Planning For A Loved One With Special Needs

Planning for a Loved OnePlanning for a Loved One With Special Needs With Special Needs

Todd Whatley, CELATodd Whatley, CELACollier Moore, J.D., LL.M. TaxationCollier Moore, J.D., LL.M. Taxation

4700 S. Thompson, C-103, 4700 S. Thompson, C-103, Springdale, AR 72764Springdale, AR 72764

479-750-1101479-750-1101

What is Elder LawWhat is Elder LawElder Law is a relatively new and unheard of area of the law. As Elder Law is a relatively new and unheard of area of the law. As

the name implies, Elder Law encompasses many issues regarding the name implies, Elder Law encompasses many issues regarding

the elderly, but it also has as a focus on planning for all the elderly, but it also has as a focus on planning for all

individuals with special needs regardless of age. individuals with special needs regardless of age.

Elder Law includes:Elder Law includes:

– Estate PlanningEstate Planning

– GuardianshipGuardianship

– Long-Term Care (Medicaid) PlanningLong-Term Care (Medicaid) Planning

– Special Needs PlanningSpecial Needs Planning

What Does Planning Involve? What Does Planning Involve?

Preserving your child’s financial security Preserving your child’s financial security and quality of lifeand quality of life

Addressing key issues:Addressing key issues:Understanding the role of public benefitsUnderstanding the role of public benefits

Making decisions about the futureMaking decisions about the future

Using estate planning/trusts to protect assetsUsing estate planning/trusts to protect assets

Part 1:Part 1:Understanding Public BenefitsUnderstanding Public Benefits

Public Benefits at a GlancePublic Benefits at a GlanceFinancial BenefitsFinancial Benefits

Supplemental Security Income (SSI)Supplemental Security Income (SSI)

Social Security (SS)Social Security (SS)&&

Social Security Disability Insurance Social Security Disability Insurance (SSDI)(SSDI)

Not means tested but subject to work credits Not means tested but subject to work credits or parents’ eligibilityor parents’ eligibility

Means tested: Limited income and assetsMeans tested: Limited income and assets

Public Benefits at a GlancePublic Benefits at a GlanceMedical BenefitsMedical Benefits

MedicaidMedicaid Automatic with SSIAutomatic with SSI

Must apply for SS/SSDIMust apply for SS/SSDI

MedicareMedicare After two years of SSDIAfter two years of SSDI

Supplemental Security Income Supplemental Security Income (SSI)(SSI)

Must meet SSA’s definition of “disability” Must meet SSA’s definition of “disability” and have limited assets/incomeand have limited assets/income

Provides monthly income for food/shelterProvides monthly income for food/shelter

Gateway to Medicaid / in-home support Gateway to Medicaid / in-home support servicesservices

Social Security (SS) / Social Security Social Security (SS) / Social Security Disability Insurance (SSDI)Disability Insurance (SSDI)

Social Security for individuals:Social Security for individuals:Disabled before age 22 andDisabled before age 22 andWith parents eligible based on their work record who With parents eligible based on their work record who

are retired, disabled or deceasedare retired, disabled or deceased

SSDI for individuals with work recordSSDI for individuals with work record

Social Security benefits may reduce or Social Security benefits may reduce or eliminate SSI benefitseliminate SSI benefits

Medical Assistance & SupportMedical Assistance & Support

Medicaid:Medicaid:SSI recipients receive automaticallySSI recipients receive automaticallyCovers “medically necessary” services, equipment, Covers “medically necessary” services, equipment,

hospitalization hospitalization In-home services needed to live at home: personal In-home services needed to live at home: personal

care, housekeeping, cooking, transportation to care, housekeeping, cooking, transportation to doctorsdoctors

Medicare:Medicare:Medical coverage, including doctors, hospital, skilled Medical coverage, including doctors, hospital, skilled

carecare

How Benefits Work TogetherHow Benefits Work Together

SSISSI MedicaidMedicaid

SSDISSDI MedicareMedicare

Part 2:Part 2:Making Decisions About the FutureMaking Decisions About the Future

Case Study: NathanCase Study: Nathan

Current situation:Current situation:

18-year-old with Down Syndrome18-year-old with Down Syndrome

Lives with momLives with mom

Income from work programs, SSI, Social Income from work programs, SSI, Social Security (from dad who is deceased)Security (from dad who is deceased)

Limited personal assets (clothing, tv)Limited personal assets (clothing, tv)

Qualifies for MedicaidQualifies for Medicaid

Case Study: NathanCase Study: Nathan

Future situation:Future situation:

Who will make health care decisions?Who will make health care decisions?

Who will make financial decisions?Who will make financial decisions?

Where will he live?Where will he live?

How will his medical expenses be paid?How will his medical expenses be paid?

What Plan Could What Plan Could Nathan’s Mom Make?Nathan’s Mom Make?

Possible Options:Possible Options:

Make no decisions/plansMake no decisions/plans

Leave money to NathanLeave money to Nathan

Disinherit NathanDisinherit Nathan

Leave money to a future caregiverLeave money to a future caregiver

Establish third-party SNT for NathanEstablish third-party SNT for Nathan

Establish first-party SNT for NathanEstablish first-party SNT for Nathan

Part 3:Part 3:Creating an Effective PlanCreating an Effective Plan

for Your Childfor Your Child

What Steps Should You Take Today?What Steps Should You Take Today? Step 1: Envision Your Child’s Future Step 1: Envision Your Child’s Future

Planning ahead makes a difference:Planning ahead makes a difference: Where and with whom will your child live?Where and with whom will your child live? What type/level of care will be required?What type/level of care will be required? Will a guardian/conservator be necessary?Will a guardian/conservator be necessary? Who else will be involved? Who else will be involved? What kind of lifestyle is desired?What kind of lifestyle is desired? What unforeseen challenges could arise?What unforeseen challenges could arise?

Lays out goals/expectations:Lays out goals/expectations: Details preferences, needs, wishes, both medical Details preferences, needs, wishes, both medical

and personaland personal Lists key people in child’s lifeLists key people in child’s life

Helps guide:Helps guide: Family membersFamily members TrusteesTrustees CaregiversCaregivers OthersOthers

What Steps Should You Take Today? Step 2: Create a Memorandum of Intent

Monthly income: Monthly income: SSI, SSDI, Social Security, earned/unearned incomeSSI, SSDI, Social Security, earned/unearned income

Monthly living expenses:Monthly living expenses: Housing, food, transportation, medical, recreation, etc.Housing, food, transportation, medical, recreation, etc.

Consider how any shortfall will be metConsider how any shortfall will be met

What Steps Should You Take Today? Step 3: Estimate Income & Expenses

Income - Expenses = ShortfallIncome - Expenses = Shortfall

Provides supplemental funds for living Provides supplemental funds for living expenses not covered by other income expenses not covered by other income sourcessources

May be established by parents:May be established by parents:Through willThrough willThrough living trustThrough living trust

““Living” SNT lets others contributeLiving” SNT lets others contribute

Trustee has discretion over distributionsTrustee has discretion over distributions

What Steps Should You Take Today? Step 4: Utilize a Third-Party SNT

The SNT Trustee ResponsibilitiesThe SNT Trustee Responsibilities

What are the trustee’s responsibilities?What are the trustee’s responsibilities? Invests/manages assetsInvests/manages assets

Distributes fundsDistributes funds

Keeps booksKeeps books

Files tax returnsFiles tax returns

Hires advocates and care managers, etc., as neededHires advocates and care managers, etc., as needed

Selecting an SNT TrusteeSelecting an SNT Trustee

Who should be the trustee?Who should be the trustee?

Parent Parent withwith professional co-trustee professional co-trustee

Corporate or other professional trusteeCorporate or other professional trustee

Successor trusteeSuccessor trustee

What Parents Should Do What Parents Should Do

Create Memorandum of IntentCreate Memorandum of Intent

Calculate future financial needCalculate future financial need

Establish SNT through will or living trustEstablish SNT through will or living trust

Fund SNT with life insuranceFund SNT with life insurance

Name SNT as beneficiary of accounts, Name SNT as beneficiary of accounts, plans, etc.plans, etc.

Reduce taxable estateReduce taxable estate

What Your Child Should DoWhat Your Child Should Do

Sign Advance Directives, if legal capacity Sign Advance Directives, if legal capacity

Have a legal guardian appointed:Have a legal guardian appointed:When child without mental capacity becomes an adult When child without mental capacity becomes an adult

and parents want to maintain legal responsibilityand parents want to maintain legal responsibility

Court appoints legal guardianCourt appoints legal guardian

What If Your Child Has Assets?What If Your Child Has Assets?

Establish a First-Party SNT:Establish a First-Party SNT:

Provides funds for living expenses not Provides funds for living expenses not covered by other income sourcescovered by other income sources

Maintains eligibility for public benefitsMaintains eligibility for public benefits

Must be established by parent, Must be established by parent, grandparent, legal guardian or the courtgrandparent, legal guardian or the court

State must be reimbursed from the trust State must be reimbursed from the trust for all Medicaid expensesfor all Medicaid expenses

Get Started TodayGet Started Today

Understand your child’s eligibility for public Understand your child’s eligibility for public benefits.benefits.

Make plans for the future to maximize public and Make plans for the future to maximize public and private resources for your child’s benefit.private resources for your child’s benefit.

Make the SNT a key part of your estate plan.Make the SNT a key part of your estate plan.

Contact a special needs attorney for the Contact a special needs attorney for the assistance you need.assistance you need.

Elder Law Practice of H. Todd Whatley, P.A.Elder Law Practice of H. Todd Whatley, P.A.479-750-1101479-750-1101

Ask the Trustee…Ask the Trustee…

A properly prepared plan can give parents A properly prepared plan can give parents

an assurance that their child’s benefits will an assurance that their child’s benefits will

be preserved, but in reality, how does be preserved, but in reality, how does

such a plan work towards meeting your such a plan work towards meeting your

child’s needs after you are gone?child’s needs after you are gone?