Through proper and timely planning, parents can provide substantial security and protection for their children with disabilities and also help ensure that they enjoy a good (and hopefully great) quality of life.

BY IRA M. FINGLES, ESQ.

No one likes to think about death. But when children are born, especially those with disabilities, planning ahead can be one of the most loving things a parent will ever do.

Most parents know they should engage in thoughtful planning to ensure the well-being of their loved ones in the event of their death or incapacity. Integral to this process is the establishment of an estate plan that directs such things as who receives the property of a parent who passes away; who will serve as guardian of any minor children; who will act on behalf of a parent who becomes unable to care for him or herself; and usually, the establishment of a "living will" to guide end-of-life decision-making.

IT ADDS UP: People with disabilities sometimes have particular expenses related to their disability, including physician and therapist visits, prescription drugs, over-the-counter medications, drugs, over-the-counter medications, adapted vehicles, prostheses and similar expenses.

Parents of children with disabilities must attend not only to these issues, but also to a host of additional issues related to their child's disabilities. The child may require services and benefits that are available only to people who have limited means; in these cases, leaving assets directly to the child with disabilities may cause more harm than good. Also, the financial needs of children with disabilities may continue throughout their lifetimes, long after the parents have passed away.

Through proper and timely planning, parents can provide substantial security and protection for their children with disabilities and also help ensure that they enjoy a good (and hopefully great) quality of life.

Estate Planning Documents for Typical Families

• A typical estate plan usually consists of the following documents, at a minimum:
• • Will: The primary function of a will is to direct how one's assets will be distributed on their passing. It also typically identifies who will serve as the guardian of any minor children if the parents pass prematurely.
• • Durable Power of Attorney: A Durable Power of Attorney, or "POA," is a document established by the parent to designate a person or multiple people to handle the parent's affairs. A power of attorney is "durable" if it remains in effect even if the principal becomes incapacitated and unable to make decisions. Indeed, this is the main reason for having a POA – it gives the agent authority to manage the affairs of the principal if and when the principal becomes unable to do so him or herself.
• • Living Will: A "living will," or Advanced Directive for Healthcare, allows a parent to designate someone to make decisions regarding end-of-life care if the parent is unable to participate in such decisions him or herself.

Estate Planning for Parents of Children With Disabilities: Overview

An appropriate estate plan should contain, at a minimum, the components specified above. Parents of children with disabilities, however, must consider a host of additional issues. Of paramount importance, specialized planning is required to ensure that adequate financial resources can be left for the benefit of the child with disabilities without jeopardizing access to critical public and private benefits, many of which require the recipient to have very low assets and income. Other specialized considerations arise as well. For example, in many states, specific language is needed in a parent's will to ensure that any guardian appointed under the will is able to continue to serve after the child reaches the age of majority if the child is unable to manage his or her own affairs. Specialized language in a POA can allow the agent to manage not only the parent's affairs, but those of the child with disabilities as well if necessary.

Means-tested Services and Benefits for Individuals With Disabilities

Most children with significant disabilities will require services and supports throughout their lifetimes. The cost of these services is often astronomical and unaffordable for all but the wealthiest families. Fortunately, a wide variety of public benefits and services are available that provide such critically-necessary things as medical care; employment supports or other constructive daily activity; behavioral supports; personal care assistance; and residential services. Cash assistance is also typically available to defray living costs and provide financial security, albeit limited.

However, some of the most important benefits and services are available only if the child has very low income and assets. These are referred to as "means-tested" programs. Among the most significant are the following:

SUPPLEMENTAL SECURITY INCOME (SSI): A cash benefit program administered by the federal Social Security Administration ("SSA"). Eligibility hinges upon:

• 1) the presence of a condition which prevents the child from working (which generally is defined as being able to earn more than about $800 per month), and
• 2) very low income and assets – with respect to assets, the child may possess no more than $2,000 total. Parents' income and resources are "deemed" to belong to the child until the age of eighteen, so many children do not become eligible for SSI until they reach that age. The maximum SSI benefit amount is roughly $760 per month. In most cases, it is possible to secure the maximum benefit with proper planning.

MEDICAID: The Medicaid program is the primary, and sometimes sole source of funding for critically necessary services such as medical treatment and long-term care. Anyone who is eligible for SSI is automatically eligible for Medicaid. In addition, virtually all states have adopted alternative Medicaid eligibility criteria that are less stringent; however, virtually all still depend upon the child having low income and assets.

STATE SERVICES: Every state provides some form of assistance to individuals with developmental disabilities, mental illness, and other significant disabilities. Services range from periodic assistance with homemaking, shopping, and the like, to lifelong placement into highly- specialized residential programs. Most states require, however, that the individual must be Medicaid-eligible to receive such services. Excess assets will lead not only to a loss of traditional Medicaid services, but to these critical non-medical services as well.

The upshot is this: allowing individuals with disabilities to hold significant assets in their own names can lead to devastating results – the receipt of diminished benefits, services, and supports, or their loss altogether. It is essential that significant assets are not accumulated in the child's name.

In many cases, though, governmental benefits and services are insufficient to provide the security, protection, and quality of life that parents desire for their children with disabilities . Specialized planning techniques have evolved that allow significant financial resources to be made available to meet needs that are not met through public programs, but that do not cause any loss of means-tested benefits and services. The most common techniques are as follows:

SPECIAL NEEDS TRUSTS: A special needs trust (also referred to as a supplemental needs trust), or "SNT," is a specialized type of trust designed to hold assets for the benefit of a child with disabilities but without causing a loss of or reduction in means-tested benefits and services. Assets held in an SNT are administered, managed, and distributed by a trustee or co-trustees who must comply with the terms of the SNT document. Often, "necessities" – food, clothing, shelter, and medical care — will be provided by way of public benefits and services. In such cases, expenditures from the SNT will usually be limited to comfort and convenience items, entertainment, travel, and other costs for which no public funding is available, but which may be critical to the child's quality of life. Funds may also be used for things like second medical opinions, payment for services that are not covered by public benefit programs, and the like.

Special Needs Trusts are one of the most important tools available when planning for the financial future of a child with disabilities. Parents must give them full consideration with the assistance of a specialized and highly qualified attorney or other advisor when planning for their children's futures.

FUNDING AN SNT: Most often, SNT's are included in the parents' estate plans as repositories of assets that would otherwise have gone directly to the child if he or she did not have disabilities. The parents' wills must be drafted so as to ensure that this occurs, rather than assets being received by the child outright and thus causing a loss of benefits and services. In addition, assets may be placed into an SNT by way of gifts or inheritances from other family members, friends, or anyone else, except the individual with dis abilities him or herself. For this reason, the type of SNT being discussed here is called a "Third Party" SNT. Alternative approaches will be discussed below to address situations in which the child with disabilities already has significant assets in his or her name.

Parents often choose, in consultation with specialized financial professionals, to fund an SNT with life insurance. Such an approach can provide assurance that a specific amount will be available upon the parents' passing. Married parents may also be able to realize considerable savings on insurance premiums by using "survivorship" or "second-to-die" policies which pay benefits into the SNT only upon the passing of the second parent to die. Care must be taken to ensure that all assets that may end up in the hands of the child with disabilities are redirected into the SNT. Thought must be given to life insurance proceeds, funds held in retirement accounts such as 401(k)'s and IRA's, and other asset types that allow for a designation of a beneficiary on the parent's passing.

ABLE ACCOUNTS: ABLE accounts are a relatively new but welcome addition to the toolkit for planning for a child with disabilities, so long as one understands their uses and limitations. An ABLE account is a specialized type of savings account designed to benefit individuals with disabilities. An ABLE account can hold substantial funds without endangering the child's governmental benefits and services – typically, up to $100,000 before SSI benefits are lost, and up to $300,000 without jeopardizing Medicaid benefits. Additionally, as opposed to Third Party SNT's, an ABLE account can receive assets that belong to the child with disabilities. (Another tool for handling assets already owned by the child with disabilities is a "First Party" SNT, which is also called an "OBRA trust" or "payback trust." Such trusts can be invaluable to proper planning, but are beyond the scope of this article.)

ABLE accounts are offered through state programs. Parents may select any state's ABLE account, each of which has its own advantages and drawbacks. A qualified attorney or financial advisor can assist parents in selecting an appropriate state's ABLE account.

ABLE accounts can be a highly beneficial tool to help secure the future of a child with disabilities. However, limitations exist which in most cases make them ineffective as the sole means of planning – usually, a Third Party SNT will also be required. ABLE accounts can receive no more than $15,000 in contributions in a single year. Additionally, states may retain funds remaining in an ABLE account upon the passing of the child with a disability to repay costs expended on Medicaid and other services during the child's lifetime. ABLE accounts occupy a specialized place in the planning process, but are not a panacea.

LONG-TERM CARE FOR PARENTS: One final issue that must be considered in planning for the future of a child with disabilities is how to protect the parents' financial futures in the event that they should become unable to provide for themselves. If sufficient assets are not available to meet the parents' needs in the event of illness, disability, or other loss of income, their financial stressors may make them less available to care for their child with disabilities during their lifetimes, and they may be unable to leave sufficient assets in an SNT on their passing if forced to expend significant sums on their own care. As such, proper planning for a child with dis abilities must also include planning for the parents' futures as well. Consultation with a qualified elder law attorney may be necessary, along with the involvement of specialized financial professionals.

Conclusion

This is just an overview of some of the many ways in which parents of children with disabilities may help secure their child's future safety, security, and happiness through proper planning.  Specialized issues that can also be considered are how to plan for the child of a divorcing or divorced couple; how grandparents and other relatives may further their own financial and estate planning goals while providing significant benefit to their grandchild with disabilities; and many others.•

ABOUT THE AUTHOR: Ira M. Fingles, Esq., has been practicing disability law in Pennsylvania, New Jersey, and throughout the country for nearly thirty years. He entered the field due to his experiences with his late sister, who had significant disabilities. His practice focuses upon a variety of areas including special education, guardianship, estate planning, and securing services for adults with disabilities. He is Vice President of the Autism Society, Greater Philadelphia Affiliate, serves on many other advisory and governing boards of disability-related organizations, and is a frequent author and lecturer on the intersection of law and disability. He is available to speak to parent groups in New Jersey and greater Philly area at no charge.