Aging: Special Needs Trusts

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Guest:  Dennis Christenson – Elder Law Attorney

Host:  Sally Smith - Author/Resource literature on age-related disease and healthy aging


Sally Smith:  Welcome to Age to Age.  I’m Sally Smith.  Let’s talk.  We’re talking, today, with Dennis Christenson, Elder Law Attorney, who has talked with us about many fascinating issues related to elder care.  But, also, one of our main topics is, actually, caregiving.  Caregiving can encompass not only the elderly, but people with special needs.  What are the legal considerations with any of this?


Dennis Christenson:  One of the biggest reasons that people come to see me, as an elder law attorney, is that they have a loved one who has Alzheimer’s or has had a stroke, or some type of physical or mental illness and is going to have ongoing care, and they’re concerned about all of their assets being used for that care.  And with nursing homes costing $50,000 a year or more, most families will go through their savings very quickly trying to pay for nursing home care.  So, I help people qualify for Medicaid so that their nursing home care can be paid for through the Medicaid system.


In addition to that, there are a number of people who have disabilities of one sort who need expensive ongoing medical care, a child with Cerebral palsy, a child with autism, a child that’s a quadriplegic, or a young adult that has any of these conditions, that requires ongoing medical care.  They need some way to provide for that medical care, and public benefits is usually the way that their care is provided for.


Another thing that we do for anyone, whether they’re young or old, if they are going to need publics benefits, or Medicare and Medicaid, to help pay for their care, is assist them in qualifying for whatever public benefits are needed.  We make sure that they get the appropriate medical benefits they’re entitled to, and then make sure that they’re in a position to be eligible to receive that care.  Now, that also means that some estate planning needs to be done so that they continue to receive their benefits.  For example, if someone receives a personal injury settlement, this could be someone in a car wreck, and they’re a quadriplegic with very expensive care, the receipt of that settlement can cause them to lose those public benefits for medical care, which can be very expensive.


So, what we do is help people, who have received an inheritance, or who have received money from a personal injury settlement, keep their money in trust so they don’t lose their public benefits.  These are what we call special needs trusts.  They’re very important because they allow someone, who receives some money, to keep their public benefits, and to use that money to enhance the quality of their life. 


Now, there’s another situation that’s very important, and this comes up with elderly clients.  Let’s say they have a child with a disability, or a grandchild with a disability, and they want provide for that child.  But if they just name them in their will and say this money goes to Johnny Jones, when he gets that inheritance, he’s going to lose his public benefits.  Federal and state law provides that a person who wants to take care of someone who is disabled can give money to that child, or adult person, but keep it in trust.  These special needs trusts are a way that a person, who is receiving public benefits, can continue receiving these benefits and not lose their eligibility. 


So, from a planning standpoint, it’s very important for anyone that has a child with a disability to place money for their child in trust, instead of giving the money outright.  As an older person with a grandchild that they want to give money to, it’s important that they have a special needs trust.  These special needs trusts, again, allow someone to have the benefit of the money they’re to receive without losing their public benefits, which are critical for their ongoing care.


Sally Smith:  That would be critical.  And what about the angst of being an aging parent, and maybe the sole caregiver, of a child who’s definitely going to outlive you, to provide for them?  That must be a huge motivation. 


Dennis Christenson:  It’s very important because some of these adults, young adults, who’s going to take care of them after their parents die?  Maybe this is the only child.  How are you going to set something up to make sure that they are taken care of?  How are you going to make sure the medical bills are paid if they have to live in an institution?  How is that going to be set up?  And so, this estate planning with special needs trusts is a way to make sure that those things can be taken care of and put in place so that they don’t lose those public benefits they’re entitled to and end up, in effect, a ward of the state where there’s no plan in place.


So, we do a lot of planning for people who have children with disabilities, or sometimes they’re taking care of a parent, or their spouse.  What happens when a 70-year-old man has a 65-year-old wife who has Alzheimer’s?  Who’s going to take care of her?  So, these special needs trusts can be set up to take care of these persons with disabilities so that there is a person to take care of them, and there’s a way to do it financially so they don’t lose their public benefits.


Sally Smith:  I mean, you can only plan for so much.  So, you’ve got an older parent with a child like this, and they’re trying to take care, really, of a child that may live twenty years after they’ve passed on, and they’re trying to think ahead and deal with the finances, deal with who’s going to be in charge, who’s going to make the decisions, who’s going to be the caregiver, all that stuff.  Say they ask someone to oversee it, because they’re younger and will live way beyond them.  What happens when the designated caregiver, or proxy, or whatever we’re going to call it, the agent, retires or passes on?  Is there a default list of people who will step in to take care of this disabled child?


Dennis Christenson:  Well, it’s always very important when you name someone to be an agent, whether it’s a personal representative, or power of attorney, that you consider back-ups, successors, in case something happens to you.  Now, sometimes families can go through three or four names, sometimes they only have two, so the documents you create kind of factor that in.  If I’ve named you as a trustee of the trust for my child, and I don’t know who else I’d want to have as a back-up, I could give you the authority to choose the successor for yourself.  Sometimes what we can do is name a group of people to choose a successor; a committee can choose a successor.


Sally Smith:  I see.


Dennis Christenson:  So, you try to build that in, depending on the circumstances, and that’s why you have to take so much time with the family to figure out who’s the appropriate person.  Now, sometimes, despite your best planning, you can’t.  In that case, a court would then have a hearing and decide who would be the appropriate person.  But we try to encourage people to keep it out of the courts and let people who know that person the best make those decisions as to who will take over.


Sally Smith:  Wow.  What a fascinating tool for planning and trying to have people rest easy with important issues hanging out there that are going to be hard to solve.  Thank you so much, Dennis, for sharing that with us.  And thanks to all our listeners for joining us.  We’ve learned a lot from you today, Dennis. 


We welcome your suggestions and comments on our website.  This is Sally Smith, Age to age, saying good-bye and wishing you courage and joy on your journey.  We are all connected. 


If you enjoy listening to Sally Smith, you can buy her book, The Circle.  It’s the story of how she personally responded to her mother’s journey with Alzheimer’s disease.  It’s a wonderful gift of hope for anyone with a parent with dementia.  Just click on Sally Smith’s name under the Health Professionals tab on the Podcast home page.  All profits support research at the Center on Aging.  Thanks.

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