SPECIAL NEEDS PLANNING FOR
DISABLED CHILDREN AND ADULTS
Parents of children with disabilities face many challenges. After dealing with medical issues, parents often worry about their children's economic future. Where will their child live? Who will take care of them? How will they support themselves? Traditionally, parents were forced to disinherit their children with disabilities - the children that needed their financial support the most - so that those children could keep government benefits.
Estate plans to benefit people with disabilities are designed to financially assist the disabled person while retaining that person's present and future entitlement to various government benefits. Planning requires knowledge and coordination of the various government benefit programs, such as Social Security Disability, Supplemental Security Income, and Medicaid. It also requires an analysis of the source of funds used to create the estate plan, such as a personal injury settlement, an inheritance, a gift, or the disabled person's own funds.
Both federal and state laws provide options other than disinheritance. Estate planners in Ohio use several types of trusts to benefit persons with disabilities, including Medicaid Payback Trusts or Special Needs Trusts, Pooled Trusts, Supplemental Services Trusts, and Third-Party Discretionary Trusts. These types of trusts can benefit disabled individuals without jeopardizing their eligibility for public benefits.
Medicaid Payback Trusts or Special Need Trusts
Medicaid Payback Trusts, which are also called Special Needs Trusts, are trusts established by a parent, grandparent, legal guardian, or the court for a disabled beneficiary who is under the age of 65. Medicaid Payback Trusts are often funded by assets received by the disabled person through a personal injury settlement, jury award, lottery winnings, or an inheritance. At the beneficiary's death, Medicaid must be paid back for any amounts expended by Medicaid on behalf of the beneficiary. These trusts are usually irrevocable.
Pooled Trusts
Pooled Trusts are trusts established by a disabled individual or his or her parent, grandparent, legal guardian, or the court. Pooled Trusts are administered by non-profit, tax-exempt foundations that manage individual accounts for individuals throughout the State of Ohio, but that pool these accounts for investment purposes. The beneficiary of a Pooled Trust can be any age as long as he or she is disabled. A Pooled Trust may be used for supplemental services only. Funds left in the Pooled Trust at the beneficiary's death may either be retained by the Trust to help others with disabilities or be paid back to the state. There are three Pooled Trusts in Ohio, which are managed by The Community Fund Management Foundation (Cleveland), The Disability Foundation (Dayton), and the McGivney Trust (Columbus).
Supplemental Services Trusts
Ohio law allows anyone to establish a Supplement Services Trust with assets belonging to someone other than the beneficiary for a beneficiary who is eligible to receive services from the Ohio Department of Mental Retardation and Developmental Disabilities (ODMR/DD) or the Ohio Department of Mental Health (ODMH). The Trust principal at the time of its creation may not exceed a maximum amount stated in the Ohio Revised Code, which is $226,000 in 2007 and an additional $2,000 every year thereafter. A Supplemental Services Trust may only be used to pay for supplement services - it cannot be used for other types of support or maintenance. At the beneficiary's death, ODMR/DD or ODMH must be designated to receive at least 50% of the funds remaining in the Trust.
Third-Party Discretionary Trusts
A Third-Party Discretionary Trust is a Trust established by an individual with his or her resources for the benefit of a disabled individual of any age. Third-Party Discretionary Trusts are appropriate when the assets in the Trust have never belonged to the disabled beneficiary. To avoid problems with SSI and Medicaid, funds in a Third-Party Discretionary Trust should be used for supplemental services. Unlike Medicaid Payback Trusts, Pooled Trusts, or Supplemental Services Trusts, however, there is no payback provision. A Third-Party Discretionary Trust is the estate planning tool used most often by parents for their disabled child.
What are Supplemental Services?
"Supplemental Services" are services that are provided to an individual with a disability in addition to services the individual is eligible to receive under programs authorized by federal or state law.
"Supplemental Services" are expenditures, items, or services that meet the following criteria:
- The services are in addition to services an individual with a disability is eligible to receive under programs authorized by federal or state law or regulations, and the services do not replace services that would otherwise be available without the existence of the trust;
- The services are in addition to basic necessities for such items as essential food, clothing, shelter, education, and medical care, and the services are in addition to other items provided pursuant to an ascertainable standard (health, maintenance and support); and
- The services are not available without payment from the trust.
"Supplemental Services" which meet the criteria outlined above may include, but are not limited to the following:
- Reimbursement for attendance at or participation in recreational or cultural events;
- Travel and vacation;
- Participation in hobbies, sports, or other activities;
- Items beyond necessary food and clothing (for example, funds for dining out occasionally, for special foods periodically delivered, or for an article of clothing such as a coat which is extra but which is desired because it is newer, more stylish, etc.);
- Visiting friends, companionship;
- The cost differential between a shared room and a private room;
- Equipment such as telephones, cable television, televisions, radios and other sound equipment, and cameras for private use by the individual;
- Memberships in clubs such as book clubs, health clubs, and record clubs;
- Subscriptions to magazines and newspapers;
- Small, irregular amounts of personal spending money, including reasonable funds for the occasional purchase of gifts for family and friends or for donations to charities or churches;
- Personal advocacy;
- Counseling and guidance;
- Someone to visit the individual periodically and monitor the services he or she receives;
- Intervention or respite when the person is in crisis, if not available from other third-party sources;
- Vocational rehabilitation or habilitation, if not available through other third-party sources;
- Reimbursement for attendance at or participation in meetings, conferences, seminars, or training sessions; and
- Other expenditures used to provide dignity, purpose, optimism, and joy to the individual.
The following are examples of "Supplemental Services" that may require prior submission to a government agency or other insurance provider and be denied by that agency prior to being considered a legitimate distribution from a trust account;
- Cosmetic, extraordinary, experimental, or elective medical or dental care, if not available through other third-party sources;
- Exercise equipment, or special medical equipment if not available through other third-party sources;
- Services of a representative payee or conservator;
- Reimbursement for time expense for a companion or attendant necessary to enable the individual to access or receive supplemental services including, but not limited to, travel and vacations and attendance at meetings, conferences, seminars, or training sessions; and
- Items which Medicaid or other governmental programs do not cover or have denied payment or reimbursement for, even if those items include basic necessities such as physical or mental health care or enhanced versions of basic care or equipment (for example, wheelchair, communication devices), and items that are not included for payment by the per diem of the facility in which the individual lives.
Helpful Websites:
The attorneys at Beckman Weil Shepardson are available to help you plan for your disabled child's future needs.
Our Ohio elder law attorneys working for the betterment of the community through comprehensive and caring elder law services include Janet E. Pecquet, Jennifer Griffin Anstaett, and Kristen M. Myers. To schedule a consultation with one of our elder law lawyers, contact Beckman Weil Shepardson LLC , and by phone or through this Web site.
