Eastridge Presentation.Revised for Distribution

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

Workshop Goals


A Word of Caution . . . .


I. Defining a

“Special Needs Plan”

II. Estate Planning Tactics

III. Special Needs Trust as a Solution

IV. Conclusion


Enhance life for our family member with

special needs

Enhance /sustain quality of life for our family

Planning Objectives


Commonly:

Just disability and estate planning, perhaps including “guardianship.”

What is special needs planning?


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?


• Intellectual disability • Stroke • Mental Illness • Advancing Age • Head Injury • Other cognitive or neurologic disorders • Age • Physical limitations

Functional or categorical determination?

“Special Needs”


Allocation of Resources Time, Money, Energy toward Goals

Family Needs

Education

Residential

Financial

Healthcare

Government Benefits

Employment

Recreation

Legal


Allocation of Resources



Identify Needs

Identify Resources

Establish Goals

Develop Strategies



Family

Mom and Dad

Child 2

Special Needs


Means-Tested Resources

Medicaid

Supplemental Security Income (SSI)

Waiver

Section 8 HUD


Non-Means-Tested Resources

Medicare

Social Security Disability Income (SSDI)

Private Resources

Savings

Investments

Insurance

Retirement

Annuities

Grants/ Scholarships

Income


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


Estate Planning


Purpose of Planning

General Planning

Me + My Stuff

Special Needs Planning

Me + My Stuff + Others

What concerns you?


Purpose of Planning

Educational

Medical

Social/ Recreational

Vocational

Residential

Legal

Financial

Government benefits


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


What does a plan do?

Marshalls assets

Provides notice

Gives context

Imposes obligations

Creates options

Relies on experience

Removes ambiguity

Early investment opportunity


Who plans?

• Principal • Beneficiary • Power of Attorney • Guardian • Conservator • Trustee • Trust Protector • Family • Judge


Who plans?

Executor

Corporate or Individual

Beneficiary

Principal Attorney –in-

Fact

“Agent”

Trustee

Corporate or Individual

Guardian/ Conservator


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.


Okay, I Need a Plan. Now What?


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


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


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


Choosing your Trust

• Supplemental Trusts • Special Needs Trusts


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



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



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


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


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



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


\

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.


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?



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


“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



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


Great, how do I use an ABLE Account?

• Income • Savings • Avoid spend-down • Independent control • Trust “Band-Aid”


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?


“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


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?


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


THANK YOU

Brent A. Bush, Esquire

Security National Trust Co.

Wheeling, WV

[email protected]

304-233-5215

Michael A. Bush, Esquire

Bowles Rice LLP

Morgantown, WV

[email protected]

304-285-2500


Documents

Eastridge Presentation.Revised for Distribution