Directions,” the document may state that the loved one will one day own a home or that a live-in caregiver will be given rent-free accommodations in the home.
The Memorandum of Intent is not a legally binding document. But, because it can contain information not appropriate for SNT documentation, it can enhance the trustee’s understanding of the loved one’s situation and needs.
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9. What Steps Should You Take Today?
Estimate Income and Expenses
Monthly income:
SSI, SSDI, Social Security, earned/unearned income
Monthly living expenses:
Housing, food, transportation, medical, recreation, etc.
Consider how any shortfall will be met
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10. Special Needs Expense Information
Beginning
Amount
Lasting
Item
Today
At Age
Monthly
Annual
Lifetime
Until Age
Housing:
Mortgage/ Property Taxes
Rent Expense
Home/Condo Maintenance Fees/Security System
Utilities (fuel/electricity/gas)
Telephone/Cell Phone
Cable/Satellite/Internet
Misc. Household (lawn/etc.)
Child Care:
Special Care Needs:
Live-in aid or ADL
Assistance & Respite
Advocacy/Social Services
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11. Beginning Amount Lasting Item Today At Age Monthly Annual Lifetime
Until Age
Transportation:
Automobile/Van
Fuel/maintenance of auto/van
Adaptive Equipment
Nutrition/Food/Beverage:
Food/Beverages
Special Diet
Vitamins/Oral Medications
Feeding Devices
Eternal/Nutrition/Misc.
Clothing:
Special Clothing
Cleaning Laundry
Furnishings:
Medical Equipment
Wheelchair/Ramps
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12. Planning for Loved One’s Incapacity
Sign Advance Health Care Directives and Powers of Attorney, if legal capacity
Consider Conservatorship/Guardianship, if lacks capacity:
When child without mental capacity becomes an adult and parents want to maintain legal responsibility
Court appoints conservator/guardian
If the individual with special needs is competent, at legal age, he or she should put in place critical estate-planning documents, including a will, advance directive and medical power of attorney.
If the individual is not competent, a parent or other individual can be named as guardian or, in extreme cases, conservator of both the individual and the estate.
Parents must be named as guardians to continue making legal decisions for a child who has attained legal age.
The role of guardian or conservator can be challenging when an individual is developmentally disabled and/or mentally ill.
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13. Part 2: Understanding Public Benefits
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14. Public Benefits At a Glance
Means Tested Public Benefits
SSI
Medicaid
Entitlement Public Benefits
SSDI
Medicare
Other Benefit Programs
Section 8
Veteran Benefits
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15. Supplemental Security Income (SSI)
Person Must Meet Two Tests:
Medically Disabled (physically or mentally) or elderly (65+), plus
Poor
Resource Test –measured only one time each month
Income Test – total any income received any time of the month
To qualify for SSI, an individual must meet the Social Security Administration’s definition of “disabled” and have limited assets and income. SSI can be impacted as follows:
It is reduced, dollar for dollar, if the individual has more than $____ in unearned monthly income, such as gifts, interest or rent.
It is reduced by one dollar for every two dollars earned if the individual has earned income (wages) above $_____ a month.
It is reduced by one third if the individual receives in-kind support and maintenance (i.e., food and shelter).
For eligible individuals, SSI pays up to $___ a month for food and shelter.
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16. Disability Defined
“Disability” for an adult is defined as the inability to engage in any “substantial gainful activity” (SGA) due to any medically determinable physical or mental impairment, or combination of impairments, that has lasted or can be expected to last for a continuous period of at least 12 months, or result in death
“Disability” for a minor is defined as a medically determinable physical or mental impairment or combination of impairments that causes marked and severe functional limitations, and that can be expected to cause death or that has lasted or can be expected to last for a continuous period of not less than 12 months
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17. SSI Resource Test “Countable resource” limits for SSI are:
$2,000 for an eligible individual and
$3,000 for an eligible couple
Not all resources are counted, some are exempt:
Home of any value
Automobile of any value
Furniture, clothing, and personal care items
Burial plots, certain types of life insurance contracts, and miscellaneous other assets
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18. SSI – What Do You Get? SSI is to pay for food and shelter
In 2019, Federal Benefit Rate is $771/month
Some States Supplement, e.g. California is $156.40
Amount may change depending on living arrangement or eligible couple
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19. Reduces benefits dollar-for-dollar after the first $20.00
Types of SSI Income
Unearned Income
Includes gifts, payments from annuities, and pensions, alimony and support payments, dividends, interest, rents, awards and payments from other benefits programs.
Reduces benefits dollar-for-dollar after the first $20.00
Earned Income
Consists of wages, royalties, net earnings from self employment, and any honoraria received for services rendered.
Reduces benefits one dollar for every two dollars earned after the first $65 earned monthly.
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20. Types of SSI Income In-Kind Support & Maintenance Deemed Income
Actual receipt of food, clothing, or shelter, or something that can be used to get one of these.
Reduces benefits dollar for dollar up to a maximum of 1/3 the benefit.
Deemed Income
Someone else’s income. (Same household; duty to support)
Reduces benefits dollar-for-dollar after the first $20.00
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21. SSDI Eligibility Two tests to qualify:
Disability – Same definition as for SSI
Sufficient work history
No resource test for SSDI
SSDI benefit based on past wages
After 24 months = Medicare
Can receive SSDI and SSI if wages were low
20 CFR §
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22. Childhood Disability Beneficiary (CDB) (sometimes called) Disabled Adult Child
Social Security for individuals:
Disabled before age 22 and
With parents eligible based on their work record who are retired, disabled or deceased
50% of parent’s RSDI while living
75% of parent’s RSDI after death
Social Security benefits may reduce or eliminate SSI benefits
No resource test
Medicare after 24 months
A growing number of parents over age 65 are caring for adult loved ones with special needs. As parents retire, become disabled or die, their loved ones become eligible to receive their Social Security benefits as follows:
If a parent who is eligible for Social Security is retired or disabled, the loved one receives an amount equal to ½ of the parent’s benefit.
If a parent who was eligible for Social Security dies, the loved one receives an amount equal to ¾ of what the parent was receiving or would have received at retirement.
If a loved one is receiving SSI, it can be reduced, dollar for dollar, by Social Security. A large Social Security benefit can even disqualify the loved one for SSI, triggering the loss of Medicaid. The loved one then must reapply for Medicaid separately.
A special needs attorney can help you plan ahead for this type of situation.
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23. Medicaid and Medicare Medicaid:
Covers “medically necessary” services, equipment, hospitalization, prescription meds
Preventative care
Covers long-term care and in home nursing care
Medicare:
Medical coverage, including doctors, hospital, prescription meds
Government decides amount of in-home support offered to Medicaid recipients.
In-home support can include paramedical services.
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24. Medicaid and Medicare Medicaid Medicare
Automatically available with SSI
Must Apply Separately with SSDI or SS
Expanded Medicaid if income below 138% FPL
Medicare
Available with SSDI and CDB after 24 months
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25. Section 8
Housing is one the greatest concerns that persons with disabilities and their families have for the future
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26. Housing Section 8 and Special Needs Trusts Rules issued by HUD
Administered by local Public Housing Agencies (PHA)
Voucher Program vs. Project Based Assistance
Not an entitlement benefit
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27. Housing Qualifying for Section 8 Income limits Asset Test
Asset Test
Transfer for less than fair market value
Applying for Vouchers
Waiting lists
First come vs. Lottery
May take years to get
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28. Housing Special Needs Trust Issues:
Regular recurring distributions may be problematic
Cell Phone, Cable, Internet
Common exclusions
Sporadic income/gifts
Reimbursement of medical expense
Benefit back-pay, settlements, lump-sum inheritance
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29. Housing Purchasing a home Allowable Should be sustainable
Consider money, management, safety, and support
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30. Part 3: Special Needs Trust and ABLE Account
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31. Types of Special Needs Trusts
Source of Funds
Who Establishes
Distribution Upon Death
Third Party
Anyone except beneficiary
Grantor’s wishes
(d)(4)(A)
Disabled beneficiary’s funds before age 65
Individual/Beneficiary, Parent, grandparent, Guardian, Court
Medicaid payback; then remainder beneficiaries
(d)(4)(C)
Pooled Trust
Disabled beneficiary’s funds
Individual/Beneficiary, parent, grandparent, Guardian, Court
Non-profit Trustee; or, Medicaid payback; then remainder beneficiaries
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32. Utilizing a Third Party Special Needs Trust
A Third Party Special Needs Trust is the best method for providing instructions on leaving inheritance to a loved one with special needs
Called a third party SNT because it is established with the assets of someone other than loved one with special needs
An SNT offers a good way to preserve public benefits while providing the supplemental funds needed for a higher quality of life. Assets in the SNT do not disqualify the beneficiary from public benefits because they are owned by the trust. The trustee distributes assets for the benefit of the beneficiary according to strict guidelines.
In Nathan’s case, the parents might have funded the SNT with life insurance and left the assets accumulated over their lifetime to their daughter. This would have allowed them to preserve Nathan’s quality of life by maximizing public and private resources, while still meeting other important estate planning goals and preserving harmony between brother and sister.
An SNT also can be tailored to meet individual situations, such as the need for an advocate, care manager or conservator.
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33. Other Arrangements - Not Recommended
Outright inheritance – loss of SSI and Medicaid
Left in non-qualifying trust – loss of SSI and Medicaid
Disinheritance – no money available for loved one with special needs
Leaving assets to brothers or sisters with request to take care of sibling
Subject to creditors
What if they die who then has assets
May not want to take care of brother/sister if have own family
Could be lost in divorce
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34. Third-Party Special Needs Trust
Third-party trust main requirements:
Beneficiary (or spouse) did not create the trust.
The trust does not hold any of the Beneficiary’s (or spouse’s) own money.
The Beneficiary is not trustee and Trustee has sufficient discretion to withhold distributions
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35. Third-Party Special Needs Trusts
Most families prefer third-party trusts:
No payback requirements
Grantor can leave any remaining funds to whomever he or she wants
Revocable during life of grantor
More drafting flexibility so long as correct distribution standard is used
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36. Choosing The Trustee Family vs. Professional vs. Attorney
Complexity-SSI rules, tax reporting, investments,
Amount under management
Court oversight - bond?
Family relationship
Fees
Conflict of interest
Knowledge and experience
Ability vs. willingness
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37. Using Trust Advisory Committee and Trust Protector
Consider Using:
Trust Advisory Committee
Name Family/Friends to Make Sure Trustee doing job
Trust Protector
Provide Authority to make modifications if change in law or situation
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38. Trustee Duties Advocacy Accountability Financial Best interest
Understand public benefits
Promote independence and quality of life.
Financial
Proper investments
Understands taxes
Hires professionals
Accountability
Accurate records
Keeps beneficiary informed
Complies with statutory duties
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39. What Can a SNT Pay For?
How does the expenditure affect beneficiary’s government benefits? Is the expenditure appropriate for the beneficiary and consistent with trust policies? Is the expenditure at fair market value and otherwise reasonable?
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40. How Much Should I Fund Most People Fall Into Two Groups:
Treat All Kids Equally
Fund Loved One with Special Needs with More Because Unable to Work
Life Insurance is good funding tool
Must use special planning for retirement assets
Find good financial planner
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41. First-Party Special Needs Trusts
First Party SNTs are the only planning tool that allows an individual who has assets to preserve those assets AND preserve eligibility for needs- based public benefits
First-Party SNTs are called:
(d)(4)(A) SNT (a/k/a Litigation or Payback SNT)
(d)(4)(C) SNT (a/k/a Pooled Trust)
42 USC §1396p(d)(4)(A) and 42 USC §1396p(d)(4)(C)
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42. First Party SNTs When are First Party SNTs commonly used:
Personal Injury Award
Inheritance or Gift
Minor with a Disability Turns 18
Adult Recently Disabled
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43. The ABLE Account Achieving a Better Life Experience (ABLE) account
Passed into law on December 18, 2014
Similar to 529 Plan Educational Plans but for persons with disabilities
As described in following charts, person can fund his or her own ABLE account, yet there are several restrictions on it

44. ABLE Account Issues ABLE Account Who can use?
Only persons disabled before age 26
Who can fund?
Anyone, including person with a disability
How many can person have?
One
Who can control?
Person with a disability and likely their legal guardian, conservator, or agent
Who inherits on death of person with disability
Medicaid first, then can go to heirs

45. ABLE Account Issues ABLE Account How much can fund in a year?
$15,000 (or annual gift exemption)
Is funding gift-tax free?
Yes
Is there a cap on how much can be in account?
Yes, currently $100,000 limitation for SSI recipients and up to State 529-plan limitations
How is income taxed?
No income tax
What type of distributions can be made?
Only “qualified disability expenses” as defined by government

46. Part 4: Guardianship/Conservatorship
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47. Guardianship/Conservatorship
At age 18, an individual is presumed to have legal capacity
If loved one lacks capacity to manage personal or financial affairs a court appoints a guardian or conservator to take control over that person’s affairs
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48. Guardianship/Conservatorship
There are two general types of Guardianship/Conservatorship:
Of the Person
has the care, custody, control, and education of the person; and
Of the Estate
must manage finances and legal affairs
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49. Part 5: Making Decisions About the Future
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50. What You Should Do Create Memorandum of Intent
Establish own Estate Plan
Establish Special Needs Trust
Calculate future financial need
Consider funding alternatives, e.g. life insurance
Name SNT as beneficiary of retirement accounts
Special considerations
If there is an SNT in place, anyone wishing to bequest assets from a retirement plan, insurance policy, etc. should be told to name the SNT, rather than the loved one, as beneficiary.
Parents with more than one loved one who wish to pass assets equitably can provide for the loved one with special needs by funding the SNT with life insurance.
Funding an irrevocable SNT removes the transferred assets from the parent’s taxable estate.
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51. Case Study: Nathan Current situation:
Just turned 18-year-old, has autism and lacks capacity
Lives with mom and dad
Income from SSI
Limited personal assets (clothing, t.v.)
Beneficiary of Uniform Transfer Minor’s Act Account available to him at age 21 and worth around $25,000
Qualifies for Medicaid
[Note to speaker: replace “autism” with relevant condition based on audience.]
Once families understand the role of public benefits, they can make decisions about their loved one’s future. Planning ahead is critical to preserving a loved one’s quality of life. Let’s consider Nathan….
While Nathan’s mom is alive and able-bodied, Nathan will continue to live at home and mom will make his medical and financial decisions. Nathan receives Social Security because his dad was eligible for benefits before he died. Nathan’s mom is not currently eligible for Social Security.
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52. Case Study: Nathan Future situation: How to preserve public benefits?
Who will make health care decisions?
Who will make financial decisions?
Where will he live?
How will his medical expenses be paid?
Who will advocate for care, employment, or schooling?
What will happen to Nathan?
After Nathan’s mom dies, his SSI will increase but his resources will not be sufficient to preserve his quality of life.
Nathan will need someone to make his medical and financial decisions. He also will need a place to live if he is unable to stay in the family home. And he will need a way to pay for medical expenses.
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53. What Plan Could Nathan’s Parents Make?
Make no decisions/plans
Leave money to Nathan
Disinherit Nathan
Leave money to siblings with promise to help
Establish third-party SNT for Nathan
Establish first-party SNT for Nathan/ Spend down Assets
Establish Limited Conservatorship
What plan of action could Nathan’s mom make to protect him after her death?
No plans: If Nathan inherits assets under mom’s will, he will be disqualified from SSI and be forced to live on the inheritance and income from Social Security and work programs. When the inheritance is gone, Nathan will qualify for SSI again but have no supplemental income to preserve quality of life.
Disinherited: If mom leaves all assets to Nathan’s sister with the understanding that she will care for Nathan, he will remain eligible for SSI but could become destitute if the sister cannot or will not comply with the mom’s request.
Non-SNT Trust: If Nathan’s mom creates a trust that is not an SNT, income and principal will be counted as his assets and he will lose SSI.
Third-Party SNT: If Nathan’s mom establishes a third-party SNT, Nathan will keep SSI and benefit from supplemental funds, which the trustee will distribute. The trust can be structured to help ensure the involvement of people important to Nathan. [optional:] The trust also may require and provide money for periodic monitoring of Nathan’s caregivers. At Nathan’s death, there will be no “payback” to Medicaid.
First-Party SNT: If Nathan has his own assets, his mom can establish a first- party SNT. This works in the same way as the third-party SNT except that, at Nathan’s death, any funds remaining in the trust are subject to a Medicaid payback.
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54. Get Started Today Understand your loved one’s public benefits
Make plans for the future
Start naming those persons who will advocate and care for your loved one
Make the Special Needs Trust the key part of your estate plan
Talk to an Attorney who Specializes in this Complicated Area of Law
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55. Thank You
[Insert Name]
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[address]
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