SPECIAL NEEDS TRUSTS

When parents have a son or daughter with a disability, they must plan their estates carefully to best benefit that child. How parents leave their assets after death may greatly affect the quality of life for their son or daughter with special needs. Myers Urbatsch P.C. is heavily involved in the drafting and implementing of special needs trusts and can assist you in preparing the appropriate plan.


Does Every Disabled Person Need a SNT?

No. Disabilities can take many forms and have varying degrees of severity. The nature and severity of your child's disability will affect the nature of the estate plan that you, as parents, develop. Many individuals have physical disabilities or health impairments that do not affect their ability to manage financial or other affairs. If your son or daughter has such a condition, how to leave them an inheritance depends on a number of factors. The primary factor will be whether or not your son or daughter receives (or may one day need to depend on) government benefits such as Supplemental Security Insurance (SSI), subsidized housing, personal attendant care, or Medi-Cal. If your child does receive (or may one day need to depend on) government benefits, then it is most important to create a special estate plan that does not negate his or her eligibility for those benefits.

On the other hand, you may have a son or daughter with a physical disability or health impairment who is not eligible for or who is not receiving government benefits. In this case, you may be able to dispense with elaborate planning devices and merely leave your child money outright, as you would to a non-disabled child. If you believe that the disability may reduce your son or daughter's financial earning capability, you may want to take special care to leave a greater portion of your estate to this child than to your non-disabled children.

There are some exceptions to this simplified approach, of course. One exception is when parents are somewhat fearful of their son or daughter's financial judgment. If you are concerned that your son or daughter with a disability may not responsibly handle an inheritance, then you can utilize a trust, just as you would for a non-disabled heir. Another exception is if your child's disability or health impairment involves the future possibility of deteriorating health and more involved health care needs. While your son or daughter may be capable of earning money and managing an inheritance at present or in the immediate future, in twenty or thirty years time deteriorating health may make it difficult for him or her to maintain employment or pay for health care. Government benefits might then become critical to your child's security.

Remember, benefits include much more than money; your child may also be eligible for valuable services such as health care, vocational rehabilitation, supported employment, subsidized housing, and personal attendant care. If, however, he or she acquires too many assets through inheriting all or part of your estate, he or she may be ineligible for these benefits. Therefore, in order to protect your son or daughter's eligibility for government benefits at some point in the future and to provide for his or her long-range needs, you may need to consider establishing a special estate plan.

If your son or daughter's disability affects his or her mental capability, the need to create a special estate plan is clearer cut. Mental illness and cognitive disabilities often impair a person's ability to manage his or her own financial affairs, while simultaneously increasing financial need. As a result, you must take care to ensure that there are assets available after your death to help your son or daughter, while also providing that the assets are protected from his or her inability to manage them.

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Special Needs Trust Planning for Persons with Disabilities

A special needs trust is a trust that is designed to allow money to be set aside for a disabled beneficiary while still allowing them to remain eligible for Supplemental Security Income (“SSI”), Medi-Cal, and other needs based governmental programs. There are two basic types of special needs trusts: first person special needs trusts and third person special needs trusts. First person special needs trusts are funded with the assets of the disabled person themselves. These types of trusts require special provisions, most importantly the provision that the Department of Health Services be paid back from the remainder of the trust upon the beneficiary's death for Medi-Cal payments it made on behalf of the disabled person during his or her lifetime. Third party special needs trusts are funded with assets from third parties, such as parents or grandparents, and do not need to have the repayment provision mentioned above. If you have a developmentally disabled child or other relative, or you have a child or relative who suffers from some form of mental or physical disability, we would be more than happy to discuss with you how you can plan for the child or relative in your estate plan.

Many families believe that they have so few assets that an estate plan is not necessary. This is not true. We often have more assets than we realize, although some assets may become important only after our death. The most notable asset of this type is life insurance. Therefore, whether you consider yourselves a family of substantial means or with little or no assets, estate planning should be done. The only reliable method of making sure that the inheritance actually has a chance of reaching a person with a disability when he or she needs it is through the legal device known as a Special Needs Trust (SNT). The SNT is developed to manage resources while maintaining the individual's eligibility for public assistance benefits. How is this done? Simply put, the family leaves whatever resources it deems appropriate to the trust. The trust is managed by a trustee on behalf of the person with the disability.

While government agencies recognize special needs trusts, they have imposed some stringent rules and regulations upon them. This is why it is vital that any family contemplating using a SNT consult an experienced attorney -- not just one who does general estate planning, but one who is very knowledgeable about SNTs and current government benefit programs. One wrong word or phrase can make the difference between an inheritance that really benefits the person with a disability and one that causes the person to lose access to a wide range of needed services and assistance. As an illustration of this, suppose that the trust instructed the trustee (manager) to pay the person with the disability all income a month for life. Such a mandatory income might jeopardize government benefit programs, which only allow him or her certain amount of income a month, typically under $1,000 a month.

The SNT will not be counted as the disabled person’s resource. The trust will be established and administered by someone else. The person with the disability does not have a trust. He or she is nominated as a beneficiary of the trust and is usually the only one who receives the benefits. Furthermore, the trustee (manager) is given the absolute discretion to determine when and how much the person should receive. Given the government's stringent requirements, it is critical that the trust be carefully worded and shows that the trust:

  • is established by the family or persons other than the person with the disability);
  • is managed by a trustee (and successor trustees) other than the person with the disability;
  • gives the trustee the absolute discretion to provide whatever assistance is required;
  • should never give the person with the disability more income or resources than permitted by the government;
  • must be used for supplementary purposes only; it should add to the things provided by the government benefit program, not supplant them except in special circumstances;
  • defines what it means by supplementary/special needs in general terms, as well as in specific terms related to the unique needs of the person with the disability;
  • provides instructions for the person's final arrangement (families should assume that when the individual with the disability dies no relatives will be alive who know what the mother and father would have wanted);
  • determines who should receive the remainder (what is left over) of the trust after the individual with the disability dies;
  • provides choices for successor trustees -- people or organizations that might be able to take a personal interest in the welfare of the person with the disability; and
  • protect the trust against creditors or government agencies trying to obtain funds to pay for debts of the person or the family.
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Who should be the Trustee of a Special Needs Trust?

It is one thing to leave resources to a trust, and it is quite another to manage them in such a way as to last the lifetime of the person with the disability. Every trust must have a trustee, someone who will manage the trust's assets. Anyone can be a Trustee of a SNT, except the beneficiary, their spouse, or their agent. The ideal Trustee of a Special Needs Trust should have all of the following qualities.

  • Must understand public benefits;
  • Will use discretion in the best interest of the disabled beneficiary;
  • Can wisely invest and conform to all statutory fiduciary requirements;
  • Understands taxes;
  • Keeps perfect books;
  • Carries insurance, is bondable, or has deep pockets;
  • Can identify second rate services or abuse; and
  • Is immortal

Many Special Needs Trusts fail because of ill equipped Trustees and ongoing changes in the facts and circumstances of trustees, beneficiaries, and the laws surrounding public benefits. We have found that a system of checks and balances works best in SNT administration. It allows for professional financial management of the trust, while protecting the unique care and management needs of the disabled beneficiary.

We recommend that the duties of the Trustee be divided into two categories:


Financial Accountability – Professional Trustee

  • Can wisely invest and conform to all statutory fiduciary requirements
  • Understands taxes
  • Keeps perfect book
  • Carries insurance, is bondable or has deep pockets
  • Is immortal

Personal Care -- including advocacy, care management, and public benefits – Trust Advisory Committee

  • Must understand public benefits and keep up with changes in the law
  • Will use discretion in the best interest of the disabled beneficiary
  • Can identify second rate services or abuse

We find that corporate fiduciaries or private professional fiduciaries are invaluable. SNTs for disabled Plaintiffs will hopefully last throughout their lifetimes. This may mean decades of administration. Professional fiduciaries are more permanent and provide continuity of administration for our disabled clients who will likely long outlive their parents. Further, if a professional fiduciary does make a mistake in administration, they typically have insurance or sufficient assets to cover such mistakes. A well intentioned family member who makes a negligent mistake in administration often does not have sufficient assets to pay for their mistakes made during administration, thus leaving the disabled individual destitute and reliant solely upon the government’s welfare programs for survival.

Corporate fiduciaries have established departments that specialize in managing assets, keeping records, and providing accurate accountings. Specialized private, professional fiduciaries are experienced in managing SNTs. The advantages of having a professional trustee are permanence, continuity of administration, professional management (and a likely greater understanding of the rules of the Uniform Prudent Investor Act (California Probate Code §§16045-16054), Accountings, and the Uniform Principal and Income Act (California Probate Code §§16320-16375), financial accountability, and (because of its status as an independent trustee) greater latitude in administering the trust without triggering undesirable tax consequences.

The disadvantages include greater administrative costs, turnover of personnel, clients' fears about lack of personal attention, a conservative investment philosophy, and occasional delays in making decisions because corporate procedures frequently require action by committees. However, these disadvantages are minimized in our SNTs proposed management team. The Trust Advisory Committee which will have the authority to remove and replace the Trustee for any reason. This means that if the fees are too high, there is turnover of personnel, a lack of personal attention or delay in decision-making, the Trustee can be replaced by the Advisory Committee. We find this authority by the Trust Advisory Committee keeps the corporate fiduciary more in tune with the family’s desire for ongoing maintenance of the disabled beneficiary.

A common question we receive is whether a parent, sibling or someone in the same generational level of the disabled individual should be named as trustee or successor trustee. We have found through our experience that parents often lack all of the skills necessary to be trustees and will not survive their disabled children. We have also found that brothers, sisters, and cousins tend to want to live their own lives, have their own families and often resent the sometimes full-time nature of the job of trusteeship if it is thrust upon them. They have the same problems that parents would have in that they lack some of the essential skills of trusteeship. The greatest problems we have ever had with the Trusteeship of a Special Needs Trust are fixing the problems of well intentioned family members who were trustees of another family members trust. The cost is often prohibitive and would have been avoided through professional management.

The subject of fees is important. Although corporate trustees are often viewed as expensive, their fees are often not much greater than the combined fees of an investment adviser and a tax preparer which may be required if an individual trustee is named. Further, corporate fiduciaries often will not make the mistakes of an individual trustee and so reduce the cost of fixing mistakes.

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Should I Create a Separate Special Needs Trust Now?

At one time, the average attorney simply advised parents of an individual with a disability to prepare their Last Wills and Testaments and include a Testamentary Special Needs Trust. Upon the death of the parents, the wills would be probated, and the special needs trust would be created. In simpler days, this was pretty good advice.

Today, most attorneys who are experienced in estate planning for persons with disabilities will advise the family to prepare an Intervivos Special Needs Trust. Intervivos simply means that the trust functions now, while the parents are still living. As a "living" trust, it should not be confused with the modern estate planning tool for the family's main estate, the Family Revocable Living Trust. These are two very separate trusts. The Family Living Trust is designed to avoid probate, reduce estate taxes, and make for a smoother estate distribution. The Intervivos Special Needs Trust's sole function is to look after the future of the person with the disability.

Parents need not wait until their son or daughter is 18 years old to establish the Intervivos Special Needs Trust; they can establish the trust now. The trust is set up as a checking account at a local bank. Families can place funds into the trust every month and use these funds to cover the normal supplementary expenses of the person with the disability, as well as to save for the future. Using the trust funds to pay for the individual's supplementary expenses is also an excellent way of recordkeeping, for these expenses are tax-deductible.

An Intervivos or Living Special Needs Trust has other very unique features, such as:

  • It is a trust that is separate from the family's main estate.
  • The trust is managed by the trustees, who are usually the parents.
  • By paying for supplementary items from the checkbook, the family shows the future trustees the types of things that are appropriate to the person's needs and that have passed government scrutiny. The typical government challenge to a SNT comes when a trustee pays for nonsupplementary items. (In contrast, a testamentary trust -- one that is created after the parents have died -- gives guidelines on how to establish the trust; it does not give specific examples of how to administer it.) The simple checkbook with its stubs can help the future trustees use the Living Special Needs Trust properly and avoid expensive challenges.
  • Often relatives (e.g., aunts and uncles, grandparents) would like to leave an inheritance to the person with the disability but are concerned that, if they leave it to the person, he or she will lose government benefits or will mismanage the funds. Relatives like the concept of a trust, which is a nice legal way to make sure the person actually receives the full gift. With a testamentary trust, the parents of the person with the disability must die, their estate must be probated, and then the trust will be created. After the trust is created, relatives can leave money to the trust. The better option is to create a living special needs trust NOW. This permits relatives with tax concerns (i.e., those who need to give money each year to avoid large estate taxes upon their death) to give money into the trust now, rather than only upon their deaths.

In today's society, it has been said that 40-60% of the population will go into a nursing home before they die. The average family's total estate will be completely used up in one year to cover nursing home costs. In their wills, the parents may have generously given everything to the testamentary trust. Unfortunately, after nursing home care and Medi-Cal expenses, there may be no estate left for the testamentary trust. Even if a portion of the estate remains after the parents die, there may be a six month to six year wait while the estate is being probated. A testamentary trust would not be created or funded during this waiting period. What would happen to the supplementary needs of the person during such a wait?

Having a living special needs trust creates a much more secure scenario for the person with the disability. With this type of trust, the parents would have saved money each month for the future and may have purchased life insurance or transferred assets into the trust. Should they suddenly pass away or have to go into a nursing home, the living trust, which is a private matter, continues to function without interruption. The successor trustee designated by the parents would begin to administer the trust funds within a short period of time (one to two hours). Supplementary assistance to the person with the disability would continue without a break.

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Should the SNT be Revocable or Irrevocable?

Once the basic details of the trust have been agreed upon, you have to decide whether to lock the door and throw away the key, making it impossible to change the trust, OR to hold the key just in case you want to make some changes. With a Revocable trust, you retain the right to add and subtract assets as you go along. With this right, there are some potential consequences. The first and major consequence is that the government considers the trust to be part of your estate. Therefore, when you die, everything in the special needs trust is included in your estate for tax purposes and for potential lawsuits. What happens if someone sues your estate after you are gone? The assets in your special needs trust could be lost in such a lawsuit. Even if you only put a life insurance policy in the trust, it now reverts back to where your creditors and the IRS can lay claim.

If you make your trust Irrevocable, it means that any assets you place in it will remain there for the benefit of the person with the disability. If you need some of these assets later on for your own care, you cannot take them out. The advantages of an irrevocable trust may outweigh the disadvantages, as long as you do not place too much in the trust. If it is set up properly, it is completely separate from your estate. The irrevocable trust is considered a separate entity. It has its own tax number. Any assets that you place in the trust cannot be touched by your creditors for debts, taxes, and so on. Neither can the trust be touched by any creditors of the person with the disability.

What should you do? For younger parents, the answer may be a revocable trust. For older parents, the irrevocable trust may be the only option. Your attorney, in consultation with your financial planner, may be the best resource in making this determination. It is important, however, to have a current Letter of Intent (see article later in this News Digest), which will help your trustee interpret the "legalese" of either the revocable or irrevocable trust in light of your hopes and desires for the future.

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What is the Letter of Intent?

Simply put, the Letter of Intent is a document written by you (the parents or guardians) or other family members that describes your son or daughter's history, his or her current status, and what you hope for him or her in the future. You would be wise to write this letter today and add to it as the years go by, updating it when information about your son or daughter changes. To the maximum extent possible, it is also a good idea to involve your child in the writing of this Letter, so that the Letter truly "presents" and represents your child. The Letter is then ready at any moment to be used by all the individuals who will be involved in caring for your son or daughter, should you become ill or disabled yourself, or when you should pass away.

Even though the Letter of Intent is not a legal document, the courts and others can rely upon the Letter for guidance in understanding your son or daughter and the wishes of you, the parents. In this way, you can continue to "speak out" on behalf of your son or daughter, providing insight and knowledge about his or her own best possible care.

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Why is it Important to Write a Letter of Intent?

A Letter of Intent serves many purposes. First, it spells out in black and white your son or daughter's background and history and his or her present situation. It also describes your wishes, hopes, and desires for his or her future care and, where possible, describes your child's feelings about the present and desires for the future. While you are still living, the Letter can be used by your lawyers and financial planners to draft the proper legal documents (wills or trusts) to ensure your wishes are carried out. Once you are no longer able to take care of your son or daughter, due to death or illness -- and this is the most important reason to write a Letter of Intent -- the Letter gives your son or daughter's future caregivers some insight into how to care for him or her. It provides advice on possible alternatives for his or her care. If your child has a severe disability, caregivers will not have to waste precious time learning the most appropriate behavior or Medi-Cal management techniques to use. If your child is used to doing things independently and only requires occasional assistance, the Letter can spell out exactly what is needed. The Letter of Intent can describe this very concrete information and much, much more, including valuable information about the personality of your son or daughter -- his or her likes, dislikes, talents, special problems, and strengths. Thus, the Letter is a crucial part of any life or estate plan, because it speaks both for and about the person with a disability and his or her family.

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When Should Parents Write the Letter of Intent?

The answer is a simple one. Start now. Start today. Procrastination is easy, when your health is good, the future looks bright, and there are a hundred other pressing tasks to be done. But none of us can predict the future. What will happen to your son or daughter, if something happens to you? Will your relatives, friends, lawyer, or the police know where to contact your son or daughter - and will that person know enough about your loved one to know what kind of care is needed and how best to provide it?

Writing the Letter of Intent now is a way to protect your son or daughter from unnecessary chaos and turmoil when he or she must depend upon someone other than you for the care and support that is necessary. The Letter of Intent helps pave your son or daughter's transition by giving future caregivers the information about him or her that they so vitally need.

Preparing the Letter is often an emotional experience for parents and their children. You will need self-discipline and motivation to work past the many painful questions and issues that must be addressed when considering your son or daughter's future.

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What Information Goes Into the Letter of Intent?

How can you summarize the life of a person you have watched grow and develop over many years? What can you say that will give insight into and perhaps touch the heart of a care provider who must suddenly assume some measure of responsibility for your son or daughter?

Basically, the procedures for developing a Letter of Intent are fairly simple. You can write the Letter out longhand, or you can use a computer or typewriter. Don't worry about perfect spelling or grammar; your major concern is that anyone who reads the Letter in the future can understand exactly what you meant and what you would like to see happen in your son or daughter's life. Begin by addressing the Letter to "To Whom It May Concern." In the first paragraph list the current names, addresses, and telephone numbers of the people who should be contacted if anything should happen to you (i.e., other children, case manager, your son or daughter's school principal or employer, lawyer, financial planner, priest, etc.). You might then briefly state the family history; include names, birthdates, and addresses of family members.

The Letter will then need to focus in upon seven potentially major areas of your son or daughter's past, present, and future life. Depending upon your child's needs, these areas may be: housing/residential care, education, employment, Medi-Cal history and care, behavior management, social environment, and religious environment. You might begin by summarizing your son or daughter's background and present status in each of these areas. Then summarize your wishes, hopes, and desires for his or her "best" future, listing three or four options in each of these areas. Be sure to discuss your ideas with your son or daughter and to take into consideration his or her feelings on the future (more is said about this below). The worksheet shown at the end of this article is useful for this "future planning" step, which may require much thought and planning before you actually begin to write information into the Letter of Intent.

Take a brief look at the example below (marked "An Example for Writing a Letter of Intent"). This example focuses on only one of the major life areas -- Housing/Residential Care -- and illustrates how a person named Mrs. Sanders went about writing this section of her Letter of Intent for her son named Chris, a 35 year old man with developmental disabilities.

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How Do I Involve My Son or Daughter in Writing the Letter?

How much you involve your son or daughter in writing the Letter of Intent will depend in large part upon his or her age and the nature and severity of the disability. It is only fitting that young adults and adult children be involved in planning their own lives to the maximum extent possible. Many individuals have disabilities that do not prevent their full or partial participation in the Letter-writing process. Before involving your child, however, you, as parents, might want to talk first among yourselves about the content of the Letter and your ideas regarding your child's future. When you've agreed upon the basic information you feel should go in the Letter, discuss each area with your son or daughter. Ask for your child's input about his or her favorite things to do, what type of education has been enjoyable and what might be pursued in the future, what type of employment he or she enjoys or envisions. Equally crucial to discuss are your child's future living arrangements: How does your child feel about the options you are considering listing in the Letter of Intent?

It's important that your child realize that the Letter is not a binding, legal document; it is written to give guidance, not edicts, to all those involved in care giving in the future. If you fear that your child will be upset by talking about a future that does not involve you as parents, then you may wish to make the discussion simply about the future -- what will happen when your child leaves high school or a postsecondary training program, what your child wants to be or do in the next ten years, where he or she wants to live. You may be surprised to find that discussing the future actually relieves your child. He or she may very well be worrying about what will happen when you are no longer there to provide whatever assistance is needed.

Involving your child in discussing and making decisions about the future may be more difficult if the individual has a disability that severely limits his or her ability to communicate or to judge between a variety of options. You, as parents, are probably the best judges of how much -- and how -- you can involve a son or daughter with a severe cognitive disability. For these children, the Letter is especially critical; it will serve to communicate the vital information about themselves that they cannot.

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An Example for Writing a Letter of Intent

Titling a section of her Letter "Housing/Residential Care," Mrs. Sanders writes that Chris has always lived at home and had a room to him. She briefly describes the family home and the articles in the home that give Chris special pleasure, such as his portable radio.

She then describes his daily and weekly routine, including the fact that Chris finds great joy in going to dances each week at the local Arc. She briefly lists his favorite clothing, food, games, and so on. She also mentions that each year Chris visits his sister for a week in the summer.

Mrs. Sanders then considers what future living arrangements might be suitable for Chris, and she uses the worksheet at the end of this article ("Letter of Intent Worksheet") to jot down three options. Before she transfers these options from the worksheet to her Letter of Intent, she discusses each one with Chris. She does so because he needs to be a key member of the team planning his future life.

Following her talk with Chris, Mrs. Sanders lists the agreed upon information in her Letter of Intent. The first option she lists is the possibility that Chris might live with his sister. As a second possibility, he might live with an old family friend. The third option is residence in a group home. Because this last option may indeed be the one that is finally selected for Chris, Mrs. Sanders takes care to describe the type of group home she thinks he would enjoy. As a mother and lifelong friend to Chris, she sees past his limitations to his strengths, and she notes these down in some detail. Lastly, she expresses her desire that the group home will give him room to grow and build upon those strengths.

"Residential Care" is just one important area for Mrs. Sanders to cover in her Letter of Intent. It takes her a week to complete the other sections. She finds that describing the past is not nearly as difficult as considering the future, but she methodically and systematically works her way through each area, using the worksheet when planning is necessary. The end result is a Letter of Intent that is twelve pages long, handwritten. She feels comfortable that anyone picking up this Letter of Intent will have a head start in getting to know and care for Chris.

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What Happens Once the Letter of Intent Is Written?

Once you've written the Letter of Intent about your son or daughter, the first, most important thing to do is to let people know that there is a Letter of Intent available to be consulted. This might mean telling your other children (or relatives, neighbors, friends, workshop director, pastor, or case manager) why you have written the Letter, what type of information it contains, and where the Letter can be found. Put the Letter in an easily accessible place, and make it clearly identifiable. Many parents also make copies of the Letter and give it to their other children (or persons such as a neighbor).

Secondly, you should update the Letter on a regular basis. Select one day out of each year (such as the last day of school or perhaps your son or daughter's birthday) where you will review what you have written and add any new information of importance. Talk with your child each time and incorporate his or her ideas. After each addition, sign and date the Letter. Should something change in your son or daughter's life, such as his or her caseworker or the medication he or she is taking, update the Letter immediately.

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Funding a Special Needs Trust

As families do their estate planning for their loved ones, they tend to think of it as a legal issue only. However, the lawyer can only establish the trust for them. Someone has to find the funds to put in it and make sure that there are sufficient funds to last the lifetime of the individual with the disability. That person is a financial planner.

The general perception of a financial planner is someone who is going to try to sell you investments and insurance through high pressure techniques. While the financial planner may very well use various financial products to fund the trust, the more reputable planners realize that most families have limited resources. Therefore, the planner's primary job is to help the family see what resources are available and then reallocate them, so that the future funding of the trust will be realistic.

As with attorneys, there are very few financial planners who have any experience with planning for the future of a person with disabilities. Most are trained to look at the overall family estate and try to provide as many dollars as possible, at the same time looking out for potential problems. When they realize that there is a person with a disability involved, they may react in a very human way; assume that the person will need extra help, and direct more dollars to the person with a disability, without understanding the consequences this might have in terms of the person's government benefits.

An experienced financial planner will examine your Letter of Intent (see the article of the Letter of Intent later in this News Digest) and do a detailed financial analysis based on the future costs of supplementary items and advocacy. He or she will then look at the many different resources available to fund the trust now and in the future. (See the Worksheet for Costing out Expenses of the Person with the Disability, later in this News Digest, which you can use to list the total monthly expenses of the person with a disability. When you subtract the total amount of government benefits and personal income of the person from the total monthly expenses, you have identified the amount of supplementary funds needed on a monthly basis by the person with a disability.) The only other major expense will be the cost of advocacy services, which may run from $50 to $100 per hour.

Most families are surprised to learn that they do have a variety of resources within their reach that can be directed to the Special Needs Trust. The options open to a family include:

  • Standard government benefits. These benefits form the foundation for the future.
  • Savings. No matter how you look at it, the family will have to SAVE for the future. The government benefit programs have never provided enough for even poverty level existence. A regular savings program is essential to meet the person's supplementary needs in the future.
  • Family assistance. Family members may wish to provide residential care, supervision, and supplemental assistance in the future.
  • Parents' estate. Parents may leave a portion or all of their estate to the trust. To keep peace in a large family, parents should leave something for the other children as well.
  • Inheritances. Relatives or friends who have expressed an interest in the person with the disability should be given instructions and assistance on how to leave a gift to the trust.
  • Property. Some families want their loved one to live in the same house. The house can be placed in the trust and managed by a local nonprofit agency for the benefit of the person, or expanded into a group home setting.
  • Investments. Certificates of Deposit, IRAs, Keoghs, and so on can be directed to the trust.
  • Military benefits. Some families have elected a Survivor Benefit Option (SBO), so the person with the disability will always have some income and Medi-Cal care. They may still want a special needs trust to manage the other resources which will supplement the military benefits.
  • Insurance. For the average family, life insurance may be the only way that they can leave a large lump sum for the future by making small monthly payments. It is also one of the few guaranteed methods of funding a trust. While the above items may fizzle out as people change their minds or the economy falters, a paid-up life insurance policy in an irrevocable trust will guarantee future funds.
  • Other resources. Many families have resources that are unique to them. The financial planner will help you determine which ones are appropriate for funding the trust.

As families examine ways to fund the trust, they need to keep in mind something very important. Do not forget the other brothers and sisters. While the siblings may be pillars of love and understanding when it comes to their brother or sister with a disability, they have probably seen a great deal of your time and energy spent in the disability arena. They should not be left out at the end. Families tend to assume that, while they must pay for the services of a bank trustee and a guardian/advocate, relatives who take on these responsibilities should do so for free, because that is what families do! The trustee should be directed to pay for whatever services are necessary, whether an agency or relative performs the service. This may mean the difference between a brother driving the fifty miles to his sibling's group home once a week or once every three months.

With proper legal and financial planning, the family can guarantee that the person with the disability will enjoy a comfortable lifestyle after the parents are gone.

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