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Estate Planning for Parents of Disabled Children

Posted by Daniel J. Eccher, Esq. | Jun 27, 2010

Parents of disabled children tend to worry a lot. I am frequently asked the following questions:
• Will my child be able to live independently, without my support?
• Does my child need a guardian?
• Where will my child live?
• Does my child qualify for public assistance programs such as SSI and MaineCare (Medicaid)?
• If I leave money or property to my child, will my child lose public assistance?

Will my child need a guardian?
Some children, in spite of their disabilities, are able to live independently. Many people with physical disabilities lead active lives, helped by adaptive equipment, in-home services, and legal protection under the Americans for Disabilities Act. For this group, the appointment of a guardian is not a concern.

Even a child with mental or emotional disabilities may be able to live on their own or in supportive settings such as supervised apartments and group homes.

A parent of a disabled child should ask him or herself, “Is my child able to make decisions about medical care? Is my child able to manage money?” If the parent has any doubt, he or she should first consider whether the child has the mental capacity to sign a durable power of attorney, in which the child chooses another person (such as a parent, other family member or family friend) who can to access medical and financial information and make the decisions for the child, to the extent the child is unable. In this situation, the child continues to have a degree of independence.

However, the child's mental disability may be so severe that he or she does not have sufficient understanding of the power of attorney. In this case, I advise parents, upon the child's turning 18, to petition the probate court for appointment as the child's guardian. Otherwise, the parent will no longer be able to make decisions for the now adult child. Where the child has money or property in excess of $5000, the parent must also be appointed as the child's conservator.

A parent will also worry who will watch over the child after the parent is gone. I advise parents, in their wills, to designate a responsible adult to act as the child's guardian in this circumstance.

Where the child receives some kind of Social Security benefit, the parent should also apply to become the child's representative payee, to handle that child's benefit check.

Will my child qualify for public assistance?
A child who has a physical, mental or emotional impairment may be unable to support him or herself financially. The child is also unlikely to have medical coverage.

In order to be eligible for cash benefits from the Social Security Administration, the child must undergo a disability determination. This can be started by visiting the local Social Security office.
If the child is determined to be disabled, he or she may qualify for Social Security Disability Income (SSDI) or Supplemental Security Income (SSI). A child with a deceased or disabled parent may qualify for SSDI, based on his parent's work record. The amount of the cash benefit will vary, based on the parent's work history. After two years of being on SSDI, the child will also qualify for Medicare, which will cover much, but not all of, the child's medical expenses. Depending on the amount of the SSDI benefit, the child may also qualify for MaineCare. (discussed below), which would cover the child's other medical expenses not covered by Medicare.
Children who do not qualify for SSDI may qualify for SSI. The child must be low income and have limited assets. The maximum SSI benefit in 2010 is $674. If the client qualifies for SSI, he or she will also qualify for MaineCare.

MaineCare (Medicaid) is a comprehensive public insurance program. MaineCare is available to a number of different populations, with different income and asset thresholds for each group. You should call the local Department of Health and Human Services office to find out whether your child might be eligible.
In my will, should I leave my child money or property? Will this cause my child to be ineligible for public assistance?

The parent may be want to leave money or property to the child, but may worry that the child will lose benefits, particularly medical coverage.

Special Needs Trusts for Disabled Children
There is an answer to this problem. The parent's will should leave the child's inheritance to a special needs trust. This arrangement will enable the child to maintain benefits while having funds available to provide for the child's “special” or “supplemental” needs. A person, known as a “trustee”, oversees the funds. You can choose a family member, friend, professional or financial institution to be the trustee. The trustee will have discretion as to what kinds of things to spend the money on. The trustee will not give money directly to the child (this would cause the child to lose benefits) but instead will make payments directly to providers of goods and services to the child. The primary purpose of the trust is to meet those of the child's needs which may not be met by benefit programs. These needs may include: dental care, eyeglasses, holistic health care, special therapies, in-home services in excess of what public programs provide, companion services, adaptive equipment, telephone, tuition, transportation, exercise programs, and the like.

The trustee may also, in the trustee's discretion, expend funds for the child's housing. For instance, the trustee might purchase a modest home for the child or might pay for an oil delivery. If the child is on SSI, such an expenditure will cause the child to lose a little more than one-third of his or her monthly benefit, but this may not be a bad trade-off.

The trust can provide that, upon the child's death, the balance of the trust will go to other family members or to charity.

Getting help
When it comes to a will, a special needs trust or a power of attorney, consult a lawyer who is knowledgeable in this area. Beware of forms on the internet or in books, which may not be appropriate for Maine residents, and which may not address your particular situation. Also, there are tax considerations, which can only be addressed with the help of a competent professional.

The information provided here is for educational purposes only, and should not be construed as legal advice or an answer to a specific legal problem.

Sally M. Wagley assists older and disabled people and their families in the areas of public benefits, estate planning and estate administration, with the firm of Levey and Wagley, P.A. in Winthrop, Maine,

About the Author

Daniel J. Eccher, Esq.

Daniel J. Eccher, Esq. is the Managing Shareholder at Levey, Wagley, Putman & Eccher, P.A., in Winthrop, Maine. Dan's favorite problem to solve is helping clients figure out how to afford long-term care while having something left for their family.

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