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There's an old, worn-out piece of cloth hanging over the railing, barely blue and torn around the edges. This is 7-year-old Jimmy's favorite blanket. Most nights he can't fall asleep without it. His family knows this, but he can't verbalize it to them or anyone else.
Jimmy, who lives in New Hyde Park, is autistic, and will be dependent on his parents for the rest of his life. The reality is that Jimmy will most likely outlive them.
It's one of the greatest, but most overlooked, questions concerning the future, for families with special needs children:
Who will care for our child when we're not around?
Will anyone know how important that frayed, blue blanket is to Jimmy, if his parents suddenly died?
With 1 in every 26 American families raising disabled children, according to the July 2005 U.S. Census Bureau Report, this is a problem many families will have to solve sooner or later. Developmental disabilities affect approximately 17 percent of children in the United States, with Down syndrome affecting about 1 in 800 live births, and cerebral palsy 1 in 500 children older than 3. Autism-the fastest-growing disability in the country-affects 1 in 150
8-year-olds.
Parents who are overloaded and overwhelmed with so many day-to-day issues that need immediate attention often put off planning for the well-being and financial future of children with these
disabilities.
"Future-care planning is a very difficult subject," says Roberta Koenigsberg, J.D.,
director of legal affairs at Young Adult Institute/National Institute for People with Disabilities Network (YAI/NIPD), a not-for-profit health and human services agency in Manhattan for people with developmental and learning disabilities. "When you have a child with a disability and you've done everything for them, you've protected them and taken care of them, it's even more difficult to make these plans."
In fact, 75 percent of families with developmentally disabled children haven't done any planning at all, according to the New York State Developmental Disabilities Planning Council. And many of those who have planned don't realize that what is typically done for a child without a disability-saving money, leaving an inheritance-is the exact opposite of what you should do for a child with special needs.
That's because, with the exception of a wedding or
engagement ring and certain other limited resources, an
inheritance can disqualify a special needs child, like Jimmy, from the government benefits he needs to support him financially for the rest of his life.
"It's never too late," says Koenigsberg. "The biggest mistake parents make is not doing it. People tend to think of estate planning as something rich people do. If you have any kind of real estate, you have to figure out what you're going to do with it."
And those children grow to be adults quickly, and will need planning to safeguard their
future. Today, 80 percent of the adult population with developmental disabilities currently live with their family, according to the Planned Lifetime Assistance Network of the National Plan
Alliance, a nonprofit organization that provides planning services for families of adult children who have lifelong disabilities.
The Basics Of Benefits
To be eligible for public assistance, or Supplemental
Security Income (SSI), an adult (a person who is at least 18) cannot have more than ,000 in certain resources. These can
include the home the person lives in, certain burial funds or life
insurance policies, and personal and household goods. Also, the adult may not earn more than 0 a month when first applying for SSI. In New York State, this needs-based monthly benefit from the federal government in 2007 for a person living alone is 3; the state supplements this with per month.
For children with disabilities who become adults who won't be able to support themselves or get health benefits through a job, this type of aid is essential. In New York State, eligibility for SSI also creates eligibility for Medicaid, which may be the only health insurance the disabled person will be able to receive until they reach the age of 65 and qualify for Medicare.
Leaving more than the maximum allowed amount of money or assets for a person with special needs can jeopardize these public benefits. Although the home the disabled person lives in, household goods, and one vehicle used by the person don't count as assets when determining eligibility for these benefits, if the person goes into residential care and sells any of their resources, money from their sale will count as an asset.
For children whose parents leave no will, the result can be just as harmful. The parents' estate is not automatically split among the surviving children if there is no will in place. If a disabled adult does receive an inheritance, the federal government will
require the individual to spend the money down below the ,000 mark before it will pay for residential care or other services.
The costs of medical care can make even a substantial amount in savings disappear quickly, especially for those who require full-time care.
As Tara Lynch, licensed insurance agent and investment specialist, says, ",000 makes you a Rockefeller in this world."
Lynch, Matthew Maroney and Richard Philipp are
co-founders of Special Needs Advisory Partners (SNAP), a Melville organization that provides future-planning services and free consultations to families with special needs children. The co-founders merged their backgrounds in law, finance and special-needs planning together not only to coordinate these services
under one roof, but because so many of those in a position to help professionally can't.
"The reason we found each other is, I used to try to refer someone to an insurance person to fund a special needs trust," says Maroney, an attorney. "The person would say, 'Yes, I do life insurance. Yes, I handle special-needs cases,' and very quickly I'd realize, you just told me that because you want a sale."
If you call financial advisers and estate lawyers on Long Island and inquire about special needs planning, most of the time the only response you'll get is a lot of wait time or "Sorry, we don't handle that." The few who do handle these matters may be experts in trusts and estate planning, but may not have any experience in special needs trusts and estate planning, which can be much more complicated.
"I found that there wasn't a great deal of coordinated information about the transition process," says Virginia Cover, mother of a 19-year-old with a developmental disability. "It's easy to put off, because we did put it off. It's an overwhelming process."
Cover is also the finance and development officer for the Cody Center for Autism and Developmental Disabilities at Stony Brook University Medical Center, a multidisciplinary center offering support to families facing the challenges of autism and related developmental disabilities. She helps run a support group for parents that, among other things, helps inform families about special needs trusts. These trusts are specifically designed to hold assets greater than ,000, while at the same time maintain eligibility for government benefits.
Special Needs Trusts
A special needs trust (SNT), also called a supplemental needs trust, is a trust that provides money for a disabled person's
extra and supplemental needs-recreational activities, special medical equipment, computers, CDs, special doctors-beyond what government benefits cover. Since this trust is a third-party trust (funded with the assets of someone other than the individual with the disability), it isn't considered income by the
federal government, and does not replace benefits intended to provide food, shelter, clothing and other daily necessities. The federal government would consider this kind of trust the beneficiary, not the person.
"Under basic government funding for living expenses, there is really not enough money to fund extras, like sports and recreation, or any entertainment such as going to plays or concerts," says Cover. "A special needs trust helps provide funding for the extras that make life enjoyable."
Family and friends can leave money and other valuable property in the trust for the ongoing benefit of the person with special needs, instead of giving financial gifts or an inheritance outright. The person who is named trustee, either a trusted family member or an attorney, is in charge of managing and spending the funds in the best interest of the beneficiary.
Sometimes parents disinherit their special needs child, leaving money to a close relative, instead of
creating a trust. But leaving an
inheritance in another's hands is still risky.
"You don't know who that person is going to marry or what kind of financial disaster their life is
going to turn into," says Maroney. "The road to hell is paved with good intentions."
Bankruptcy, death or divorce of the person to whom the money was left are only some of the circumstances that could legally keep this money away from the person it was intended for.
An SNT can be funded by anything from cash and investments to life insurance policies for families who don't have a large sum to
immediately put into a trust.
"Traditionally, life insurance comes in, too, as a product that can be used to fund a trust, because you're leveraging your dollars to purchase thousands of dollars," says MetLife Senior Financial Planner Douglas Licari.
"The first thing we
strongly recommend the client to do is to sit down with an
attorney who has the information and has the knowledge of working with special needs children," says Licari, who is also a specialist with MetLife's Division of Estate Planning for Special Kids (MetDESK), which offers free planning services for families with special needs children. "This is not something the client can do on their own."
A Pooled Trust
Non profit organizations such as the Association for the Help of Retarded Children (AHRC), which provides community-based programs and services to adults and children with developmental disabilities, and YAI/NIPD offer pooled (community) trusts for families in New York State. A pooled trust is an SNT that has many beneficiaries. Money is contributed by individual families and held in a separate account, but for investment purposes, it is pooled with other families' funds. These trusts are already established, and have a set contribution that begins with an initial investment, followed by payments over a set
period of time.
"The advantage of a pooled trust is, you don't need to draft your own trust and you don't need to administer it," says Koenigsberg. "The disadvantage is, if you don't like the way our trust is written, you can't change it."
Pooled trusts also eliminate the difficult task of finding a trustworthy and knowledgeable trustee, since these organizations are run by people who deal with these issues on a regular basis. However, unlike private SNTs, when the beneficiary dies, a portion of the remaining funds may be given to the organization
administering the pooled trust, to help others with disabilities.
Self-Settled Trusts
Whenever a disabled person receives funds outright, whether as a result of a personal injury settlement or a direct inheritance, these assets must be put into a self-settled trust as a means of preserving public benefits. These trusts are created with funds that belong directly to the person with special needs, and can be created privately or in a pool, just as a third-party trust can.
The major drawback of having an inheritance end up in a self-settled trust, as opposed to an SNT, is that it has a payback provision.
"When the special needs person dies, whatever is paid on their behalf has to be paid back to the government," says Melville attorney Audra Dehan, referring to a non-pooled, self-settled trust. "In the end, there may be nothing left in the trust."
A Letter Of Intent
Although not a legal document, a "letter of intent"
addresses the personality aspects that only those closest to the person with the disability would know-favorite colors, foods, sports teams, names of friends, and likes and dislikes, as well as lifestyle issues: where the person will live, social activities, religious affiliation, medical care contacts and behavior management.
Unlike the trusts mentioned above, a letter of intent does not involve finances or assets.
Detailed instructions can be included in the letter, to help the next caretaker handle the typical activities of daily living, such as eating, getting dressed and
social interaction. What could take months for the caretaker to figure out could be learned in just a few days.
"It really should be a comprehensive guidebook for the person who is caring for the person [with special needs], whether it's their medical needs or their emotional needs," says Dehan. "It's very personalized to each
individual case. Usually, what parents are most concerned about is, 'Nobody can take care of my child like me because they don't know that when he looks to the right that means he needs to use the bathroom.' That kind of
really personal information should be in there."
Rather than just describing these preferences in words, families can also show them by videotaping daily activities.
"You know a picture is worth a thousand words. Well, a video can be worth a book," says Maroney.
Guardianships
Guardians are responsible for making decisions regarding medical, financial and personal care on behalf of those who are unable to make them for themselves. While the appointment of a legal guardian is vital to ensure that the person with special needs will be taken care of in the future, it is even more so once a special needs child turns 18, when parents no longer have the legal
authority to make medical decisions for their kids.
"Parents think that just
because they have a child with
developmental disabilities, they are the child's guardian," says
autism activist Evelyn Ain, publisher of Spectrum Magazine, mother of an autistic child and contributor to the Long Island Press. "God forbid the child needs an operation at 18 years old. They [parents] have to go in front of the court in an emergency hearing so they can reclaim guardianship over their own child."
An appointed healthcare proxy can also make decisions for the disabled person, but only in regard to healthcare matters.
"Obviously, some do not have the mental capacity to really execute a will and testament, but the standards for mental capacity to execute a healthcare proxy are a lot lower," says Maroney. "You can go to the doctor with your child who is over 18 and actually have them establish who can make the healthcare decisions."
A bill was signed into state law in July, sponsored by Assemb. Harvey Weisenberg (D-Long Beach), which would authorize a family member to make the
decision to withhold or withdraw life-sustaining treatment from those with mental retardation, when a legal guardian or health proxy isn't in place. From a list formed in conjunction with parents, family members and advocates, family members are chosen to make these decisions in order of priority by the commissioner of New York State's Office of Mental Retardation and Developmental Disabilities.
"If a child is on life support, somebody has to make a determination as to how this child is going to survive or expire, and then the family who had this child all their life is sent to court," says Weisenberg, who is also the father of an adult with a developmental disability and a leading advocate for people with disabilities in New York State. "In as difficult a situation as that might seem, for them to be referred to court to be able to make a decision is ridiculous."
Finding Help
When planning for the
future of a special needs child, it is important to find a qualified professional to help draw up legal documents. Special needs trusts in particular can be a problem if they are not set up properly, since laws and eligibility requirements for government benefits are very complex, and change frequently.
"Even if you have someone like the family lawyer helping you, it's good to bring someone in just to do this piece of it in conjunction with your regular lawyer,
because the law and requirements change-and you want to make sure that it's done correctly," says Koenigsberg.
With improved medical and surgical treatment, children with developmental disabilities are living longer. Whether the person is a toddler or nearing middle age, it is essential that parents create a legally recognized plan to protect their most valuable asset of all, their child.
"Parents come into my office who are in their 60s and say, 'We have a Down syndrome child, and he's going to be 40 and we're not going to be here forever,'" says Weisenberg. "If something happens to these people, what is going to happen to their child?"
By answering this difficult question now, families with special needs children won't have to worry about how it might be answered for them later.
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