by Dana Bookbinder, Esq.~Parents of a special needs child know too well the level of detail that they must tend to on a daily basis for the comfort and progress of their child in both the classroom and at home. Some may not be aware, however, of the legal planning that must be addressed with the same dedication to ensure their child’s well-being.
Throughout the primary education of a child with special needs, his parents typically meet with teachers, therapists, child study teams, and often special education attorneys. But what happens once this child turns 18? Once a child reaches the age of majority, his parents no longer have the legal authority to sign documents on his behalf. Therefore, it is necessary for the child to sign a General Durable Power of Attorney and Advance Health Care Directive or, if the child does not possess the legal capacity to do so, the parents must apply to become guardians on the child’s behalf.
Through a General Durable Power of Attorney, an individual can appoint another individual, such as a parent, to conduct financial and business transactions on his behalf. Executing the document does not strip the individual of the right to conduct his own transactions, but authorizes another individual to do so if he is unable. Because financial institutions are careful not to permit individuals to sign for one another without unambiguous authority, these documents must be very specific in their language.
Likewise, if a child has capacity to sign an advance health care directive, he should sign to authorize another adult to speak to doctors and advocate for his healthcare on his behalf in the event that he is unable to do so in the future himself.
In the event a child turns 18 and does not have the legal capacity to sign legal documents, his parents must apply through a court to become his guardian. Unlike legal documents which do not impede an individual’s ability to make his own decisions and sign paperwork on his own behalf, a guardianship establishes that an individual does not have the capacity to manage his own affairs. The guardianship may be limited in scope if a child is capable of handling some, but not all of his financial, legal, or healthcare issues.
In addition to providing for a legal mechanism to conduct a child’s business or healthcare dealings once he reaches the age of majority, parents must consider how to finance their child’s life in the event they are no longer living. As parents become more educated on planning tools to help their children, special needs trusts (also called supplemental benefits trusts) are becoming increasingly popular. These trusts are specifically designed to benefit an individual who is receiving public benefits with strict financial eligibility requirements, such as Medicaid, Supplemental Security Income (SSI), or Section 8 Housing, and preserve that individual’s eligibility for the programs. The trust appoints a trustee to make distributions to enhance the beneficiary’s life by paying for items such as therapies, entertainment, personal items, travel expenses, education, clothing, and other items that are not covered by public benefits.
The trust language must adhere to the public benefit law requirements or the beneficiary risks losing his benefits. Problems can arise if an attorney inserts language affording the trustee too much latitude to decide whether to distribute funds. Likewise, if the trustee does not make distributions completely in line with the laws, the beneficiary could find that his benefits are reduced or eliminated. Parents should consider naming a professional who handles special needs trusts or someone who is extremely well versed in the requirements.
Predicting how much is necessary to fund a child’s trust is nearly impossible since public benefit laws and programs frequently change. Nevertheless there are professionals that can help with these calculations and there are means to fund our children’s lives even if assets are not close at hand. Life insurance is one effective way to fund such trusts.
In some cases, where a child on public benefits receives an inheritance, a recovery from a lawsuit or other funds directly, a special needs trust can be established for the child with his own money. Here, the requirements pertaining to the trust are more stringent than if the trust is funded by others’ assets, and in some cases, depending upon state law, a judge must approve the establishment of the trust after certain public benefit programs are notified and reimbursed for past benefits paid. The advantage of the trust is substantial, however, because it enables the beneficiary to profit from his own funds and still receive health coverage through Medicaid or Medicare, payments through other assistance programs, or housing through a current program.
Planning for our children begins before they are born and the results continue well after our lifetimes. Special needs planning in particular is laden with complexity but also opportunity to ensure the care and well-being of our loved ones.