ESTATE PLANNING FOR INDIVIDUALS WITH DISABILITIES AND THEIR FAMILIES

by Thomas D. Begley, Jr., Esquire, CELA and Emily M. Schurr, Esquire

This article provides a guide to estate planning in consideration of protecting individuals with disabilities and preservation of family assets. Proper estate planning must be executed to ensure continuing eligibility for public benefits, and overall planning to ensure the best quality of life for loved ones with a disability.

Public Benefits

            Many individuals with disabilities receive means-tested public benefits.  Some of these benefits have an asset test, some have an income test, and some have both.  Common means-tested public benefits include Supplemental Security Income (SSI), Medicaid, Federally Assisted Housing, and Supplemental Nutrition Assistance Program (SNAP) (formerly Food Stamps).  If individuals with disabilities acquire income or assets, they may lose these important public benefits.  Therefore, proper Special Needs Planning must be undertaken by family members to prevent a loss of these critical benefits.

Estate Planning for Family Members

            Family members of individuals with disabilities often want to tailor their estate plans to provide a certain quality of life for that individual.

Life Care Plan

The process should begin by developing a plan.  The family can retain the services of a Life Planner or do it themselves with an analysis of the current and future financial needs of the individual with disabilities.  The goal is to create a guide that accounts for everything caregivers and loved ones need to know about the person.  Things to be considered include the following:

• Living Arrangements. Where will the individual with disabilities live?
• Important People. Who are the key players in the person’s life, including family, friends, doctors, social workers, care managers, trustees, and financial advisors?
• Medical Conditions and Prognoses. What are the medical conditions and prognoses of the individual with disabilities?
• Medical Coverage. What medical coverage does the person have?
• Public Benefits. What public benefits are currently received or potentially available?
• Abilities and Disabilities. What are the person’s strengths and limitations?
• Personal Characteristics. What are the individual’s personality traits, likes, dislikes, and preferences?
• Assistance with Activities of Daily Living. What support is required for activities of daily living, such as eating, dressing, and personal hygiene?
• Is the individual employed or capable of working?
• Social Activities. What recreational and social activities do the person enjoy?
• What does the individual manage transportation needs?
• Immediate Cash Needs. What are the current immediate financial needs of the individual?
• Monthly Budget. What is a realistic monthly budget, considering anticipated financial requirements?

Family Estate Planning Documents

            To protect a loved one with disabilities, family members may want to consider the following documents as components of their own estate plan:

• Will
• Health Care Power of Attorney and Living Will
• General Durable Power of Attorney
• Stand-alone Third-Party Special Needs Trust (for the benefit of family member with a disability)
• Bloodline Trust (for non-disabled family members)
• Irrevocable Family Trust, including Deed transferring home to Trust, to protect home from long-term care costs.

Additional Planning Tools

• Long-Term Care Insurance. Usually, parents cannot afford a significant loss of assets to pay for long-term care for themselves, if they have a child with disabilities who is unable to work and will need above-average financial support from parents.  Long-term care insurance helps lessen that burden if nursing level care is needed.
• Second-to-Die Life Insurance. Second-to-die life insurance is often a practical way to provide sufficient assets to adequately fund the Third-Party Special Needs Trust.

Estate Planning Documents for Individual with Disabilities

            If the individual with disabilities has capacity, the following estate planning documents should be considered. Both Power of Attorney documents listed below are always advisable, as they prevent the potential need to seek guardianship if the person no longer has capacity in the future.

• In many cases, the individual does not have significant assets, and a Will may not be necessary.  Instead, POD or TOD accounts and proper beneficiary designations may suffice.
• Durable Health Care Power of Attorney. This document allows the individual with disabilities to designate a parent or other family member as the Health Care Representative to make medical decisions on their behalf.
• General Durable Power of Attorney. Through this document, the individual with disabilities typically appoints parents or other family members as the Agent(s) to handle financial decisions on their behalf.