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Protecting Adult Children with Disabilities

A growing family requires an estate plan.
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Adults with disabilities are living much longer than in the past, which means their aging parents must plan for the day when their dependent children outlive them.

Special Needs require special planning.  One in four Americans has some kind of disability, and an increasing number of children are being diagnosed with some form of autism. The life expectancy for people with Down syndrome has increased from living to age 12 in the 1940s to nearly 60 today. Most children born with cerebral palsy live into their thirties. For parents of these special needs children, it is more important than ever to create a plan and a community, says the article “How to build support system for adult children with disabilities” from The San Diego Union-Tribune.

Financial resources and support services need to be put into place, for when parents are no longer able to provide care. Here are the key points to address:

Preserving the child’s eligibility for government assistance programs, including Supplemental Security Income (SSI) and Medicaid, through the use of a Special Needs trust. Any amount of money can be placed in the trust, and the funds don’t count when determining eligibility. If parents leave money directly to a child, they will lose their ability to get SSI and Medicaid benefits.

Start early. A Third-Party Special Needs trust should be set up before the special needs child turns 18. It doesn’t need to be funded, but it needs to be created.

Be a stickler for the rules. If the child receives SSI, money from the trust may not be used for food and housing, but it can be used for other costs, like therapies that are not covered by Medicaid, or even extras, like a cellphone or vacation. An experienced elder law attorney will be able to help the family with planning and learning the intricacies of these rules.

Name a trustee and a successor trustee. Selecting someone to manage the trust on behalf of the child is a critical decision, and not always an easy one. The trustee should be someone responsible who cares about your child’s well-being. It could be a sibling, if the relationship is good, or a family member. The person should be younger than the parents, so they will be around after the parents have passed.

Open an ABLE Account—Achieving a Better Life Experience account. These are accounts that work in much the same way as a 529 account. They can be established for a disabled person at any time, but the child must have the qualifying disability before age 26. Money from a Special Needs trust can be moved into an ABLE account, and the beneficiary can use it for any qualified disability expense.

Prepare a letter of intent or guidance. This is not a legally binding document, but rather a way of sharing information with others about your child: their preferences, routines, comfort levels and wishes. It can also be used to provide information about caregivers, medical providers and others who are a good fit with your child. You may also wish to share information about what and who they don’t like. Update the letter every year or two.

Power of Attorney. Having a power of attorney for a disabled individual is far more flexible and less costly than a conservatorship or guardianship.

Housing options. Where will your child live? That depends on what kind of disability the child has and the family’s financial resources. Ideally, the child can transition from the family home to another place while the parents are still living. If feasible, the parents could leave the family home to the child in the Special Needs trust, but they’ll also need to leave enough money for ongoing expenses and maintenance of the house. Some disabled adults live in group home settings, where counselors and other staffers help residents live on their own.

An elder care lawyer will be able to connect the family with many different resources and help with creating a Special Needs trust.

Reference: The San Diego Union Tribune (Jan. 9, 2020) “How to build support system for adult children with disabilities”

 

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