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Planning for the Future for the Family With Special Needs. Sheryl R. Fishman, Esq. Who Should Plan?. NOT ONLY PARENTS! Anyone interested in the future and well being of the person with a disability!. When Should We Plan?.
Sheryl R. Fishman, Esq.
NOT ONLY PARENTS!
Anyone interested in the future and well being of the person with a disability!
“Learn as if you were going to live forever. Live as if you were going to die tomorrow.”
*Immediately upon diagnosis;
*Age 15 or 16 – Transition Time;
*At the onset of a serious illness;
*If expecting a malpractice or Personal Injury Award;
*Before you die;
*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!
What would happen tomorrow if you were not here?
Etc. Etc. Etc.
A will is a legal document that provides instructions on how you want your assets distributed at your death.
NO – Only Probate!
Examples of Non-Probate Assets
*ITF designated accounts;
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?
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.
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.
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.
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.
*Newspaper and Magazine Subscriptions
*Personal Care Services
*Home Care Services
*Non-covered Medical Expenses
1. Self-Settled Trust
2. Third-Party Trust
3. Intervivos Trust
4. Testamentary Trust
5. Pooled Trust
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!
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.
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!
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.
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.
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.
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.
The Estate Plan should be periodically reviewed to:
Must Go to Court
*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