The task most often associated with Estate Planning is the distribution of your assets upon death. However, while that is important, it is not the only purpose.

As the parent of a child with SMS, one of your concerns will be to provide for the future for your child. Because of their rights to receive public support through Medicaid, SSI (Supplemental Security Income) or other sources – you will want to structure your estate so your estate is consistent with public benefits. In other words, you will want to protect their public benefits and make sure that your estate does not disqualify your child from receiving public benefits. Because of these technical legal issues – PRISMS strongly encourages families to work with a “Special Needs Lawyer” to develop your estate and financial plans. Estate planning fall into three main categories: guardianship,  financial planning (Social Security Benefits, Special Needs Trust and ABLE accounts) and wills/letter of intent.

Guardianship

You may want to consider guardianship when your child becomes legally an adult. Adult guardianship is the legal process by which an individual assumes the role of decision-maker for an adult who is unable to make such decisions for him or herself. There are several types of guardianship including limited guardianship, guardian of the person or guardian of the property.

When people who have the diagnosis of Smith-Magenis Syndrome become 18 years of age, they will likely need assistance managing their affairs, requiring assistance and guidance from family, friends or a legal guardian. If guardianship is necessary, it should be tailored to the person’s needs. Strict monitoring must be in place to protect the best interests and preferences of each person.

Deciding who will become the guardian of a special needs adult is often a difficult decision. But it is very important , because without a guardian, the court will have to appoint someone without knowing their wishes or those of the family members.

Guardian of the Estate

Or “guardian of the property” or “conservator” – this type of guardianship or conservatorship typically assumes full decision-making powers for a person deemed to be unable to make decisions or perform necessary tasks on his or her own. This includes finances, medical decisions, living arrangements and more.

Limited Conservatorship or Guardianship

Powers of a conservator or guardian can often be limited to reflect the needs of the individual who is incapacitated or disabled, and laws in a number of states specifically provide for the appointment of a limited conservator or guardian for certain individuals with developmental disabilities. These types of arrangements are often used in special needs cases. A limited conservator or limited guardian is appropriate for individuals whose conditions impair their ability to care for themselves or their property, but not to the extent that a general conservatorship or full guardianship is required. For example, California law provides that a limited conservator may be appointed only:

  • For adults who have a developmental disability.
  • When a court finds that the conservatee lacks the capacity to perform some, but not all, of the tasks necessary for personal needs or to manage financial resources.

A limited conservatorship or limited guardianship encourages maximum self-reliance and independence of the adult with developmental disabilities by giving the conservator or guardian power only over those activities that the individual is unable to handle.

Note: Use of terms such as guardian or conservator and their meanings vary according to state. You should seek the advice of your own legal counsel to determine whether these kinds of mechanisms are available in your state and applicable to your own circumstances.

 Guardian Responsibilities

Guardians should be knowledgeable about decision-making and other types of supports, services, and systems that can significantly affect the individual’s autonomy, supports, and quality of life. Moreover, guardians must be committed to the individual’s well-being and avoid any appearance or actual lack of commitment to the individual. They must know and understand the individual’s needs and wishes and act in accordance with them whenever possible and whenever any action will not negatively affect the individual’s health, safety, financial security, and other welfare. Family members are often preferable choices when a guardianship is ordered and the family members meet these standards of knowledge, they do not have conflicts of interest (other than also serving as a paid advocate or paid service provider), and the individual with I/DD does not object to the family member’s appointment as guardian.

Guardians shall defer to the individual’s preferences when decisions do not jeopardize the individual’s health, safety, financial security, and other welfare.

-Excerpt from the ARC

Social Security Benefits

At age 18, people with developmental disabilities who are not earning a living that is self-sustaining can apply for benefits through the Social Security Administration. Most commonly, individuals apply for and receive Supplemental Security Income (SSI), a government program that provides stipends to low-income individuals who are disabled. Medicaid health care is included with these cash benefits. Medicaid will become increasingly important once your child is no longer covered by your private insurance. Other social security benefits such as long-term care require separate applications. Call your local Social Security office to find the best time to begin the enrollment process, it usually six months prior to turning 18.

Special Needs Trust

Special needs trusts are frequently established for individuals with disabilities who receive an inheritance or insurance settlement. When established correctly, special needs trusts permit the person with a disability to have funds available and still qualify for Medicaid and SSI benefits. The funds must be utilized for the sole benefit of the individual with a disability. Each state has its own regulations pertaining to such trusts. Seeking advice from an attorney or a financial advisor who specializes in special needs trusts is recommended so as not to jeopardize governmental programs with means-tested benefits that include income and asset limitations.

The money in the Special Needs Trust may be distributed for many different things your child wants or needs. Furniture, cars, clothes, and other personal needs can be paid for with money from the Trust. The Trust can also pay for medical expenses including insurance premiums, alternate therapies and any special equipment. Even social and recreational expenses like TVs, computers, movies, sports, vacations or camps can be funded by the Trust. Intellectual or artistic activities like classes, books, games and crafts are also provided for through a Trust. Your child can have a more productive and fulfilling life through access to funds through a Special Needs Trust.

Your Special Needs Trust will need to have a Trustee. The Trustee is the person who will manage the trust and make the decisions about how to invest or spend the money in it, so it’s important to choose someone you trust. You should also designate a successor trustee. Your Successor trustee(s) can be individuals (adult children, other relatives, or trusted friends) and/or a professional corporate trustee.

Planning for your child’s future can be overwhelming. It is best to consult a financial planning professional. An attorney who specializes in estate planning for families with a child with special needs can help you establish a will and, if needed, a special needs trust. Insurance agents and other financial professionals who specialize in needs planning, guidance counselors and parents of other children with special needs also are good resources.

ABLE Accounts

Enacted into law by Congress in 2014, the ABLE Act permits the investment of funds for the benefit of a person with a disability. Similar to a 529 plan, an ABLE account grows tax free and can be used for qualified expenses including housing, education, transportation, health care, employment supports, therapies and other similar expenses. There are limits to the amount of annual contributions with a maximum accumulation of $300,000. THe ABLE account does not jeopardize Medicaid eligibility but may affect Social Security benefits after exceeding a ceiling of $100,000.

When correctly administered, an ABLE account or special needs trust provides additional ways to invest funds to benefit an individual with a disability without risking Medicaid eligibility. It is important that families understand the state and federal regulations and their impact before establishing these funds. Coordination of a comprehensive plan is required. It is advisable to consult with a financial advisor and/or attorney with expertise in these laws and regulations.

The cost of establishing an account will likely be considerably less than either a Special Needs Trust. With an ABLE account, account owners will have the ability to control their funds and, if circumstances change, still have other options available to them. Determining which option is the most appropriate will depend upon individual circumstances.

The total limit over time that could be made to an ABLE account will be subject to the individual state and their limit for education-related 529 savings accounts. Many states have set this limit at more than $300,000 per plan. However, for individuals with disabilities who are recipients of SSI, the ABLE Act sets some further limitations.

Will and Testament

A will states how you want your estate to be distributed upon your death. If parents die without a will, generally state law will distribute assets to the children. Thus, it may be especially important to prevent asset distributions to a child with special needs.

It is important to make sure that all assets are kept out of your disabled child’s name (including assets left in a will) so they can maintain financial eligibility for Medicaid or Supplemental Security Income (SSI). Currently, assets of just $2,000 distributed to a person with a disability may jeopardize federal government needs based assistance such as SSI. Benefits from state public assistance programs may also be affected. Assets can be kept and/or willed for your child’s benefit (but kept out of their name) via a Special Needs Trust. Be sure to tell your extended family, such as grandparents, not to will assets directly to your special needs child.

Letter of Intent

In addition to your will, some financial planners recommend a letter of intent.
The letter serves as a guide providing valuable information on the daily life of your child and is to be used in case a new caregiver has to step in and manage your child’s day to day activities. In addition to vital information on your child’s medical history, medication and physicians, the letter of intent should include your child’s likes, dislikes, hobbies, recreational and social preferences, food allergies as well as your hopes, dreams, wishes and aspirations for his or her future. The document should also detail your thoughts on a variety of matters such as dating, religion, sex, future living plans and academic and job readiness skills. While the letter of intent is not legally binding, it can function as a road map for future caregivers One of the best ways to get started developing this letter is to think of a day in the life of your child. What are his or her habits? What are his or her routines? What makes him or her upset?

Share the letter of intent with the person(s) who will be caring for your child. Discuss it. If you aren’t comfortable that they share your views or that they are willing to respect them, you may want to reconsider your choice. A letter of intent is often the most important part of the plan.

Finding a Special Needs Lawyer

Most often, other families involved in disability support groups can help you find a lawyer. You might also contact your PRISMS regional representative in case there is a PRISMS family near you.

Or visit the Special Needs Alliance for assistance in identifying an attorney in your area.