(We appreciate our partners at the Special Abilities Network for their collaboration and contributions to this information)
Keep your documents updated!
Comprehensive planning for our loved ones encompasses three different professional disciplines: legal planning (estate planning), disability planning (creating a team of caregivers, benefits selection, management, and the letter of intent), and financial planning (knowing the financial commitments required to ensure an individual can live comfortably for their entire lifetime). There is a balance required for effective planning, much like that of a three-legged stool. It is imperative proper planning takes place to ensure an individual does not lose precious benefits. In addition, the needs and desires of other family members should also be considered so their goals and dreams can be accomplished as well.
For Medical and Health Planning, refer to the Health section of Transition University.
Will vs Living Will
A traditional will states what will happen to assets and property when you pass away. A living will, is a legal document designed to direct loved ones (agents) on how to handle certain aspects of your life if you become incapacitated, such as healthcare.
For example, in the case of a parent having a will, the will:
- Allows you (as parents) to direct the distribution of property and leave assets to your children, grandchildren, charities, or other heirs.
- Allows you to name a guardian for your minor children.
- If you die without a will state law determines how to distribute your assets. A child with disabilities would likely receive assets of more than $2,000 and become ineligible for SSI, Medicaid, and DSPD
- Make sure you include language in your will and/or revocable trust that says any distribution to your child with disabilities shall be distributed for their benefit to their Supplemental Needs Trust.
A Living Will is a legal document that lays out your preferences regarding health care, such as your refusal or acceptance of medical treatment, in addition to the optional selection of a chosen agent or decision maker. Utah’s Advance Health Care Directive also includes a living will.
Types of Trusts
A young adult receiving SSI will lose benefits if they retain more than $2,000 in assets in their name. Two options discussed in this book that can assist families with navigating financial resources are ABLE Accounts and Supplemental Needs Trusts. The disability community commonly refers to this type of trust as a Special Needs Trust, when in fact, they mean a Third-Party Supplemental Needs Trust.
A legal arrangement that allows an individual with a disability to have access to funding without potentially losing the benefits provided by public assistance programs like SSI, Medicaid, or Medicare. The wording in these trusts has to be very exact and specific and must align with Medicaid language.
A Supplemental Needs Trust can be used to cover the supplemental needs of a person that are not covered by public assistance programs. The assets held in the trust are not considered countable resources when qualifying for public benefits. Distributions from the trust should not be used to pay for items or services covered by any public benefit; for example, shelter and food. Some things to consider are:
- No limits on contributions
- Income generated is taxable
- No Medicaid payback
- Trusts are managed by someone other than the beneficiary
- There could be start-up costs/trustee fees
- Work with a qualified Estate Planning Attorney and Financial Planner to create a plan that meets the needs of your family.
Detailed information can be found in the red section of the Choices book
The goal of a pooled trust is to provide resources for individuals with disabilities who do not have the financial ability to set up a first or third-party trust. A pooled trust is another option for managing financial assets for people with disabilities without compromising their government benefits. The trust is intended to provide extra and supplemental services for the care, support, comfort, education, and training of the beneficiary over and above public and/or private benefits. Food and shelter are NOT supplemental needs. The trust money CAN NOT be used for groceries, rent, or mortgage payments if the beneficiary receives Supplemental Security Income (SSI). Supplemental needs are anything that is not considered a necessity. (Outings and entertainment, phone service, medication if other funds are not available, drug and alcohol treatment, mental health support, etc.)
Pooled trusts are managed by non-profit organizations that facilitate the combination of assets from multiple donors. One example of a pooled trust is TURN Community Services’ Pooled Trust (formerly The ARC of Utah Special Needs Trust). An individual with a disability, family members, or others deposit money into the pooled trust for a specific individual with a disability. For investment purposes, the money individuals or families deposit is pooled together with other participants’ funds and invested as one pool of money. However, each person in the Trust has a sub-account that contains the money put into the trust specifically for them. Income generated by the investment of the pooled money is allocated back proportionally to each person’s account.
- The minimum deposit for trust accounts is $1,500. It has been recommended to open an account with just $1,500 so the 2% fee is smaller.
- It does not cost anything additional to make future deposits. The fees to open the account are: $250.00, a one-time fee to set up an account and 2% of the initial contribution.
- 1% of current balance annually, to start one year from the beneficiary’s initial deposit.
Recommended that each person in the account keep a minimum balance of $25.00 to keep the trust open to avoid another setup fee at a later time.
- Upon their passing, any tax due is paid, ½ of the remaining funds go to repay Medicaid, and ½ will stay with the Trust to assist others with disabilities.
Use this link to access more information on TURN Utah’s Pooled Trust. This is one example of a Pooled Trust.
Is a trust created by an individual (called a grantor, usually the parent) that can be changed over time. Revocable trusts are used to avoid probate and to protect the privacy of the trust owner and beneficiaries. You can have a supplemental needs trust that is revocable or irrevocable. A revocable trust becomes irrevocable after the grantor passes away.
Describes a trust that cannot be modified after it is created without the trustee’s consent.
“Third Party” refers to the individual who is establishing and funding the trust. For example, when a parent places assets in a third-party supplemental needs trust, they are acting as a third party. The beneficiary, or the person with a disability, is the first party. With a third-party trust, Medicaid does not have a claim on trust assets for Medicaid payback.
“First Party” refers to the individual with a disability. A first-party special needs trust typically has a Medicaid payback provision after the beneficiary passes away. For example, these types of trusts are sometimes used when an individual with a disability receives a large legal settlement due to injury and requires Medicaid. The legal proceeds are placed in a first-party special needs trust such that the beneficiary can remain eligible for Medicaid. After the beneficiary passes away, Medicaid has a claim on trust assets to pay back for services received.
Just a reminder...
When establishing your estate plan, you must work with a qualified estate planning attorney who is engaged in drafting Supplemental Needs Trusts on a regular basis. For most families, the Third-Party Supplemental Needs Trust is most appropriate.
Keep your documents updated!
Laws and circumstances change. Your legal documents, letter of intent, and Care Notebook (discussed in the Health section of this Transition module) should be revisited and amended with each change in life. It would be a good idea to sit down with your documents each January and update any areas that may need to be revisited.
Detailed information on all of these topics can be found in the red section of the Choices book.
Letter of Intent
A letter of intent should encompass the plan for your child’s future. Your child might outlive you by 40 years. What is the plan? Where will your child live? Will they be living independently? Is your child interested in employment? What social and recreational needs are there? What is it that others must know about your child if you are not here? What is the child’s medical history? Who will be the trustee? Who will manage taxes/money? Does this person understand public benefits? Who will be the child’s advocate/guardian? Who will be a friend to your child? No one can be a substitute for you. However, if you can document the supports you have in place and your wishes, you will help to build continuity and support for your child. Please be aware that a letter of intent is not legally binding.
There are many different templates for Letters of Intent. However, there are 10 basic things every Letter of Intent needs to address.
- Family History: Where and when you were born, raised, married, something special about siblings, grandparents, and other relatives, special friends, description of your child’s birth, when, where, your feelings, etc.
- General Overview: A brief overview of your child’s life to date and your general feelings about the future.
- Education: Summary of educational experiences and desires for future education; regular classes, special classes, special schools, related services, mainstreaming, extracurricular activities and recreation; types of educational emphasis, i.e., vocational, academic, total communication, etc.; the name of specific programs, school, teachers, related services providers.
- Employment: Types of work your child may enjoy; open employment with supervision, activity center, etc.; companies that you are aware of that may be of interest to your child and provide employment in the community.
- Residential Environment: To live with relatives, friends or others – specify; if not these people or these people pass away, who are the other options, i.e., a group home in the same community – specify size; describe the best living arrangement – single room, etc.
- Social Environment: Mention the type of social activities your child enjoys, i.e. sports, dances, movies, etc.; should they have spending money and how they should spend it; favorite foods and eating habits; does your child take and/or enjoy vacations.
- Religious Environment: Specify religion; local place of worship your family attends; local clergy that may be familiar with your family; has there been religious education and is this an interest to your child.
- Medical Care: Current doctors, therapists, clinics, hospitals, etc., and how frequently your child attends and for what purpose; current medications, how are they given, for what purpose; list medications that have not worked in the past.
- Behavior Management: Describe the current behavior management program that is being used; other behavior management programs that have not worked.
- Final Arrangements: Desires for your child’s funeral arrangements – including – prearrangements you have made (if any)
Detailed information on all of these topics can be found in the red section of the Choices book
Info Sheets & Additional Resources:
Future Planning, Guardianship, and Trusts