When people plan for the future of their children with disabilities, it allows, “everybody to go to sleep with peace of mind that our loved ones are taken care of.”
Special needs planning attorney Adrienne Arkontaky brought that message to a video presentation hosted by The Center for Discovery, a health, education, therapy, research and residential organization for people with disabilities in Harris, New York.
In the video, she outlined the major steps and components of a special needs plan that guides how your child will be financially protected when you are no longer able to take care of them.
“It’s a daunting question,” she said. “It’s emotional.”
This is what she shared…
Adrienne said your approach to planning for your children’s future without you should be similar to the instructions that flight attendants give on airplanes.
First, put on your oxygen mask. Then help the kids.
To get your own estate plan in order, follow these steps:
1. Take an inventory of all of your assets. Be thorough, so you uncover and remember every account, investment and
other detail of your holdings. It’s easy to forget some assets, such as bonds given to you long ago.
2. Prepare a letter of intent. This letter describes your wishes for arrangements to be made after your death. It’s informal and should be updated when needed.
3. Prepare advance directives. These directives, such as a living will, power of attorney, health care proxy, Health Insurance Portability and Accountability Act (HIPAA) information release and a disposition of remains, lay out what happens and who makes decisions for you when you are unable to do so.
4. Make a will. The most well-known of these documents, your will formally outlines what will happen to your estate after your death.
5. Name guardians for minor children in your will. If you and your child’s other parent are both deceased, you want your will to identify who will make decisions for any children under 18. Otherwise, courts will decide.
“Planning for the future of a loved one with disabilities is quite different from just general estate planning,” Adrienne said.
Special needs financial planning is different for every individual, but plans will often use this important tool: the special needs trust.
A special needs trust is a mechanism to set aside financial assets for your child without damaging your child’s ability to qualify for government assistance programs that are based on financial need.
Those include Supplemental Security Income (SSI) benefits, Medicaid health care coverage and services from state agencies such as the Office for People with Developmental Disabilities (OPWDD) in New York.
Adrienne outlined different types of special needs trusts:
• A third-party special needs trust funded directly by your estate when you are deceased. It’s called “third-party” because someone other than the child who is the beneficiary is funding it. In this case, you (posthumously) are the funder. This trust only comes into existence upon your death.
• A third-party special needs trust that other people, such as aunts and uncles or other relatives, can contribute to through gifts. These can be set up while you’re still living. But it’s still contributions from other people to your child, not assets already in your child’s name.
• A first-party special needs trust that’s funded with assets already belonging to your child. Money for this kind of trust can come from legal settlements, such as medical malpractice settlements, that go directly to the child, or gifts given directly to the child, or other assets in the child’s name, like stocks and bonds. At the end of the beneficiary’s life, Medicaid can bill this kind of trust for expenses it waived during their lifetime. An experienced lawyer should examine the bill to be sure all the charges are appropriate. Any services provided under special education laws may not need to be repaid to Medicaid.
• A pool trust, which is managed by a non-profit organization. This is usually for smaller amounts of money. The non-profit organization will manage the money, and the money will go to the organization when the beneficiary dies. It could be a way to ultimately support a worthy organization.
Government benefits alone are unlikely to provide for all the needs of a person with disabilities, Adrienne said, making trusts an essential part of special needs planning.
But special needs trusts are meant to supplement those government benefits, not supplant them.
You have to be careful which expenses you pay for out of funds from a special needs trust, because the government benefits are supposed to cover basics such as food, shelter and medical care.
Figuring out what you can spend the money on can be complicated, but a special needs trust attorney can help.
Another kind of special needs planning prepares for events that are likely much sooner—what happens when your child moves from special education services in the schools to adulthood.
You should start thinking about guardianship arrangements when your child turns 16.
“What will life look like after 18?” Adrienne asked. “How much support will this individual need?”
For someone who cannot independently take care of themselves after 18, Adrienne spelled out different kinds of guardianship on New York:
• Article 81 Guardianship: This is a tailored type of guardianship that specifies exactly which areas of life the guardian handles for the adult with disabilities, such as financial decisions, or employment decisions.
• Article 17 a Guardianship: Usually set up in surrogate’s court, this broader type of guardianship is for situations when a person with disabilities clearly needs someone to make most decisions for them for life. You can name standby guardians for when the initial guardians are no longer able to care for the person. To get this type of guardianship, you need two doctors to attest to the person’s developmental disability and their need for a guardianship.
Plans for transitioning to adulthood should also include designating power of attorney and health care proxies for the person with special needs.
High-functioning people with developmental disabilities may be able to understand these arrangements. In other cases, someone needs to be appointed to guide the decisions.
And another option is a “supported decision making” plan, under which a team of people works to help the person with disabilities make decisions.
“It’s never too early,” to start special needs planning, Adrienne said.
The basics of estate planning can start even before you have children.
“You never know what life’s going to bring, so you want to make sure as early as possible that you have this plan.”
You should be aware that your plans can—and should—change over time as your circumstances change.
And you should consult with a special needs planning lawyer who focuses on this area of law.
You want someone who does this every day, Adrienne said. Other types of lawyers won’t have the right background.
You should ask your lawyer how many trusts they’ve done, if they’ve had challenges to their trusts, and how much they know about the public benefits programs for people with disabilities.
Make sure details of trusts you establish are double-checked, so beneficiary designations are correct and financial contributions go the right places—for example going directly into the trust and not the individual (which could jeopardize their public benefits).
When it comes to working with an attorney, Adrienne said, “No one should not do this because of cost.”
Special needs planning attorneys will work out ways for smaller estates to set up trusts.
Each of these mechanisms involve many technicalities that have to be worked out—but that’s what your special needs planning attorney takes care of for you.
“It’s making a plan, and it’s different for everybody,” Adrienne said, “of how somebody will have the best quality of life that they can.”
If you’re ready to talk with an attorney about special needs planning, reach out to the Cuddy Law Firm.