Hello and welcome. My name is Mark Biernath, I’m an estate planning attorney here in the Atlanta area. I have a special emphasis on Special Needs Planning. All families need to have planning in place, especially if there are minor children involved. But if you have a child that has special needs, it’s critically important that you take the steps to protect that child’s future eligibility for important government benefits, like SSI and Medicaid. You might be thinking to yourself that right now you don’t need to have access to those benefits simply because you already have insurance or some other mean of providing for the needs of your special needs child. But consider what would happen if you or your spouse were not around. What would happen with those benefits? This is when special needs planning is important. Special needs planning is the concept of leaving assets for your child with special needs in such a way that it does not render them ineligible for benefits. As you may know, Medicaid and SSI have resource limits. If an individual has more than two thousand dollars in what are called countable resources, they would not be eligible on the financial side for either Medicaid or SSI. But there are specialized legal tools that we can use in order to protect assets for special needs individual and that Medicaid or SSI will not count them as available resources. This is the heart of special needs planning. Today we are going to look at some clips from a seminar I recently did in Summerville, Georgia for a group of families with special needs children.
“I’m assuming that there is a person with special needs in your life, who either has or might need SSI or Medicaid, or a combination of the two, either now or at some point in the future. If you are not in that boat, if you do not have that concern, your welcome to stay, love to have you, but you might get a little bored because we are going to get into some details on these types of programs and how to make sure that whatever you do doesn’t jeopardize that persons eligibility for these two programs. Why these two programs? If you qualify for these two programs, you qualify for whatever other government programs there might be. The others, like waivers and things like that are usually based on what the exact disability it is, not the financial side of it. So, if we can keep you financially qualified for SSI and Medicaid, then if you are otherwise eligible for the other programs, you’ll be eligible for them. I’m also going to assume that you want to leave that person in the best possible situation that you can, if that is not the case, then again you are welcome to stay but you might get a little bored. How many of you have an estate plan? If you haven’t actually taken the time to create an estate plan of your own, the state legislature has taken the time and developed one for you. We are going to take a few minutes right now to look at what that state estate plan is and why it is not the one you want to use especially if you have a child or someone you love with special needs. If you are married and have a child, one half of your estate goes to your spouse, and one half goes to your child. If you have more than one child, your spouse only gets one third, and two thirds goes to your children equally. Now this does not take into account items such as joint property items. Joint property items generally will pass to the joint property owner but you would be surprised how many people don’t know how they own property. We see it very regularly, that dad passed away and the house was only in his name, and now mom who is not special needs, has to report to the court every year about what she is doing with the house because her children own part of that house. If mom needs to refinance the house, she has to go to court and ask permission, the court will appoint a guardian to represent her own children to see whether it is in her own children’s best interest for their mom to refinance the home. This is not a situation you want to leave your family. If you are not married but have children, it’s distributed equally among the children. So that’s the general estate the state has written for you.”
So, to summarize, the state has written an estate plan for you, and that plan does not accommodate your child with special needs because if by law an asset passes directly to your child, it belongs to your child and would account as an available resource. Now there are ways we have, where we can fix these kinds of problems, but it is always better to avoid problems rather than trying to fix them. So we have seen how the state law will put assets in your child’s name, now even if these are not countable resources, this does open the opportunity for Medicaid to engage in what is called estate recovery. This is
where they are able to go after the estate of the Medicaid recipient in order to recover costs they’ve expended on that beneficiaries behalf from the estate of the special needs individual. Many of you have likely received letters from Medicaid indicating that they do intend and will be required to pursue what is called estate recovery against the estate of your child. By leaving assets in a special needs trust for your child, you could avoid this altogether.
“Estate recovery goes against any assets that are actually in the name of the Medicaid recipient. Three weeks ago I was in Rome, doing a similar presentation like this, and just before me, they had a speaker from Medicaid, presenting on Georgia Medicaid Estate Recovery and she did a fantastic job of setting me up because she scared everyone in the room. When she sat down everybody thought that if their child were receiving Medicaid that when the parent passed away, Medicaid would go against the parent’s estate. That is not what the brochure says, that is not what the law says. It is the Medicaid recipient’s estate that Medicaid has the right to go after. Our goal is to not have any assets in the Medicaid recipient’s estate, and we can do that by using one of the fundamental tools of special needs planning, which is a Special Needs Trust.”
State law is not the only way assets may wind up in your child’s name. Beneficiary’s designations to life insurance, retirement accounts, or other POD beneficiary designations will have the same result. Also, improperly drafted wills or trusts may leave assets to your child in such a way that they will be counted as available resources for Medicaid and SSI purposes. There by rendering your child ineligible for government benefits, until those assets are gone. A Special Needs Trust is the foundational tool upon which a plan is built. In the next part, we’re going to take a closer look at Special Needs Trusts. Please join us.