Magazine article The Exceptional Parent

The Aging Parent and the Child with Disabilities Estate Planning Concerns and Options

Magazine article The Exceptional Parent

The Aging Parent and the Child with Disabilities Estate Planning Concerns and Options

Article excerpt

Estate planners counseling families who have children with disabilities are increasingly confronted with planning dilemmas that mirror the social, financial, and societal issues presented by an aging population. It is not uncommon when discussing "special needs" planning with a client to discover that she is in her 70s or 80s and possibly in declining health, and that her child with special needs is a 50-year-old who has never lived anywhere but at home and is receiving public benefits such as SSI and Medicaid. This scenario presents special problems for the client and the attorney.

Given the economic climate and the likely retrenchment in services to the disabled population, outliving one's money or leaving less to the next generation is not just an academic issue when children with disabilities are involved. We move from the goal of a typical client wanting to pass on a legacy to descendants, to the client who fears being unable to provide for a child with a disability and leaving him or her totally dependent on diminishing public resources.

In particular, clients are increasingly concerned that even if they currently have adequate assets to care for their child after they are gone, these funds could be depleted if they suffer their own debilitating illness or otherwise become unable to care for themselves at home and are forced to live their final years in a nursing home. Public health agencies across the country estimate that the average annual cost of private pay care in nursing homes ranges from $50,000 to $110,000 annually, depending on the state of residence. Elder law practitioners and those with knowledge of the industry assert that the cost is, in fact, significantly higher.

Without advance planning, eligibility for Medicaid to pay for nursing home care essentially requires the impoverishment of the senior. However, there are some provisions in the long-term care Medicaid statutes and regulations (both federal and state) that offer certain opportunities to seniors who have children with disabilities to provide for those children without initially depleting their assets in the event of the senior's nursing home placement. This article discusses those planning techniques and other planning issues and opportunities that need to be addressed in this area of practice.

Understanding the Benefits at Issue. The lynchpin upon which all planning in this area depends is a comprehensive understanding of the benefit programs that are implicated--both for the elder and the child with a disability. Although there are numerous programs that assist people with disabilities--particularly if they have low income--the two "income" programs that are most important in this context are Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI). Eligibility for these programs, in turn, affords eligibility for two important health insurance programs--Medicaid, which in most states automatically accompanies SSI, and Medicare, for which beneficiaries automatically qualify after two years of receiving SSDI benefits. Indeed, in some cases people with disabilities can be eligible for SSI, SSDI, Medicaid and Medicare.

"Disability" is defined by the Social Security Administration for both the SSI and SSDI programs as "the inability to engage in substantial gainful activity because of a medically determined impairment or combination of impairments that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months." In 2009, "substantial gainful activity" is further defined as the inability to make more than $980 per month. This figure is adjusted annually.

A detailed description of the SSI and SSDI programs is beyond the scope of this article. Suffice it to say that SSI is a means-tested program for people with disabilities; in order to be eligible, one must have less than $2,000 in countable assets and limited income. …

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