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.

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

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

5. Part 1: Creating an Effective Plan for Your Loved One

6. 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?

7. 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
Trustees
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.

8. What Steps Should You Take Today? Estimate Income & 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
Once you’ve described your loved one’s desired lifestyle, you’ll need to determine what it will cost and whether he or she will have adequate resources.
When estimating your loved one’s future income, consider whether you will be receiving Social Security benefits and/or whether your loved one will qualify for SSI, have earned income from employment, or have unearned income, such as from investment returns.
When considering monthly expenses, list costs for items under such categories as:
Housing
Care assistance
Personal needs
Education
Transportation
Medical/dental
Food
Social/recreational
Your loved one’s expenses may exceed his or her income. If so, the shortfall represents the minimum amount that should be set aside in an SNT.
Income - Expenses = Shortfall

9. 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

10. 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

11. What Steps Should You Take Today? Utilize a Third-Party SNT
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.

12. What Your Loved One With Special Needs Should Do
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.

13. What If Your Loved One Has Assets?
Establish a First-Party SNT:
Maintains eligibility for public benefits
Established by individual, parent, grandparent, legal guardian or the court
Must be for Beneficiary’s primary benefit
Must be for loved one under age 65
State must be reimbursed from the trust for all Medicaid expenses on death of loved one with special needs
Pooled trusts, established by disability organizations, provide an alternative for families with limited assets.

14. Part 2: Understanding Public Benefits

15. Public Benefits At a Glance
Means Tested Public Benefits
SSI
Medicaid
Entitlement Public Benefits
SSDI
Medicare
Other Benefit Programs
Section 8
Veteran Benefits

16. 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.

17. SSI – Monthly Payment 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

18. SSI Definition of Disability
“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

19. 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

20. SSI Income Test Income is divided into FOUR TYPES:
Earned Income (e.g., wages)
Unearned Income (e.g., cash gifts or inheritances)
In-Kind Income (e.g., gifts of food or shelter)
Deemed Income (somebody else’s income)
NOTE: Definition of “Income” for SSI purposes is different than definition of “Income” for IRS purposes
20 CFR §

21. SSI Exempt Income and Earned Income
The first $20 of any income is exempt plus the first $65 of earned income
Earned income reduces the SSI monthly benefit $1 for every $2 earned
Example: If $585 was earned in a month, the SSI check would be reduced by $250
($585 - $85 exemptions – 250 (50% of earned income) = $250
20 C.F.R. § (c)(6), (12). 20 CFR §§ (c)(4), (c)(5), (c)(7), (c)(12).

22. SSI Unearned Income
Unearned Income reduces SSI $1 for $1 after the $20 exemption
Effect of Unearned Income is much greater than Earned Income
Example: Parent gives child SSI recipient $585 cash gift. Child will lose $565 of his monthly SSI check

23. SSI In-Kind Support and Maintenance (ISM)
ISM consists of food or shelter provided directly to the recipient or paid for by a third party
Clothing used to be considered ISM but no longer is, see POMS SI
Depending on the SSI recipient's living arrangements, the SSI check reduction is subject to either the "value of the one-third reduction" (VTR) or the presumed maximum value rule (PMV)

24. SSI Deeming of Income
Income and resources of a person having a duty of support are "deemed" to the person who is legally entitled to support. In the most common cases:
Parents income and assets deemed to minor
Spouse’s income and assets deemed to spouse
It does not matter if money is actually provided to an eligible individual for deeming to apply.
20 CFR §§ , a

25. Social Security (SS) / Social Security Disability Insurance (SSDI)
Social Security for individuals:
Disabled before age 22 and
With parents eligible based on their work record who are retired, disabled or deceased
SSDI for individuals with work record
Social Security benefits may reduce or eliminate SSI benefits
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.

26. Medicaid and Medicare Medicaid: Medicare:
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.

27. 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 after two years

28. Part 3: Special Needs Trust

29. Third Party Special Needs Trust
A document setting forth legally binding instructions concerning your loved one with special needs
Preserves Eligibility for SSI/Medicaid
Appoints a Lifetime Management Team for Loved One’s Care
Directs Personal Care and Advocacy for Loved One with Special Needs
Once parents decide to establish an SNT, they should carefully consider who will assume the role of trustee. The trustee’s responsibilities are complex and errors can result in the loved one losing public benefits.
Whether the trustee is a family member, attorney or corporation, it is important to name a successor trustee. Some families also set up a Trust Advisory Panel, which allows members (parents and siblings, advocates. others) to weigh in on important decisions regarding the trust.
Additionally, the trustee may be directed to or choose to involve others in the execution of duties. For example, the trustee may hire an investment manager or be directed by the trust to retain an advocate or care manager who will oversee the personal needs of the beneficiary.

30. 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

31. Selecting an SNT Management Team
Trustee
Individual or Professional
Trust Advisory Committee
Good Check and Balance on Trustee
Trust Protector
Backup to Trust Advisory Committee
Allowed to Modify SNT Terms to Keep Current with Changes in Law

32. Third Party Pooled Trust
If an individual SNT doesn’t make sense, a Pooled Trust may be solution
Pooled Trusts
Run by not-for-profit
Set up separate account
Can test out Pooled Trust during lifetime by joining trust during lifetime

33. Trustee Responsibilities
Invests/manages assets
Distributes funds
Keeps books
Files tax returns
Hires advocates and care managers, etc., as needed
Personal liability
Once parents decide to establish an SNT, they should carefully consider who will assume the role of trustee. The trustee’s responsibilities are complex and errors can result in the loved one losing public benefits.
Whether the trustee is a family member, attorney or corporation, it is important to name a successor trustee. Some families also set up a Trust Advisory Panel, which allows members (parents and siblings, advocates. others) to weigh in on important decisions regarding the trust.
Additionally, the trustee may be directed to or choose to involve others in the execution of duties. For example, the trustee may hire an investment manager or be directed by the trust to retain an advocate or care manager who will oversee the personal needs of the beneficiary.

34. 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

35. 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

36. 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

37. Part 4: Guardianship/Conservatorship

38. 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

39. 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

40. Part 5: Making Decisions About the Future

41. 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.

42. 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.

43. 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.

44. 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.

45. 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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