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BRENT A. BUSH, ESQUIRE SECURITY NATIONAL
TRUST COMPANY
MICHAEL A. BUSH, ESQUIRE BOWLES RICE LLP
W I T H
EASTRIDGE HEALTH SYSTEMS
“Tomorrow Comes Too Soon”
Copyright 2015 Brent A. Bush Michael A. Bush
I. Defining a
“Special Needs Plan”
II. Estate Planning Tactics
III. Special Needs Trust as a Solution
IV. Conclusion
Copyright 2015 Brent A. Bush Michael A. Bush
Enhance life for our family member with
special needs
Enhance /sustain quality of life for our family
Planning Objectives
Copyright 2015 Brent A. Bush Michael A. Bush
Commonly:
Just disability and estate planning, perhaps including “guardianship.”
What is special needs planning?
Copyright 2015 Brent A. Bush Michael A. Bush
Holistically: To optimize public entitlements for health care, education, housing, etc. while enhancing and supplementing the quality of life for somebody under a disability, by devising plans to accomplish this during our lives, that will endure past our death. Balancing other family goals and member interests to accomplish many objectives ** Section 1614(a)(3) of the Social Security Act
What is special needs planning?
Copyright 2015 Brent A. Bush Michael A. Bush
• Intellectual disability • Stroke • Mental Illness • Advancing Age • Head Injury • Other cognitive or neurologic disorders • Age • Physical limitations
Functional or categorical determination?
“Special Needs”
Copyright 2015 Brent A. Bush Michael A. Bush
Allocation of Resources Time, Money, Energy toward Goals
Family Needs
Education
Residential
Financial
Healthcare
Government Benefits
Employment
Recreation
Legal
Copyright 2015 Brent A. Bush Michael A. Bush
Allocation of Resources
Identify Needs
Identify Resources
Establish Goals
Develop Strategies
Copyright 2015 Brent A. Bush Michael A. Bush
Allocation of Resources
Family
Mom and Dad
Child 2
Special Needs
Copyright 2015 Brent A. Bush Michael A. Bush
Means-Tested Resources
Medicaid
Supplemental Security Income (SSI)
Waiver
Section 8 HUD
Copyright 2015 Brent A. Bush Michael A. Bush
Non-Means-Tested Resources
Medicare
Social Security Disability Income (SSDI)
Private Resources
Savings
Investments
Insurance
Retirement
Annuities
Grants/ Scholarships
Income
Copyright 2015 Brent A. Bush Michael A. Bush
What’s the Need?
Rigidity Flexibility
Means Tested
Non-Means Tested
Benefits Reduced
Approval Approval Waitlist Approval 2 Years Immediate Waitlist Contract
SSI Medicaid Waiver SSDI Medicare
Private Resources Section 8 ACA
Copyright 2015 Brent A. Bush Michael A. Bush
Purpose of Planning
General Planning
Me + My Stuff
Special Needs Planning
Me + My Stuff + Others
What concerns you?
Copyright 2015 Brent A. Bush Michael A. Bush
Purpose of Planning
Educational
Medical
Social/ Recreational
Vocational
Residential
Legal
Financial
Government benefits
Copyright 2015 Brent A. Bush Michael A. Bush
Challenges of Special Needs Plan
Providing for all loved ones without jeopardizing means-tested benefits
Designing a supplemental plan, not a support plan
How to treat all children equitably
How to establish sufficient funds for care plan
How to provide proper supervision, management, and distribution to child
Copyright 2015 Brent A. Bush Michael A. Bush
What does a plan do?
Marshalls assets
Provides notice
Gives context
Imposes obligations
Creates options
Relies on experience
Removes ambiguity
Early investment opportunity
Copyright 2015 Brent A. Bush Michael A. Bush
Who plans?
• Principal • Beneficiary • Power of Attorney • Guardian • Conservator • Trustee • Trust Protector • Family • Judge
Copyright 2015 Brent A. Bush Michael A. Bush
Who plans?
Executor
Corporate or Individual
Beneficiary
Principal Attorney –in-
Fact
“Agent”
Trustee
Corporate or Individual
Guardian/ Conservator
Copyright 2015 Brent A. Bush Michael A. Bush
How Does a Plan Work?
Estate Planning Inventory and Letter of Intent
Seek Professionals
Special Needs Estate Plan
Funding the Plan
Annual Review
Using the tools to build the plan.
Copyright 2015 Brent A. Bush Michael A. Bush
No Estate Plan
West Virginia laws of intestate distribution Decedent’s Spouse
Decedent’s Children
Decedent’s Parents
Decedent’s Siblings
Escheat
Control
Means-tested benefits
Taxes
Probate
Copyright 2015 Brent A. Bush Michael A. Bush
Non-Special Needs Estate Plan
Letter of Intent
Last Will and Testament
Durable Power of Attorney
Medical Power of Attorney
Living Will
Revocable Trust
Probate Avoidance
Copyright 2015 Brent A. Bush Michael A. Bush
Special Needs Estate Plan
Letter of Intent
Last Will and Testament
Durable Power of Attorney
Medical Power of Attorney
Living Will
Revocable Trust
Probate Avoidance
Special Needs Trust/ Supplemental Trust
Guardianship/ Conservatorship
ABLE Account
Copyright 2015 Brent A. Bush Michael A. Bush
Choosing your Trust
• Supplemental Trusts • Special Needs Trusts
Copyright 2015 Brent A. Bush Michael A. Bush
Special Needs Trusts
D4A First Party Self-Settled
• Established by parent, grandparent, guardian, court with assets of the disabled individual
• Under 65 • Medicaid pay-back • Needs planning • Benefits preservation
Copyright 2015 Brent A. Bush Michael A. Bush
Special Needs Trusts
D4C First-Party Pooled Trust
• Assets of the disabled individual • Trust funded by individual • Non-profit pooled trust • Trust pay-back, then Medicaid • Needs planning • Benefits preservation
Copyright 2015 Brent A. Bush Michael A. Bush
Special Needs Trusts
Third Party Special Needs Trust
• Assets of third party • Established during life or by will • Trustee discretion disbursement • Trustee discretion preservation • Dispositive provisions • Needs planning • Trust protector
Copyright 2015 Brent A. Bush Michael A. Bush
Traditional Enlightened
Parental care and stewardship terminates
Distributing assets outright
Disinheriting a special needs child
Leaving property to another family member with an ‘understanding’
Parental care and stewardship continues
Benefits protected
Third-party Discretionary Trust
Third-party Supplemental Needs Trust Eligibility
Quality of life
Residual estate
Third party administrator
Estate Planning Options For Families
Copyright 2015 Brent A. Bush Michael A. Bush
First-Party Third-Party
• Created by parent, grandparent, guardian or a court, with...
• Funds of beneficiary
• Benefits eligibility
• Contains ‘pay-back’ requirement
• Funding vehicle for needs planning
• Set up by third party, with...
• Funds of another
• Benefits eligibility
• No ‘payback’ requirement
• Not usually court-supervised
• Funding vehicle for needs planning
• By gift or testamentary bequest
Special Needs Trusts
Copyright 2015 Brent A. Bush Michael A. Bush
Qualified Disability Expenses
Education and training Special dietary needs Recreation
Spending money Counseling Computers
Certain medical items Appliances Clothing
Vacations, social Dental expenses Companions
Quality of life expenses Adaptive equipment Musical
Transportation Furnishings Travel
Insurance/preneed/other Housing
Personal care items
Copyright 2015 Brent A. Bush Michael A. Bush
\
Guardianship and Conservatorship W. Va. Code 44A-1-1, et seq.
“Protected Person” - an adult individual, eighteen years of age or older,
who has been found by a court, because of mental impairment, to be unable to receive and evaluate information effectively or to respond to people, events, and environments to such an extent that the individual lacks the capacity: (A)To meet the essential requirements for his or her health, care, safety,
habilitation, or therapeutic needs without the assistance or protection of a guardian; or
(B)To manage property or financial affairs or to provide for his or her support of legal dependents without the assistance or protection of a conservator.
A finding that the individual displays poor judgment, alone, is not sufficient evidence that the individual is a protected person within the meaning of this subsection.
Copyright 2015 Brent A. Bush Michael A. Bush
Surrogate Decision-Making
“Conservator” – person appointed by the court who is responsible for managing the estate and financial affairs of a protected person, and where applicable, will include a limited conservator or temporary conservator. “Guardian” – person appointed by the court who is responsible for the personal affairs of a protected person, and where applicable, will include limited guardian or temporary guardian.
Functional or categorical determination?
Copyright 2015 Brent A. Bush Michael A. Bush
Surrogate Decision-Making
Initiation
Physician statement and
financial resources
Representation Fact finding
Appointment of guardian and/or
conservator and scope
Conservator and Guardian
Regular reports
Modifications and
Revocations
Copyright 2015 Brent A. Bush Michael A. Bush
“Normal” Planning “Special Needs”
Planning
Similar to Committee
Can result from failure to plan with DPOA, Trust, MPOA, etc.
Recognizes ability to determine level of guardianship- Limited to Full Guardianship
Provides for successorship of guardian
Surrogate Decision-Making
Copyright 2015 Brent A. Bush Michael A. Bush
ABLE Accounts
• Achieving a Better Life Experience Act • Savings account with tax-free earnings for health,
independence, quality of life • Eligibility
• Disabled before age 26 • Receives SSI or SSDI
• Qualified disability expenses • Draw backs
• Annual contribution limits • $100,000 ceiling before SSI suspension • Medicaid Payback
Copyright 2015 Brent A. Bush Michael A. Bush
Great, how do I use an ABLE Account?
• Income • Savings • Avoid spend-down • Independent control • Trust “Band-Aid”
Copyright 2015 Brent A. Bush Michael A. Bush
Where do YOU go from here?
Estate Planning
Coordination of Assets and Benefits
Title XIX Waiver
Housing
Community Services
Vocational Training
IEP/ 504 Plans
Socialization
What else?
Copyright 2015 Brent A. Bush Michael A. Bush
“Waiting is a trap. There will always be reasons to wait… The truth is, there are only two things in life, reasons and results, and reasons simply don’t count.”
Robert Anthony
Common Misconceptions About Special Needs Planning
1. A special needs trust is special needs planning
2. Government benefits are enough to support my child for their lifetime
3. I can always make decisions for my loved one
4. Guardianship is irreversible
5. I need to have all the answers before I start
6. My child is young… I can wait to plan
7. I don’t have enough money to even worry about
Common Mistakes to Avoid
1. Never defined the future needs of your loved one
2. Never set up a will or other legal documents
3. Use Disinheritance Model
4. No special needs trust is set up
5. Never changed Beneficiary Designations
6. Never securing your own future
7. Never made future caregiver official
8. Don’t understand the tax system
9. Communication is absent
Copyright 2015 Brent A. Bush Michael A. Bush
Top Tips When Planning for Special Needs
1. Don’t disinherit the family member with special needs
2. Carefully consider the division of assets among your children
3. Discuss allocation of expenses and taxes in your estate
4. Choose the trustees of a special needs trust, and guardians, carefully
5. Prepare a Letter of Intent
6. What if you become incapacitated?
Copyright 2015 Brent A. Bush Michael A. Bush
7. Review the titling and beneficiary designations on all of your assets
8. Consider using life insurance to fund a special needs trust
9. Retirement plans/IRAs not most effective method of funding a special needs trust
10. Coordinate other relatives’ estate planning with your own Bonus
11. Remember the person with special needs may need his or her own estate plan, depending on ability and determination of competency
12. Preapproval of documents
Top Tips When Planning for Special Needs
Copyright 2015 Brent A. Bush Michael A. Bush
THANK YOU
Brent A. Bush, Esquire
Security National Trust Co.
Wheeling, WV
304-233-5215
Michael A. Bush, Esquire
Bowles Rice LLP
Morgantown, WV
304-285-2500
Copyright 2015 Brent A. Bush Michael A. Bush