Storm near Barr Lake, August 2013
Life can be complicated, especially if you are a parent or guardian of a disabled person who receives government benefits. If you don’t make any plan or make an estate plan which fails to adequately address a disabled beneficiary’s receipt of government benefits, an inheritance can jeopardize a disabled recipient’s qualifications for needs-tested (income or asset-based) government benefits. Sometimes a parent’s estate plan will effectively disinherit the disabled adult child, leaving a request encouraging a nondisabled adult child to “do the right thing.” At the other end is a devise or inheritance left outright to a disabled beneficiary. This post-mortem planning can create a lot of stress for everyone involved, and it can interfere with the grieving process and put strains on the ties between siblings and other family members. In my estate administration practice, I have seen both of these scenarios play out. I don’t recommend either as a viable choice for a thoughtful planner. So – what are the alternatives?
I recently read the June 2013 issue of Bifocal (a really interesting e-zine published by the American Bar Association’s Commission on Law and Aging), which had a good article about pooled trusts. These types of special needs trusts offer flexibility for families of modest means in planning for disabled family members. Read it here.
So what would “modest means” be for purposes of a pooled SNT? I recently spoke with Megan Brand, executive director of the Colorado Fund for People with Disabilities. (CFPD is the longest-standing, locally administered pooled trust in Colorado.) Her rule of thumb for a disabled young adult is to encourage a pooled SNT where there is less than $150,000 set aside for such person’s benefit. If you’d like to learn more about the different types of trusts and planning for the needs of disabled family members and loved ones, I encourage you to attend the Colorado Guardianship Association’s next educational presentation on Tuesday, September 10, 2013 at Porter Place,1001 E. Yale Avenue from 8:30 am – 10:15 am. Megan will present on Pooled Trust, Individual Trust, Supplemental Needs Trusts, Disability Trusts, Special Needs Trusts Income Trusts, 1st Party, 3rd Party… What does all of this mean? How do they differ? How are they the same? What trust is the best fit for my client or family member? Once they have a trust, what can it be used for and how do we actually make the purchase happen? To register online for this program, click here.
Here’s a link to another helpful article about the importance of planning and considering the impact on SSI and Medicaid qualification of the disabled person. But don’t be fooled into thinking that special needs planning involves merely trusts! Trusts are important documents but it is a good idea to look at the big picture and talk with someone (like an elder law attorney) about how best to devise a plan assist a disabled person with financial, medical and personal care planning. Another good resource is Hal Wright’s 2013 book entitled “The Complete Guide to Create a Special Needs Life Plan.” I checked it out from my local library. This book is a thoughtful approach (by a Certified Financial Planner) about how to devise a plan for a disabled child to ensure access to services to meet those special needs to maintain emotional, financial and other important resources. At the top of his list of importance are the following three components of an estate plan: preparation of appropriate legal documents; establishment of an SNT; and getting guardianship and/or conservatorship status in place. If you’ve been thinking about what you need to do to put a plan in place for a disabled adult – please don’t wait until it’s too late to plan.
©Barbara Cashman 2013 www.DenverElderLaw.org