When you discuss special needs planning, there is a lot of talk about special needs trust; however, a trust is just one tool. A special needs trust is designed to prevent disruption of benefits, while allowing an allocation of funds to pass to an individual with a disability to ensure needs are met beyond what benefits will otherwise provide. A true plan needs to encompass other levels of support beyond finances.
Public Benefits
Availability of benefits vary state-by-state. In Virginia, we utilize the My Life My Community waivers to provide care required to support an individual with a developmental disability in the community. Such support includes, but are not limited to, medical care, employment, community living, behavioral interventions, and assistive technology. These benefits have the following restrictions:
- The individual have a chronic disability other than mental illness that manifested prior to age 22 results in substantial functional limitations in three or more major of the following life activities: self‐care, receptive and expressive language, learning, mobility, self‐direction, capacity for independent living, or economic self‐sufficiency, and a need for special interdisciplinary or generic services, individualized supports, or other forms of assistance that are of lifelong or extended duration. There is an exception to the life activity requirement when an individual has a condition that presents between birth and age nine that results in a substantial developmental delay or specifical congenital or acquired condition.
- There are three waivers in the My Life My Community program, each with a different set of available benefits designed to meet specific needs, primarily regarding residential supports.
- There is an asset limit of $2,000 and an income limit of $2,742 per month (in 2023). Unlike other benefits, there is no deeming from a parent to a child, so they will only consider the resources of the child.
Because there is a long waiting list for this coveted waiver, getting on the list as soon as possible is recommended.
Surrogate-Decision Making
Parents often overlook the necessity to have a plan in place to handle the daily decisions they make for a child after they attain the age of majority. I have had many clients assume that the rest of the world will understand their child has a disability and that they therefore must make decisions for them. A similar analysis is often assumed by married couples as well. The issue with that is the law recognizes legal capacity at the age of majority, and action must be taken to ensure you can continue to make decisions.
What process is used is dependent upon the capacity of the individual. If an individual can understand “the nature and effect” of a power of attorney or advance medical directive, we often implement such documents to promote autonomy and implement the least restrictive alternative. However, in some cases, a power of attorney or advance medical directive may be insufficient to protect the individual.
In cases, where an individual lacks the capacity to understand estate planning documents, or documents are otherwise insufficient, then a guardianship or conservatorship may be implemented to ensure someone has appropriate decision-making authority.
In developing a plan, families should consider naming a successor to ensure continuation of authority in the event the primary decision-maker is unavailable. Discussing this role with the successor is critical in ensuring the plan will work. Often, families assume someone will take over this responsibility when they are reluctant or otherwise not inclined to do so.
Residential Decisions
Where an individual will receive care or otherwise reside is, in my opinion, perhaps the starting point of any plan. The decision related to residence really helps develop the plan. For instance, if the individual will remain in the family’s primary residence, then additional funding may be required above and beyond the available benefits to just maintain the home and support needed. Further, the home may need to pass into a trust solely for the benefit of that individual so that a joint owner does not try to force the sale of such property. In the alternative, if the individual is going to be relocated out of the primary residence, then a plan no longer focuses on liquidity to maintain real estate or ownership issues.
While there are other tools, such as the ABLE Account, these are just a few of the things I tend to focus on outside of traditional wealth transfer planning. A special needs planner should be sure to integrate these critical issues into the plan because it is, in fact, more than just a trust.
