Planning for the Future for the Family With Special Needs

1. Planning for the Future for the Family With Special Needs Sheryl R. Fishman, Esq.

2. Who Should Plan? NOT ONLY PARENTS! Anyone interested in the future and well being of the person with a disability!

3. When Should We Plan? “Learn as if you were going to live forever. Live as if you were going to die tomorrow.” -Mahatama Gandhi *Immediately upon diagnosis; *Age 15 or 16 – Transition Time; *Age 18; *Age 21; *At the onset of a serious illness; *If expecting a malpractice or Personal Injury Award; *Before you die; *Continually! NOW!

4. Why plan? • Because you can… • Because you should… • Because of what might happen if you don’t… • Because it’s really not too complicated… • Because it’s really not too expensive… • Because it will give you peace of mind!

5. Why Don’t We Plan?

6. What if I do nothing? *Dying intestate (without a will or trust) will usually leave all or a portion of your estate to your children. *Any child receiving SSI or Medicaid will lose eligibility until the inheritance is either spent down, converted to a exempt resource, or placed in a Special Needs Trust. Leaving family with no direction and in a very difficult situation!

7. FIVE PIECES FOR PEACE OF MINDWith these five items, the puzzle pieces come into place, and you can feel comfortable about the future. • Letter of Intent • Will • Supplemental Needs Trust • Advance Directives • Guardianship

8. Take a moment to think about… What would happen tomorrow if you were not here? • Who is qualified to take your place? • Does anyone know what assistance your loved ones needs? • Can they communicate with your child? • Do they know his schedule? • Do they know her likes & dislikes? Etc. Etc. Etc.

9. Letter of Intent • Informal or Formal method of communicating in writing • Details what parent envisions for child’s life • Details what child’s life is currently • Important details about needs and desires • May be completed over time • Not a legal document

10. Last Will & Testament A will is a legal document that provides instructions on how you want your assets distributed at your death.

11. Does The Will Cover All Assets? NO – Only Probate! Examples of Non-Probate Assets *Life Insurance; *Retirement Accounts; *Joint Accounts; *ITF designated accounts; *Annuities; *Etc.

12. Why people don’t do Wills…….. • This is my only child. I don’t really need a will. • I have no money. • All my money will go to a sibling or friend who will take care of the child with a disability. • I don’t want to hurt anyone’s feelings. If I cannot leave property directly to my child with a disability, and I should not disinherit him all together, then what options do I have?

13. Providing for Persons with Disabilities:Supplemental Needs Trust Basics To preserve the disabled person’s eligibility for needs-based governmental benefits while providing assets which may be used to supplement public benefits in order to improve the disabled person’s quality of life.

14. Elements of a Special Needs Trust A Special Needs Trust (SNT) is drafted specifically so trust assets are not considered to be “countable resources” in determining the disabled person’s eligibility for public benefits based on need.

15. Elements of a Supplemental Needs Trust The SSA describes a discretionary trust as “a trust in which the trustee has full discretion as to the time, purpose and amount of the distributions.” If the beneficiary has no discretion over the distributions, the trust is not counted in determining public eligibility.

16. Elements of a Supplemental Needs Trust Assets in a SNT will not count as a resource for public benefits purposes. The assets in the SNT may be used to supplement the beneficiary’s needs not covered by public benefits without a reduction or elimination of those public benefits.

17. Examples of Permissible SNT Expenditures *Education *Travel Expenses *Newspaper and Magazine Subscriptions *Personal Care Services *Home Care Services *Non-covered Medical Expenses *Vacations *Companions *Pets

18. Does Every Person with a Disability Need a Trust? • A trust is appropriate if it helps to achieve greater independence or reliable asset management. • Always keep in mind that a trust by its nature means a loss of control over the funds by the disabled beneficiary.

19. Special Needs Trusts vs.Support Trusts • If needs-based public benefits are either not needed or not anticipated by the disabled beneficiary, no need to establish a SNT. • If public benefits are not an issue, it may be appropriate to establish a support trust to provide financial oversight and administration for the disabled person’s behalf.

20. Types of Supplemental Needs Trusts 1. Self-Settled Trust 2. Third-Party Trust 3. Intervivos Trust 4. Testamentary Trust 5. Pooled Trust

21. Self-Settled SNT 1. Established with the assets of the disabled person - proceeds of a personal injury award or other court action, inheritances or gifts received before the creation of the trust. 2. Must be established by a parent, grandparent, guardian or a court. 3. Medicare & Medicaid Liens must be paid prior to funding. 4. Must be under 65. 5. “Pay-Back” Required!

22. Third Party SNT 1. Established with assets owned by a third party for the benefit of the disabled person. 2. Usually established and funded by the parents, relatives or friends of the disabled adult child as part of an estate or gifting plan. 3. Other children can be named as remainder beneficiaries after death of disabled person.

23. Third Party SNT (cont’d) 4. Third Party SNT may be revocable and inter-vivos, or irrevocable and testamentary. 5. No need to pay Medicare or Medicaid liens before funding. 6. No age limit for disabled beneficiary. 7. No “pay-back”! THIS TYPE OF TRUST IS PREFERRED!

24. Pooled Trust • An individual contributes funds to an account managed by a not-for-profit organization. • The funds are combined and invested together with the funds of other contributors. • Each contribution is recorded in a segregated account and the agency makes distributions only from the funds in the segregated account. • Can be Self-Settled or Third-Party. • If self-Settled, upon the death of beneficiary any funds remaining stay with the agency • If Third-Party, upon the death of the beneficiary a percentage of the funds stay with the agency.

25. Advantages & Disadvantages of Pooled Trust • Advantages • Trustee with knowledge of disability issues, governmental benefits and a proven track record • Less expensive to create • When there is no family member able and willing to serve. • Disadvantages • Conservative investments which may detract from long term growth which could shorten the duration of the trust availability • Most Pooled Trusts will not take title to Real Property • Potential conflict of interest?

26. The Golden Rule The golden rule in SNT planning - the trustee should make payments on behalf of the beneficiary directly to third party vendors for equipment or services which are not food or shelter. For example, distributions directly to a retailer for a radio or television, to an airline for a plane ticket, or to a companion/aide for services rendered are not income to the beneficiary.

27. Examples of Things Trust Monies Can Not Pay For • Mortgage • Electric bill • Real property taxes • Health Expenses • Food

28. Cable bill Eyeglasses Training and education Phone bill Movies Books on tape Transportation Fresh flowers Vacation Companion Television Laundry service Pet expenses Travel What Can Trust Distributions Be Spent On?

29. Magic Language • Trust intended to supplement, not supplant, public benefits

30. Types of Trustees • Individual • Potential conflict of interest with third party funded trusts • Has to keep up with continually changing regulations • Corporate • Keeps up with changes in regulations • Professional management of funds

31. Follow-Up Steps:(1) Select Resources Select a combination of resources that will guarantee adequate funds for the disabled child’s lifetime, such as insurance, savings, investments, family assistance, etc., and change the ownership of each asset to the SNT.

32. Follow-Up Steps:(2) Remove Child as Beneficiary Remove the disabled child as the beneficiary from all of the parents’, and others relatives’, financial programs, i.e., employer sponsored retirement plans, IRAs, KEOGHSs, life insurance policies, etc.

33. Follow-Up Steps:(3) Meet With Caregivers Hold a meeting with all interested parties, i.e., the Guardian, all Trustees and Successor Trustees and all siblings, to review the estate planning documents, discuss plan and management of trust assets.

34. Periodic Update and Review The Estate Plan should be periodically reviewed to: • Ensure all assets either are owned by the SNT, or SNT is named as the beneficiary of the assets. • To update trustees and members of advisory committees. • Changes in the beneficiary’s condition or eligibility for benefits. • Changes in your economic situation.

35. ADVANCE DIRECTIVES • Health Care Proxy • Power of Attorney

36. Guardianship • Parents of person with developmental disabilities are considered the natural guardians until 18 • After 18 a person is emancipated • Guardianship enables parents and relatives to ensure that they or others that they designate may act as advocates with legal authority and maximize all necessary and available supports and resources for their disabled family member who requires some level assistance in managing their personal and/or financial affairs

37. Cannot be appointed via Will • Will is only a recommendation Must Go to Court • Surrogate’s Court (Article 17-A) • Supreme Court (Article 81)

38. SCPA 17-A VS MHL Article 81

39. Types of Guardianship

40. Who are Guardians? • Primarily family friends and other relatives • Under Article 17-A it can be a not-for-profit corporation such as NYSARC, Inc.

41. Alternatives to Guardianship • Power of Attorney • Health Care Proxy • Trusts • Personal Caregiver • Representative Payee

42. Thinking of Moving? • Are you planning on retiring in or moving to another state? • You must make plans for the continued services for your family member, whether they are going to move with you or stay in New York. • It is important to know that every state has different qualifications, paperwork, laws, and waiting periods.

43. It’s All Too Complicated…Help!

44. WHO CAN HELP? • Attorney • Familiar with Supplemental Special Needs Trusts • Familiar with unique needs of people with disabilities • Knowledgeable about public benefits • Experience working with individuals with disabilities • Financial Planner • Help you determine your financial goals and means to get them • Comfortable working with your attorney • Other family members • Trusted individuals

45. Choosing an attorney • Some one who practices in the area of special needs and conservatorships; • Some one who clearly explains fees, costs, the process and who answers your questions; • You can do research, ask friends, ask members of parent organizations, check with the New York State Bar.

46. Thank you! • It’s a lot to cover…and there’s no quiz! Good planning can eliminate the need for good luck, so there’s only one thing to remember: • Planning can be much less expensive than failing to plan!

47. QUESTIONS?

48. Disclaimer *This Handout/Presentation may not be reproduced without the express prior permission of Sheryl R. Frishman, Esq. * Nothing in this handout should be construed as legal advice. *Please consult with your own attorney before relying on the information contained herein