Planning for a Loved One With Special Needs. © 2012 McDowall Cotter2 Robert D. Vale.
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Transcript of Planning for a Loved One With Special Needs. © 2012 McDowall Cotter2 Robert D. Vale.
What Does Planning Involve?
© 2012 McDowall Cotter6
Preserving your child’s financial security and quality of life
Addressing key issues:Understanding the role of public benefits
Making decisions about the future
Using estate planning/trusts to protect assets
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Public Benefits at a GlanceFinancial BenefitsFinancial Benefits
Supplemental Supplemental Security Security
Income (SSI)Income (SSI)• Means Tested: Means Tested:
Limited income and Limited income and assetsassets
Social Security (SS)Social Security (SS)&&
Social Security Social Security Disability Insurance Disability Insurance
(SSDI)(SSDI)• Not Means TestedNot Means Tested: : subject to work credits or subject to work credits or
parents’ eligibilityparents’ eligibility
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Public Benefits at a Glance
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Medical BenefitsMedical Benefits
Medi-CalMedi-Cal• Automatic Automatic
with SSIwith SSI
• Must apply for Must apply for SS/SSDISS/SSDI
MedicareMedicare• After two After two
years of SSDIyears of SSDI
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Supplemental Security Income (SSI)
Must meet SSA’s definition of “disability” and have limited assets/income
Provides monthly income for food/shelter
Gateway to Medi-Cal / in-home support services
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Social Security (SS) / Social Security Disability Insurance (SSDI)
Social Security for individuals:Disabled before age 22 andWith parents eligible based on their work
record who are retired, disabled or deceased
SSDI for individuals with work record
Social Security benefits may reduce or eliminate SSI benefits
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Medical Assistance & Support
Medi-Cal:SSI recipients receive automaticallyCovers “medically necessary” services,
equipment, hospitalization In-home services needed to live at home:
personal care, housekeeping, cooking, transportation to doctors
Medicare:Medical coverage, including doctors, hospital,
skilled care
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SSISSI Medi-CalMedi-Cal
SSDISSDI MedicareMedicare
How Benefits Work Together
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Case Study: Nathan
Current situation:18-year-old with autism
Lives with mom
Income from work programs, SSI, Social Security (from dad who is deceased)
Limited personal assets (clothing, tv)
Qualifies for Medi-Cal
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Case Study: Nathan
Future situation:Who will make health care decisions?
Who will make financial decisions?
Where will he live?
How will his medical expenses be paid?
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What Plan Could Nathan’s Mom Make?
Possible Options:Make no decisions/plans
Leave money to Nathan
Disinherit Nathan
Leave money to a future caregiver
Establish third-party SNT for Nathan
Establish first-party SNT for Nathan
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What Steps Should You Take Today? Step 1: Envision Your Child’s Future
Planning ahead makes a difference: Where and with whom will your child live? What type/level of care will be required? Will a guardian/conservator be necessary? Who else will be involved? What kind of lifestyle is desired? What unforeseen challenges could arise?
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Lays out goals/expectations:Details preferences, needs, wishes, both
medical and personalLists key people in child’s life
Helps guide:Family membersTrusteesCaregiversOthers
What Steps Should You Take Today? Step 2: Create a Memorandum of Intent
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Monthly income: SSI, SSDI, Social Security, earned/unearned
income
Monthly living expenses:Housing, food, transportation, medical,
recreation, etc.
Consider how any shortfall will be met
What Steps Should You Take Today? Step 3: Estimate Income & Expenses
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Provides supplemental funds for living expenses not covered by other income sources
May be established by parents:Through willThrough living trust
“Living” SNT lets others contribute
Trustee has discretion over distributions
What Steps Should You Take Today? Step 4: Utilize a Third-Party SNT
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The SNT Trustee Responsibilities
What are the trustee’s responsibilities?Invests/manages assets
Distributes funds
Keeps books
Files tax returns
Hires advocates and care managers, etc., as needed
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Selecting an SNT Trustee
Who should be the trustee?
Parent with professional co-trustee
Corporate or other professional trustee
Successor trustee
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What Parents Should Do
Create Memorandum of Intent
Calculate future financial need
Establish SNT through will or living trust
Fund SNT with life insurance
Name SNT as beneficiary of accounts, plans, etc.
Reduce taxable estate
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What Your Child Should Do
Sign Advance Directives, if legal capacity
Have a legal guardian appointed:When child without mental capacity becomes
an adult and parents want to maintain legal responsibility
Court appoints legal guardian
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What If Your Child Has Assets?
Establish a First-Party SNT:Provides funds for living expenses not covered by other income sources
Maintains eligibility for public benefits
Must be established by parent, grandparent, legal guardian or the court
State must be reimbursed from the trust for all Medi-Cal expenses
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Get Started Today
Understand your child’s eligibility for public benefits.Make plans for the future to maximize public and private resources for your child’s benefit.Make the SNT a key part of your estate plan.Contact a special needs attorney for the assistance you need.