Planning a Bequest for a Child on Public Benefits
September 15, 2013
Q. One of our adult children has a disability and receives SSI and Medi-Cal. We are concerned that an inheritance may terminate his benefits. We have heard something about a Special Needs Trust. Can you tell us more about that?
A. Sure. As you apparently know, your son cannot have more than $2,000 in savings or other nonexempt assets and still remain eligible for these benefits. The receipt of an inheritance from you would likely put them over that ceiling and thereby terminate his eligibility. However, the law permits you to create a Special-Needs Trust (“SNT”) to receive his inheritance without jeopardizing his public benefits. The law’s purpose is to allow you to set aside “private funds” to supplement his SSI and/or Medi-Cal, and to thereby enhance your son’s quality of life in a kind of public–private partnership.
You would create the SNT as part of your own estate plan, and you would designate someone other than your son to be the trustee, such as one of your other children, a relative or even the trust department of a bank. So long as properly created and properly managed, the funds in the SNT would supplement his needs by direct payment to third-party providers of goods and services, while preserving your son’s public benefits.
Currently, a single individual on SSI, living independently, would receive $866.40 per month in California and $921.40 if blind. Since the SSI program is designed to cover food and housing expense, it would be best for the SNT to pay for things which are not food or housing, e.g. transportation, cell phone, computer, etc. Reason: payments for expenses which are not food or housing would result in no reduction in his SSI or Medi-Cal benefits.
However, the SNT could even assist with the cost of food or housing, but in exchange for only a modest reduction in SSI. Example: if the cost of an apartment were $1500 per month, your son could pay $500 of the cost out of his SSI, and the SNT could pay the $1,000 balance directly to the lessor. Your son’s SSI would only then be reduced by only $257 per month. Not a bad trade-off. Further, if the SNT had sufficient assets, it could actually pay much more than $1,000 per month to providers of goods and services for his benefit, and here’s the beauty about how this works: no matter how much the SNT pays toward your son’s monthly housing or food expense, the maximum reduction in his monthly SSI benefit would never exceed $257. Thus, a well endowed SNT could generate a substantial benefit to a person with a disability, with only a modest reduction in his or her SSI and usually none to his or her Medi-Cal eligibility. The SSI rules which govern here are referred to as the “ISM Rules”, where ISM stands for In Kind Support and Maintenance.
Caution: the SNT should never distribute money directly to your son, as there would then be a dollar for dollar reduction in his SSI. Rather, payments should always be made to third-party providers of goods and services on his behalf.
Parents who have a child receiving public benefits, such as SSI or Medi-Cal, should almost always consider creating an SNT as part of their estate plan and thereby preserve their child’s continuing access to those benefits while providing a funding source for the child’s supplemental needs.
Planning Your Affairs When Faced with a Chronic or Terminal Illness
November 10, 2011
We mention often on our blog that each family will have unique circumstances and unique estate planning needs—this is especially true of families in which one member has a chronic or terminal disease such as cancer, diabetes, or, as mentioned in this article in Forbes, multiple sclerosis.
For most people, the documents in their estate plan constitute a “someday” or a “what if” scenario, but for those people with chronic or terminal diseases the documents in their estate plan address issues that are much more immediate and certain. For this reason, the advice in the article mentioned above focuses mainly on doing whatever you can to take control of your estate planning, health care, and financial affairs right now. Some of the suggestions include:
* Finding financial and estate advisors who are comfortable discussing your situation, and can help you customize your plans to fit your needs.
* Customizing your estate planning documents, including your will, trust, or living will.
* Signing important forms right now, while you still can.
* Making use of your temporary or limited powers options in your healthcare and financial documents, giving your chosen agents the limited power while you are temporarily incapacitated to “pay your bills and file your taxes but not sell your house or make gifts of your assets.”
It may also be wise to include provisions to coordinate your estate plan with the possible need to apply for government benefits to help subsidize the cost of care, e.g. Veterans Pension Benefits and/or Medi-Cal for Long Term Care. Qualifying for these benefits often requires that very special steps be taken.
Living with a chronic or terminal disease is a unique situation and requires unique planning and preparation—planning that is best done right away, for the good of your family and for yourself. If you are concerned about these matter, please contact our office—we can help.
Leaving a Gift or Bequest to a Special Needs Child
September 10, 2011
If you have a child with special needs, planning your estate takes on a whole new dimension; especially, as this article in Forbes points out, now that “state and local governments are tightening income restrictions for medical benefits and supportive services, which are typically paid for by Social Security and Medicaid. Those services are tough to find—or afford—in the private sector for many adults with disabilities so severe that they can’t live alone… As a result, it’s increasingly important to structure an inheritance in a way that won’t disqualify a child for such benefits down the road.”
Structuring an estate plan with a special needs child as a beneficiary takes special consideration. Because a direct inheritance could disrupt that child’s public benefits, “some parents simply leave another child all their assets in their will. If there are three children, they might leave two-thirds to the child who lives closest to the one with special needs.”
Unfortunately this particular strategy is rife with possible dangers. The heir may be tempted to use his special needs sibling’s money for his own purposes, or could decide he’s simply tired of being a caretaker. Even worse, the heir could pass away unexpectedly, in which case the entire inheritance would go to the heir’s spouse or children, with nothing left for the special needs child.
The article gives a number of suggestions for safe and reliable ways to leave your special needs child an inheritance, including leaving property to your child in a Qualified Personal Residence Trust, setting up a housing collective, and the tried-and-true option of a Special Needs Trust. But we know that each family is going to have different needs and goals, and there isn’t one solution that will work across the board.
If you have a special needs child your very best course of action is to contact a knowledgeable and experienced attorney to help you understand your options and choose the one that will best protect your child. See Q & A’s on Special Needs Trusts.
War Veterans May Be Unaware They Qualify For VA Aid and Attendance Benefits
August 4, 2011
One of the services Elder Law and Estate Planning attorneys often provide is helping clients navigate the application procedures and bureaucratic systems for the various state and federal medical insurance programs; and one thing that remains a surprise throughout the years is how many people forget about the VA Aid and Attendance Program for war veterans.
According to the Department of Veterans Affairs website, VA Aid and Attendance is “a benefit paid to wartime veterans [or their spouses] who have limited or no income, and who are age 65 or older, or, if under 65, who are permanently and totally disabled.” Unfortunately, too many veterans and their spouses are unaware that they qualify for this benefit, or even worse, have never been informed that the program exists.
An informative article in the Washington Post quotes the VA’s deputy undersecretary for disability assistance as saying that he believes they are only reaching “about one in four eligible veterans.” Part of the reason for this is that “there are a lot of veterans where it’s been 40 years or more since they’ve been on active duty. It just doesn’t occur to them there may be a benefit from the VA.”
If you are a war veteran over the age of 65 it is very likely that you and/or your spouse qualify for Aid and Attendance Benefits. Eligibility requirements include:
- You served at least 90 days of active military service 1 day of which was during a war time period. (If you entered active duty after September 7, 1980, generally you must have served at least 24 months, or the full period for which called or ordered to active duty.)
- You were discharged from service under conditions other than dishonorable.
- Your countable family income — after subtracting care and medical expenses — is below a yearly limit set by law (The yearly limit on income is set by Congress.)
- You must need help with at least one activity of daily living: dressing, eating, walking, bathing, adjusting prosthetic devices or using the toilet. Those who are blind, living in nursing homes or require in-home care may also be eligible.
For many veterans and their families the financial assistance they receive from their VA Aid and Attendance benefits can be an incredible help. Unfortunately, the application process required to receive the benefits can be daunting. “It’s not a simple process. A&A applicants must mail the forms, copies of service records, marriage certificates, proof of insurance and medical records to the regional VA office. If a third party is making the application, an additional form, 21-22-a or 21-0845, must be completed.”
This is why many veterans ask a knowledgeable Elder Law or Estate Planning attorney to help with the application process. The right attorney can help you find and fill out the correct forms, gather the necessary records and materials, and keep track of progress throughout the entire process. If you think you may be eligible for VA Aid & Attendance Benefits, check out the information on VA Pension Benefits by clicking this link: VA Pension Benefits.
How a Special Needs Trust Can Help Your Child
March 5, 2011
You know how important it is to protect your family with an estate plan, but if you have a child with special needs then taking steps to protect them if something should happen to you is essential. Unfortunately, for families which include special needs children, knowing exactly the best way to protect your child(ren) isn’t always so clear. As Joe Perez, the widowed father of 14 year old Danny, and the subject of this article on the ABC News website found out, it’s not as simple as leaving your child with a good guardian and decent inheritance—special needs children need a little more planning than that.
You know what you want for your child, you want him to live as contentedly as possible, with loving guardians and engaged in activities which will bring pleasure and peace. But how can this dream be achieved on the limited assets that Medicaid recipients are allowed to have without losing their government benefits? How can responsible parents safely leave an inheritance to their special needs child? For many parents, part of the answer to that question is having a special needs trust.
Unfortunately, not all parents are aware of the benefits of a special needs trust, or how easy it can be to create one—with the right help. A special needs trust is the vessel that will hold your child’s inheritance (from you or from another source) without disrupting that child’s government benefits. It gives your child the funds they need beyond the basic living expenses provided by SSI or Medicaid.
If your family could benefit from a special needs trust, please contact our office for more information. A special needs trust is not the kind of document that can be found in a software package or created from a standard trust template. The needs of your child are unique, and should be addressed as such. For more information, click on “Special Needs Planning”.
Planning for the Future is Essential for Special Needs Families
September 23, 2010
If you have a special needs child, parent, or sibling then you know that planning for the future can be overwhelming under the best of circumstances; which is why so many parents and caretakers tend to live for today, while planning for tomorrow is always put off until… well, until tomorrow. But if planning and caring for your loved one is this difficult for you, can you imagine how difficult it would be for a friend or guardian if something were to happen to you? For this reason, the importance of planning for the care of your special needs loved one cannot be overstated.
Getting started with your planning can feel like climbing Mt. Everest at first, especially if you’re trying to navigate through government programs and federal financial aid. But as overwhelming as it can be in the beginning, with the right advisors the planning process can and should be a relieving and beneficial experience for all. The following article from CNN Money gives a few tips on how—and why—to begin planning for your special needs loved one.
If you would like to have a secure plan for the future but aren’t sure where to begin, perhaps the best way to start is to find an attorney in your area who specializes in Special Needs planning. The laws and requirements for government aid will vary from state to state, but more importantly, there is no substitute for a knowledgeable expert who will listen to your family’s unique story and help you blaze securely into the future. Click here for more on Special Needs Planning.
Helping the Special People in Your Life: The Special Needs Trust
August 20, 2009
Parents, grandparents, aunts and uncles often come into our offices to make estate plans, and one of the questions they ask is how they can support the people in their lives who have special needs. Special needs can include anything from Autism or Down Syndrome to Paralysis or blindness, and everything in between. These special needs family members may be receiving public benefits, such as SSI or Medi-Cal. Leaving money directly to them in a Will or Trust would, in most cases, bounce them off of such public benefits. A much better approach is to leave them a bequest in a way that will allow your special person to enjoy BOTH the public benefits upon which they rely AND your bequest. The way to do this is by leaving your gift in a Special Needs Trust.
Special needs trusts are not yet well-known, but they are gaining attention among attorneys, financial advisors, and in the mainstream media. They are permitted by both federal and state law, and recognize the need for families to “partnership” with government to improve the quality of life for the disabled. For Questions and Answers, and more information, visit our site at “Special Needs Planning”.
A Special Needs Trust can be useful for children or for disabled adults. It is a far better alternative than cutting your special person entirely out of your Will or Trust, simply to avoid jeopardizing their SSI or Medi-Cal benefits.
A special needs trust can mean the difference between living an enriched life and barely getting by. If you have someone in your life with special needs, inquire about a special needs trust as a way to leave an inheritance. It could make a world of difference.
New Website May Help Caregivers Breathe a Sigh of Relief
June 12, 2009
If you provide care for an elderly relative or a special needs child you know how much work is involved in just getting away for an afternoon or evening, let alone planning for their care if you were to pass away. First you have to find a caregiver qualified to handle your loved one’s more demanding needs, then there are lists upon lists of “what if” situations, a strict regimen of prescription medicines, and of course all of the little quirks and routines that must be strictly followed. And after all that, just when you feel comfortable leaving your loved one in the care of someone else… your “babysitter” moves away and you have to go through it all again.
What if there was a way that you could not only keep a record of all details, regimens and instructions, but also an easy way to update and communicate that information to any and all caregivers when anything changed? And would it be too much to ask to have this record somehow linked to all the latest research, resources and best-practice recommendations? Apparently it is not too much to ask, because this is exactly what the new online service, CareGiver360®, claims to provide.
CareGiver360® is the brainchild of Ken Ziel, father of a special needs son, who worried about what kind of life his son would have if anything were to happen to Ken. After much research, Ken started CareGiver360®, “an easy to use, interactive Web service that lets you create a secure Personalized Care Guide to help you manage the care of your loved one. CareGiver360® provides a wealth of caregiving resources through its searchable online library. You can draw upon this valuable resource to supplement your personal experience to create a customized, comprehensive care guide.”
CareGiver360® is a fairly new tool, but it sounds so good one has to wonder why nobody came up with the idea before. We would love to provide our clients and readers with helpful reviews, so if you’ve used the service please leave a comment letting us know how it worked for you. And we ought to mention that the service isn’t free, but at just under $10/month it’s probably not going to break the bank either.