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April 05, 2006

Older & Wiser


Planning For Disabled Adult Children

Adult children with disabilities often depend on their parents for vital support. When these parents can no longer care for their children due to their own disability or death, the responsibility will fall on siblings, other family members, and the community. Planning by parents can make all the difference in the life of the child with a disability, as well as that of his or her siblings who may be left with the responsibility for caretaking (on top of their own careers and caring for their own families and, possibly, ailing parents).

A Plan Of Care

Where is your son going to live when he can no longer live with you? Will he move in with a sibling or into a group home? Who will make the decision? Who will monitor the care he receives? Who will make medical decisions for him? It's never too soon to begin answering these questions and making sure that the living and support arrangements are in place.

In some cases, it can ease the transition for all concerned if the child moves to the new living arrangement while his parents can still help with the process. It will help everyone involved if the parents create a written statement of their wishes for their child's care. After all, the parent knows him better than anyone else. Parents can explain what helps, what hurts, what scares their child, and what reassures him. When the parents are gone, their knowledge will go with them unless they pass it on. In almost all cases where a parent will leave funds at death to a disabled child, this should be done in the form of a trust. Trusts set up for the care of a disabled child generally are called "supplemental" or "special" needs trusts, which are described in more detail below.

Money should not go outright to the child, both because she may not be able to manage it properly and because receiving the funds directly may cause the child to lose public benefits, such as Supplemental Security Income (SSI) and Medicaid. Some parents choose to avoid the complication of a trust by leaving their estates to one or more of their healthy children, relying on them to use the funds for the benefit of their disabled siblings. Except in the case of a very small estate, this is generally not a good idea. It puts the healthy child in the difficult position of having to decide how much of her money to spend on her sibling. Such funds also will be subject to claim by creditors and at risk in the event of divorce or bankruptcy. Finally, the child who receives the funds may die before the disabled child without setting these funds aside in her estate plan.

Supplemental Needs Trusts

Supplemental needs trusts (also known as "special needs" trusts) allow a disabled beneficiary to receive gifts, lawsuit settlements, or other funds and yet not lose her eligibility for certain government programs such as SSI and Medicaid. As their name implies, supplemental needs trusts are designed not to provide basic support, but instead to pay for comforts and luxuries that could not be paid for by public assistance funds. These trusts typically pay for things like education, recreation, counseling, and medical attention beyond the simple necessities of life.

Very often, supplemental needs trusts are created by a parent or other family member for a disabled child. Such trusts also may be set up in a will as a way for an individual to leave assets to a disabled relative. In addition, the disabled individual can often create the trust himself, depending on the program for which he or she seeks benefits.

Choosing a trustee is also an important issue in supplemental needs trusts. Having a family member who is familiar with the adult disable child can be a good choice. An alternative is retaining the services of a professional trustee. For those who may be uncomfortable with the idea of an outsider managing a loved one's affairs, it is possible to have a family member act as co-Trustee. Other ideas include appointing a trust "protector," who has the powers to review accounts and to hire and fire trustees, and a trust "advisor," who instructs the trustee on the beneficiary's needs. However, if the trust fund is small, a professional trustee may not be interested.

By planning ahead, one can ensure a relatively smooth transition for the adult disabled child in the event of the parents' death or disability.

Meg Rudansky is a Sag Harbor-based attorney who specializes in the areas of Elder Law, Estate Planning and Probate. She can be reached at (631) 725-4778.

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