Perhaps no legal concentration is as detailed and complicated than special needs/Title XIX planning. The myriad of requirements to get financial aid combined with the complex means by which lawyers can accomplish that feat, combined with the implications of losing that aid once attained, makes this area extremely nerve-wracking.
Seems logical that estate planning for special needs clients has become a growing sector. According to a recent Wall Street Journal article, more than 41 million Americans (5% of the US population) has some sort of disability. 6.2% of all children younger than 5 years old are considered disabled. Combine that data with the fact that disabled Americans are living longer and leading more productive lives. As such, many parents of special needs children are looking for planning for when they are not around to care for their children.
As illustrated in the above article, two important planning strategies are often used in these situations. First, the special needs trust. These devices provide for supplemental income and support that specifically does not interfere with the beneficiaries ability to receive government aid. Often, they are established by parents for disabled children in advance of the receipt of state aid.
Similarly, an OBRA '93 Trust can provide the same benefits as a more generic special needs trust, but can be established after the person is receiving aid. The kicker here is that while the client remains eligible for aid, all Medicaid benefits must be repaid with the balance of the trust principal, if any, passing to the remainder beneficiaries. Another requirement is that this type of trust may only be
established by parents, grandparents, courts, or "guardians" (also covering conservators.)
OBRA '93 Trusts have additional requirements and considerations, and I hope to cover those here soon.
Secondly, it is important that family member's estate plans are coordinated to meet the special need client's needs. If that client is already on state aid, a large inheritance from a family member could disrupt that aid and the inheritance could be "wasted", for lack of a better term.
This area is extremely complex and no one piece of advice can fit all situtations. As always, consult with an attorney prior to taking any action. This post is another reminder that the information above is not
provided in the course of an attorney-client relationship and is not
intended to constitute legal advice. It should not be used
as a substitute for competent legal advice from a licensed attorney in
your state.
