Florida Elder Law Blog - A blog by Elder Law Associates, South Florida's premier elder law attorneys, who handle elder law, medicaid planning, guardianships and much, much more.
A long blog post today, but I hope you'll indulge me, as this is an important topic that is dealt with in a straightforward manner. It's not an article I wrote, but definitely one worth reading: Ten Tips for Helping Families with Special Needs by Louis W.Pierro, Esq., who is an attorney in New York. Nonetheless, this should be mandatory reading by all Florida elder law attorneys.
COSTLY MISTAKE #1: Disinheriting the child.Many disabled people rely on SSI, Medicaid or other government benefits to provide food and shelter.Your clients may have been advised to disinherit their disabled child -the child who needs their help most - to protect that child's public benefits. But these benefits rarely provide more than basic needs. And this "solution" does not allow your clients to help their child(ren) after the client becomes incapacitated or is gone. When a child requires, or is likely to require, governmental assistance to meet his or her basic needs,parents, grandparents and others who love the child should consider establishing a Special Needs Trust.
Planning Tip:It is unnecessary and infact poor planning to disinherit a special needs child. Clients with special needs beneficiaries should consider a Special Needs Trust to protect public benefits and care for the child during the client's incapacity or after the client's death.
COSTLY MISTAKE #2: Procrastination.Because none of us knows when we may die or become incapacitated, it is important that your clients plan for a beneficiary with special needs early, just as they should for other dependents such as minor children. However, unlike most other beneficiaries, a child with special needs may never be able to compensate for a failure to plan. A minor beneficiary without special needs can obtain more resources as he or she reaches adulthood and can work to meet essential needs, but a child with special needs may never have that ability.
Planning Tip: Parents, grandparents, or any other loved ones of a special needs child face unique planning challenges when it comes to that child. This is one area where the client simply cannot afford to wait to plan.
COSTLY MISTAKE #3: Failure to coordinate aplanning team effort.It is critical that the advisor assisting with special needs planning include in the planning team: an attorney who is experienced in this planning area; a life insurance agent who can ensure that there will be enough money to maintain the benefits for the special needs child; a CPA who can advise on the Special Needs Trust's tax return; an investment advisor who can ensure that the trust fund's resources will last for the child's lifetime; and any other key advisors that may support the goals of the trust going forward.
Planning Tip:Special needs planning dictates that the client's advisors work together to ensure that there are sufficient trust assets to care for the child throughout his or her lifetime.
COSTLY MISTAKE #4: Ignoring the special needswhen planning for the child's benefit.Planning that is not designed with the child's special needs in mind will probably render the child ineligible for essential government benefits. A properly designed Special Needs Trust promotes the special needs person's comfort and happiness without sacrificing eligibility.
Special needs can include medical and dental expenses, annual independent check-ups,necessary or desirable equipment (for example, a specially equipped van),training and education, insurance, transportation, and essential dietary needs. If the trust is sufficiently funded, the disabled person can also receive spending money, electronic equipment & appliances, computers, vacations, movies, payments for a companion, and other self-esteem and quality-of-life enhancing expenses: the sorts of things your clients now provide to their child or other special needs beneficiary.
Planning Tip: When planning for a child with special needs, it is critical that the client utilize a Special Needs Trust as the vehicle to pass assets to that child. Otherwise, those assets may disqualify the child from public benefits and may be available to repay the state for the assistance provided.
COSTLY MISTAKE #5: Creating a "generic" special needs trust that doesn't fit.Even some "special needs trusts" are unnecessarily inflexible and generic. Although an attorney with some knowledge of the area can protect almost any trust from invalidating the child's public benefits, many trusts are not customized to the particular child's needs. Thus the child fails to receive the benefits that the parent provided when they were alive.
Another frequent mistake occurs when the Special Needs Trust includes a "pay-back"provision rather than allowing the remainder of the trust to go to others upon the death of the special needs child. While these "pay-back" provisions are necessary in certain types of special needs trusts, an attorney who knows the difference can save your clients hundreds of thousands of dollars, or more.
Planning Tip: A Special Needs Trust should be customized to meet the unique circumstances of the child and should be drafted by a lawyer familiar with this area of the law.
COSTLY MISTAKE #6: Failure to properly "fund" and maintain the plan.When planning for children with special needs, it is absolutely critical that there are sufficient assets available for the special needs beneficiary throughout his or her lifetime. In many instances, this requires utilization of a funding vehicle that can ensure liquidity when necessary. Oftentimes permanent life insurance is the perfect vehicle for this purpose,particularly if the clients are young and healthy such that insurance rates are low.
Also, because this is an ever-changing area, it is also imperative that the clients revisit their plan frequently to ensure that it continues to meet the needs of the special needs beneficiary.
Planning Tip:Clients should consider permanent life insurance as the funding vehicle for special needs beneficiaries, particularly when the beneficiary is young given the often staggering costs anticipated over that beneficiary's lifetime.
If the client may be subject to estate tax, consider having an Irrevocable Life Insurance Trust own and be the beneficiary of the policy, naming the Special Needs Trust as a beneficiary. Alternatively, in a non-taxable situation, consider naming the client's revocable trust as the beneficiary to help equalize inheritances if that is the client's objective.
COSTLY MISTAKE #7: Choosing the wrong trustee.During your client's life, he or she can manage the trust. When the client is no longer able to serve as trustee, they can choose who will serve according to the instructions that they have provided. They may choose a team of advisors and/or a professional trustee. Whomever they choose, it is crucial that the trustee is financially savvy, well-organized, and, of course, ethical.
Planning Tip:The trustee of a Special Needs Trust should understand the client's objectives and be qualified to invest the assets in a manner most likely to meet those objectives.
COSTLY MISTAKE #8: Failing to invite contributions from others to the trust.A key benefit of creating a Special Needs Trust now is that the beneficiary's extended family and friends can make gifts to the trust or remember the trust as they plan their own estates. For example, these family members and friends can name the Special Needs Trust as the beneficiary of their own assets in their revocable trust or will, and they can also name the Special Needs Trust as a beneficiary of life insurance or retirement benefits.
Planning Tip:Creating a Special Needs Trust now allows others, such as grandparents and other family members, to name the trust as the beneficiary of their own estate planning.
COSTLY MISTAKE #9: Relying on siblings to usetheir money for the child with special needs' benefit.Your client may be relying on their other children to provide for their child with special needs from their own inheritances. This can be a temporary solution for a brief time, such as during a brief incapacity if their other children are financially secure and have money to spare. However, it is not a solution that will protect the child with special needs after your client has died or when siblings have their own expenses and financial priorities.
What if the inheriting sibling divorces or loses a lawsuit? His or her spouse (or a judgment creditor) may be entitled to half of it and will likely not care for the child with special needs. What if the sibling dies or becomes incapacitated while the child with special needs is still living? Will his or her heirs care for the child with special needs as thoughtfully and completely as the sibling did?
Siblings of a child with special needs often feel a great responsibility for that child and have felt so all of their lives. When your clients provide clear instructions and a helpful structure, they lessen the burden on all their children and support a loving and involved relationship among them.
Planning Tip: Relying on siblings to care for a special needs beneficiary is a short-term solution at best. A Special Needs Trust ensures that the assets are available for the special needs beneficiary (and not the former spouse or judgment creditor of the sibling) in a manner intended by the client.
COSTLY MISTAKE #10: Failing to protect the child with special needs from predators.An inheritance from parents who fund their child's special needs trust by will rather than by revocable living trust is in the public record. Predators are particularly attracted to vulnerable beneficiaries, such as the young and those with limited self-protective capacities. When you plan with trusts rather than a will, your client decides who has access to the information about their children's inheritance. This protects their special needs child and other family members, who may be serving as trustees, from predators.
Planning Tip: A Special Needs Trust created outside of a will ensures that information about the inheritance is not in the public record, protecting the special needs beneficiary from predators.
Conclusion
Planning fors pecial needs beneficiaries requires particular care and the participation of all of the client's wealth planning advisors. A properly drafted and funded Special Needs Trust can ensure that the beneficiary has sufficient assets to care for him or her, in a manner intended by the client,throughout the beneficiary's lifetime.
Labels: special needs trusts
Elder Law Associates is very excited about how our first ever Florida Elder Law Forum is shaping up. "A Forum for Diverse Professionals with a Common Interest: Facing the Challenges of Home, Hospital and Facility-Based Care" will be held Wednesday, November 12, 2008 from 1:00 pm to 4:30 pm at the Classic Residence by Hyatt in Boca Raton.
The Forum will feature a unique array of presenters from health care, insurance, government, law and consumer advocates, who will address critical questions facing seniors and people with disabilities living in Florida. We will focus on home and community-based care initiatives to provide a vision of the future that includes rapid changes in health care and responses to budget cuts. Stay tuned for details.
For more information, please call me, Leslie Lautin Davis, at 561.750.3850.
Labels: florida elder law
Specialization in all professional fields has raised the standard of practice and allows the client the confidence to know that the professional handles only cases in the specialization and thus is very well versed. An elder law attorney has specialized knowledge in areas of the law that directly relates to the aging or elderly client and persons with disabilities. So what do they do and do you need an elder law attorney?
An elder law attorney properly plans for the possibility of disability, incapacity, home health care and/or nursing home placement and advises clients on how to receive public benefits, including Medicaid. In so doing, an elder law attorney prepares sophisticated Durable Powers of Attorney to provide authority for the client’s named designee to act for him or her regarding financial and legal matters and prepares complex Designation of Healthcare Surrogate forms in which the client chooses a loved one to make vital healthcare decisions for them when they are unable to act for themselves, as well as detailed Living Wills which specify the client’s wishes with regard to all life sustaining devices.
An elder law attorney practices in the Guardianship Court and is able to secure someone to properly handle an incapacitated person’s personal and financial affairs and some elder law attorneys are able to litigate guardianship issues including who should be chosen as a guardian, removing a guardian who mishandles the person’s affairs, and objecting to guardianship entirely.
An elder law attorney may be proficient in litigation for or against a beneficiary or a fiduciary under a will or trust or other asset which has a named beneficiary like an IRA.
An elder law attorney advises clients on long term care insurance, long term living arrangements and facility placement and can provide Geriatric Care Managers for daily, hands-on care.
Elder law attorneys are up to date with the new and evolving laws geared more and more to our aging and disabled population.
You need an elder law attorney…
…if you or your loved one is over 55 for estate planning documents,
…if you or your loved one is disabled, incapacitated or diagnosed with a disability for Medicaid planning and special needs trust planning,
…if you or your loved one is a beneficiary or a fiduciary and something doesn’t seem right,
…or, if you want to know your options for public benefits.
Please call our office at 561.750.3850 for an appointment that will ensure your legal protection.
-- Ellen S. Morris, JD
Labels: Florida Elder Law Attorney
A large majority of the American public still believes that the government will provide long term care when needed. It is this misconception that most likely prevents people from doing any planning at a younger age for the future need for care. According to the National Care Planning Council, many people believe they can give away assets prior to the need for long term care and qualify for Medicaid. The Council suggests that this belief prevents people from considering other ways to fund the cost of future care.
As a matter of fact, it may be possible to use the system and allow Medicaid to cover care but at what cost? Why would anyone want to plan to spend his remaining years in a nursing home--which is the preferred living arrangement for Medicaid. Why go through the expense and effort of trying to manipulate the system to get welfare care, when a little preplanning at an earlier age would be a better option?
In our Florida elder law attorney practice we hear frequent objection to long term care planning from people who think Medicare or the Veterans Benefits Administration will take care of them. While this is true to a certain extent, these people simply don't understand the limitations of these government programs.
Below are quotes taken from individuals who, over the years, have voiced misconceptions about long term care planning.
"Uncle Jim got along just fine with the government paying his care"
"I can give away my assets and have the government pay for it"
"We have a trust and all of our assets will go to our family so the government will pay for our care"
"I'm not interested in home care or assisted living, just stick me in a nursing home and Medicaid will pay the bill"
"Long term care insurance is too expensive"
Government could be more involved in providing care but our constipated system of delivery prevents this from happening. The National Aging Network, a government-sponsored program, is in the best position to help people receive long term care in their homes. And studies have shown that the cost of providing this kind of care is significantly less than the cost of providing nursing home care through government programs.
Unfortunately, for every dollar that supports a person through the Aging Network the government spends about $270 supporting a person in a nursing home. Because it has inadequate funding, the National Aging Network must confine its valuable services to people who have little income or for social reasons are disadvantaged. Moderate and middle income Americans can receive some services from the network but are mostly excluded from the more valuable caregiving services.
We believe the public's misunderstanding of Government long term care programs is an impediment to proper long term care planning. When people understand the limitations of relying on government programs they are most likely to be more motivated to plan for the future by making provisions in advance and providing advance funding to pay for care. Prior planning also allows people to have a choice in their care setting and in the type of services they receive.
--Ellen Morris, JD & Howard Krooks, JD CELA
Labels: elder care, long term care, medicaid
