What Should I Know About a Special Needs Trust?

Leaving assets to loved ones with disabilities in a special needs trust can provide support while preserving government benefits.

Your loved ones with disabilities may be eligible for a number of government programs. However, Pauls Valley (OK) Democrat’s recent article asks “Can your family benefit from a special needs trust?” The article reminds us that these programs don’t cover everything. You may need to close the gaps.

Many government programs have eligibility restrictions based on the amount and type of financial assets that are available to the recipient. This means the financial help you want to provide may do more harm than good, unless you establish a special needs trust.

A special needs trust, also known as a supplemental needs trust and by the acronym SNT, is a trust that provides assets for a disabled beneficiary in the discretion of the trustee.  The beneficiary typically can’t use the trust for basic support or to receive benefits that can be provided by the government. The special needs trust can be used to provide specialized therapy, special equipment, recreational outings and other expenses.  In short, for the needs not already served by the government benefits.

These types of trusts come up more often than people realize.  Often, clients consider making special needs trust for their children with disabilities.  But, it is also important to consider that elderly loved ones may utilize Medicaid for their long-term care.  If they do (or might) then it makes sense to set up a special needs trust for them as well.  This might be for elderly parents, siblings, or even spouses!  See our overview for more detail.  https://galligan-law.com/practice-areas/elder-law/

When considering a special needs trust, you’ll need to look at several issues with your attorney.  First, whose assets will it hold?  If the disabled individual is creating or funding a trust with their own assets (called a First Party Special Needs Trust), you have a very different set of rules which I won’t address here.  If you are creating the special needs trust for someone else (called a Third Party Special Needs Trust) you need to consider who will be the trustee.

You could name a family member or close friend as a trustee. While this works well for many, it has the potential to cause family conflicts and becomes a burden.  You could also name a trust company.  A trust company can provide professional management, expertise and continuity of administration, especially for younger beneficiaries who will outlive their care providers. A third option is to name an individual and a trust company as trustees.

The second critical issue with a special needs trust is funding the trust. You can fund the trust during your lifetime or have it activated when you die.  Note that you don’t have to be the sole donor. A special needs trust can be created so other family members can also contribute to it, as long as the person receiving benefits doesn’t contribute.  The trust can be funded with securities (stocks and bonds), IRA proceeds, insurance death benefits and other assets. 

You’ll need to understand the requirements of various federal, state and local benefit programs for people with disabilities, so that your loved one’s benefits are not at risk.

Speak with an experienced elder law or estate planning attorney about how you can to make life better for a family member with disabilities by using a special needs trust.

Reference:  Pauls Valley (OK) Democrat (August 1, 2019) “Can your family benefit from a special needs trust?”

Continue ReadingWhat Should I Know About a Special Needs Trust?

Why an Attorney Should Help with a Medicaid Application

Seniors should consider medicaid asset protection planning as part of their estate plan.
Hiring an attorney to prepare a Medicaid application may save money in the long run and get your loved one the care they need.

Elder law attorneys can be very helpful when it is time to complete a Medicaid application, and they can save money in the long run, ensuring that you (or a loved one) get the best care. Instead of waiting to see how wrong the process can get, says The Middletown Press, it’s best to “Use a lawyer for Medicaid planning” right from the start. Here’s why.

Conflict of interests. When a nursing home refers a family to people for preparing the Medicaid application or offers to complete it themselves, very often the person has dual loyalties: to the nursing home who refers them the work (or signs their checks), and to the family who will pay them a fee for help with applying for benefits. Whose interests comes first?

Everyone wants the Medicaid application to be successful, but let’s be realistic. It’s in the nursing home’s best interest that the resident pays privately for as long as possible, before going on Medicaid. It’s in the resident or family member’s best interest to protect the family’s assets for care for the resident’s spouse or family.

An attorney has a duty of loyalty only to his client. He also has an ethical and professional responsibility to put her client’s needs ahead of her own.

Saving money is possible. Nursing homes in some areas cost as much as $15,000 a month, in Texas they tend to be cheaper, but still in the several thousands.  While every market and every law practice is different, it would be unusual for legal fees to cost more than a month in the facility. With an experienced attorney’s help, you might save more than her fee in long-term care and related costs.

Further, attorneys can find ways to complete a Medicaid application and successfully obtain benefits without simply spending all of your assets before applying.  Many times nursing home staff will offer to do the Medicaid application after the assets are nearly entirely spent.  A quality elder law attorney will find ways to complete and file a successful Medicaid application while protecting your legacy.

The benefit of experience. It’s all well and good to read through pages of online information (Google, Esq.), but nothing beats the years of experience that an attorney who practices in this area can bring provide.  Any professional in any field develops knowledge of the ins and outs of an area and applying for Medicaid is no different. Without experience, it’s hard to know how it all works.  See Mary’s blog for more detail about how an attorney helps with this process.  https://galligan-law.com/when-you-need-an-elder-law-attorney/

Peace of mind from a reliable, reputable source. Consulting with an experienced attorney about a Medicaid application will help you avoid years of wondering, if there was more you could have done to help yourself or your loved one.

There are multiple opportunities for nursing home residents to preserve assets for themselves and spouses, children and grandchildren, particularly when a family member has long term care needs. However, here’s a key fact: if you wait for the last minute, there will be far less options than if you begin planning long before there’s a need for a Medicaid application.

Reference: The Middletown Press (July 29, 2019) “Use a lawyer for Medicaid planning”

Continue ReadingWhy an Attorney Should Help with a Medicaid Application

Estate Planning When Faced with a Serious Illness

More young and middle-aged workers find themselves in the role of family caregiver.
Everyone needs estate planning documents, but a serious illness makes that need more urgent. 

More than 130 million Americans are living with chronic illness. Forbes’ recent article, “Estate Planning Musts When You Or A Or A Loved One Has A Chronic Illness,” says that if you (or a loved one) are living with a chronic illness, you’ll likely need the same estate planning documents most people should have.

The article discusses these key estate planning documents, along with some suggestions that might help you customize them to your unique challenges because of chronic illness. These documents need to be tailored to your specific needs, so you should consult your estate planning and elder law attorney about what works best for you.  It’s also best to put your estate planning documents in place soon after your diagnosis, so that you can return your focus to your health, family and well-being.

HIPAA Release. The Health Insurance Portability and Accountability Act of 1996 governs the requirements for maintaining the confidentiality of protected or personal health information (PHI). A HIPAA Release lets someone you trust access your protected health information.  This is an important estate planning document because it provides your decision makers with information about your condition so they can best serve your needs.

Living Will. This is a statement of your health care wishes and can address end of life decisions, as well as many other matters. If you’re living with a chronic illness, there are special considerations you might want to make in having a living will prepared. For example, you might explain your specific disease while continuing to address other health issues.  You can address the disease you have, at what stage and with what anticipated disease course, and how if at all these matters should be reflected. It is also critically important to discuss these wishes with your loved ones before the issue arises so they understand what you want.

Medical Power of Attorney. This is sometimes known as a medical proxy. It is an estate planning document in which you designate a trusted person to make medical decisions for you if you’re unable to do so. You can give guidance to your medical agent about your preferences, goals and concerns in your medical care.

Financial Power of Attorney. This estate planning document lets you designate a trusted person to handle your legal, tax, and financial matters if you can’t or if it becomes difficult to do so. There are some unique considerations for those living with chronic illnesses to consider. One is the amount of control that should be given up now or at what stage. Another key issue in a power of attorney is if you should sign a special power that restricts the agent’s authority to certain specified items or sign a general power that provides broad and almost unlimited powers to the agent.  It is especially importantly that your power of attorney include authority to handle Medicaid and other long term care benefits if you are facing a serious illness.

Appointment for the Disposition of Remains.  This is a basic estate planning document by which you choose a person to execute your burial wishes and let them know what those wishes are.

Declaration of Guardians.  This is an estate planning document in which you name a person to serve as a court appointed guardian should you need one.  If you have the other documents in place you’ll likely never need this, but it is important to have as a safety net naming someone you trust to be guardian instead of a court appointed agency or lawyer if the need ever arises.

Will and Revocable Trust. Finally, Wills and  Revocable Trusts are estate planning documents which control the flow of assets at your passing.  You should speak with your attorney about which is right for you, but if you or a family member has a chronic illness, using a revocable trust may be a good way to provide for succession of your financial management.  A revocable trust allows the successor trustee to act quickly to manage the finances if you cannot do so yourself and under the guidelines you create.  This way, the trustee can pay for the care you need.

Everyone should have these estate planning documents as part of a well-crafted legacy plan, but if you or a loved one is facing a serious or chronic illness, you may be facing additional challenges that make this planning more critical.

Reference: Forbes (July 5, 2019) “Estate Planning Musts When You Or A Or A Loved One Has A Chronic Illness”

Continue ReadingEstate Planning When Faced with a Serious Illness