Special Needs Planning For Families

Parents of a child with special needs want the same things for their child as other parents:

  • Financial security
  • Meaningful and productive activities
  • The company of caring people
  • A safe home
  • The opportunity for self-expression
  • Some degree of independence
  • Advocates on their behalf

From helping a young family put in place a special needs trust to which grandparents can contribute, to evaluating guardianship and its alternatives for a young person approaching 18, to evaluating savings options like ABLE accounts and to advising on public benefits eligibility requirements, we can help at every stage of your loved one’s life. We’re here for you now, and we will be there for them later.

With experience in public benefits eligibility and special needs trusts, we also offer individuals with disabilities sophisticated advice regarding options to preserve a personal injury settlement or unexpected inheritance while protecting their eligibility for public benefits.

We help clients evaluate their options among different sources of public benefits, different types of special needs trusts, and selection of fiduciaries to help manage funds and administer their trust.

The Four Key Areas Of Planning

For many individuals and families, planning tends to focus on four key areas:

  • Becoming eligible for public benefits
  • Supporting decision making
  • Protecting assets for the future
  • Planning for a good life

Becoming Eligible For Public Benefits

Public benefits fall into three general categories:  income, health insurance, and services and supports. Most, though not all, public benefits programs are subject to strict financial limits.  Among these programs the specific rules can vary, and can change.  It is important to have an understanding of what benefits are available,  how their financial rules operate,  and how best to plan for these, because access to public benefits can be critical for an individual’s well-being.

The Social Security Administration (SSA) is the main source of income benefits for people with disabilities, through the Supplemental Security Income (SSI) program, or through Social Security Disability Insurance (SSDI).  SSI has strict income and resource limits; an individual may have no more than $2,000 in countable resources to remain eligible.  Some assets are not counted, such as one’s home, personal effects, a vehicle, a prepaid funeral plan and an ABLE Account.  The SSDI program is not financially tested, but the individual must meet the SSA definition of disability and be eligible based on her own or a parent’s work record.

Heath insurance is available through Medicaid (we call it Medical Assistance in Maryland) and Medicare. If you are eligible for SSI,  you automatically qualify for Medicaid health insurance in Maryland.   Medicaid is also financially tested.   If you are found eligible for SSDI, after 25 months you qualify for Medicare.  Both Medicaid and Medicare provide comprehensive health insurance.  Medicare has premiums, deductibles and co-payments;  Medicaid generally does not.

For many families,  it is the services that their loved one can qualify for that are the most valuable public benefits.  For example, for people with developmental disabilities,  access to support staff,  employment training and assistance,  and housing may be available through the Community Pathways Waiver, a joint program between Maryland Medicaid and the Developmental Disabilities Administration.  For young people on the autism spectrum,  the Autism Waiver, a joint program between Maryland Medicaid and the Maryland Department of Education,  can provide environmental accessibility adaptations,  intensive individual support services and respite care.  These waiver programs have both an income and resource limit.

We can help plan for financial eligibility for such programs by evaluating what assets are countable, the options for spending down or use of trusts or an ABLE account to preserve funds, and how to accomplish these planning steps.    We can help you understand the application process and gather the documentation needed related to financial eligibility. We can help you plan in the event benefits are denied or terminated.

Sometimes an individual’s benefits eligibility changes,  whether due to a change in a parent’s circumstances or the individual’s own financial or medical situation.  We can help you to understand these changes and plan accordingly.

Supporting Decision Making – Guardianship And Alternatives

Particularly when a young person approaches the age of 18 and adulthood,  parents are concerned about the child’s ability to make decisions.   As an adult,  each of us has the right to make important life decisions ourselves.   Yet sometimes we could use some help in making decisions.   If an individual is capable of making financial or medical decisions independently, we can work with him or her directly.  If he or she is able to understand the meaning and effect of a power of attorney or advance medical directive, and can select agents independently and voluntarily, then these documents may be a good option for allowing others to assist in decision making.  If the individual is not able to understand these concepts and choices,  then we look to alternatives that are less restrictive than guardianship, such as the use of a Representative Payee for Social Security, an authorized agent for Medical Assistance or a Trustee to manage other funds.  Sometimes circumstances call for the appointment of a legal guardian by the Circuit Court,  or a request to the Court for authority for limited purposes.  We work to help you understand the options and select the one that works best for you.   Circumstances may come up later in life that require revisiting capacity for decision making, such as when an inheritance or an insurance payment is received.  We can help assess the options and plan for these unexpected events.

Protecting Assets For The Future

As you think about planning for the future for yourself or your loved one with disabilities, it is helpful to consider how your personal assets can be used to create a private assistance system to complement what is available through public assistance programs.  In that way,  you can get the best of both worlds: the help you and your family can provide and the income, health insurance and services that you qualify for as a result of your disability.

Essential in planning for your private assistance system is recognizing that most of the public benefits programs that help people with disabilities have strict financial tests for eligibility. In general, these programs look at your income (generally the money you are receiving each month) and your resources (what you have left at the end of the month after your income has come in, and  after you have paid bills or spent money). SSI and many Medical Assistance programs have a strict resource limit of $2,000. Other programs have different limits, and often count income and resources differently, even though they use the same terminology. It’s complicated.

Not all income and resources are counted. For SSI and Medical Assistance, certain resources are not included in this limit, for example, one’s personal effects, vehicle, home and prepaid funeral plan are generally not countable for these programs. Cash, stocks and bonds, the cash value of certain life insurance policies and retirement accounts are all examples of resources that are countable, if the individual has control over them.

If you want to leave money or property to a loved one with a disability, you must plan carefully, otherwise, you could jeopardize their ability to receive important public benefits. For example, if you leave $10,000 in cash  to your loved one in their name, that gift would disqualify them from receiving SSI and risk the loss of Medical Assistance health insurance and waiver eligibility until the funds are spent down or placed in an exempt type of trust or an ABLE account.

By creating a third-party special needs trust (that is, one that is funded with assets that belong to someone other than the beneficiary) or contributing to an ABLE account, you can protect the funds from being counted for purposes of these benefit programs.

We can help you evaluate the different ways to protect assets and select the options that work best for you and your loved one. Factors we discuss with you include the rules and procedures that may apply to different trusts and ABLE accounts, whether or not the state has a right to funds remaining after the beneficiary dies, how funds in the trust or ABLE account may be used without affecting benefits eligibility and the relative costs of each option.

We will discuss with you how to fund the trust or ABLE account and can coordinate with your financial advisor to ensure that beneficiary designations are updated for your retirement accounts, life insurance policies and other financial assets that pass to the next owner in this manner, and these assets get into the trust after your death.

If your family member has assets of their own that make them ineligible for public benefits, then a first-party special needs trust or an ABLE account may be an effective planning tool if the amount is too great to be able to spend it down in a reasonable manner. A first-party special needs trust (that is, one that is funded with assets that belong to a beneficiary) has many strict requirements. Chief among these is the requirement to repay, after the beneficiary dies, all states that have provided the beneficiary with Medicaid benefits during their lifetime, up to the amount of funds remaining in the trust.

You or a family member may have already established a trust but are unsure of how it works, how to fund it and how it will affect your loved one’s benefits eligibility. You may have been appointed as a trustee of a trust and are unsure how to go about carrying out these responsibilities. We will help review the trust and evaluate its effect on current benefits, suggest changes if appropriate and assist in getting the changes implemented, either through an amendment or seeking court approval to change the trust. We can advise you as trustee of your role and responsibilities.

Planning For A Good Life

As you look to the future for your loved one with disabilities,  public benefits and protecting assets are important, but these are only tools for the creation of a good life  with emotional and financial security,  and meaningful activities.    We want to understand your loved one and what a good life means to them.   We can then help you to create a circle of support: those caring people and organizations that will be part of your loved one’s life over time.  Your circle may include family members, friends,  congregations,  mentors, care givers,  provider agencies, agents under powers of attorney and advance directives, guardians, medical and clinical professionals, lawyers, financial advisors, and trustees.  Together,  this team can assist and advocate for your loved one and provide continuity and connection over time.

Among the important jobs for those in the circle of support is serving as a trustee.  Choosing the right trustee, whether a person or an entity, is one of the most important decisions you will make.  The trustee of a special needs trust will have complete control over the trust assets and will be in charge of investing and spending money for the beneficiary, that is for the benefit of your loved one.   The legal term for this type of control is “discretion,” and special needs trusts are often referred to as “discretionary” trusts.    A special needs trustee must also be an advocate for the beneficiary, be sensitive to the beneficiary’s unique needs, and be mindful of the beneficiary’s public benefits and their rules.

You may want to have family members involved in your loved one’s future planning and serving as trustee may be a good way to accomplish this.  However, not everyone is cut out to be responsible for large sums of money or the regular obligations of serving as a trustee. Sometimes, there are other roles that may be a better fit, such as serving as a co-trustee with a corporate trustee, as a trust protector with certain limited although powerful responsibilities, as guardian of a person, or simply as a loving sibling or family member. We can help you understand the different roles that family members can play and help you find other resources for support and advocacy for your loved one if there are no family members who can take on these roles.

Your decisions about fiduciaries may evolve over time, as your financial picture changes, relationships with certain individuals change, someone you have named dies or becomes incapable of serving, or younger family members or friends grow into these responsibilities. It is wise to review these selections from time to time so that you can make adjustments as needed.

A letter of intent is an important tool in planning for the future. A letter of intent is not a legal document, like a will or power of attorney, rather a letter of intent is document that can capture information about your loved one to help others in the circle of support who may not know your loved one’s history, connections, preferences, and goals. Your letter of intent is an active, living document, meaning that you may change and add to this over time. Topics in a letter of intent may include: family history, contact information for friends and mentors, routines and relationships,  educational history and aspirations,  likes and dislikes of all kinds, advice on effective communications and calming techniques,  how to connect with important groups like religious congregations, teams,  online groups, school and program alumni.

Contact Us For A Free 15-Minute Call With An Attorney

At O'Byrne Law, LLC, we offer a free 15-minute phone call for prospective clients. To discuss our legal services for special needs planning with an experienced lawyer, call 410-891-6685  or email us.