Special needs trusts are an important component of planning for a disabled child, even though the child may be an adult by the time the trust is created or funded. These trusts allow a beneficiary with a disability to receive inheritances, gifts, lawsuit settlements, or other funds and yet not lose her eligibility for certain government programs, such as Medicaid and Supplemental Security Income (SSI). Types of Trusts Special needs trusts generally fall into one of three categories: 1) third-party trusts that one person, typically a parent or grandparent, creates for the benefit of a child or grandchild; 2) first-party…

Among the costs of caring for a dependent with special needs are the fees for professional advice. Some families are tempted to save on these costs by setting up a special needs plan on their own. Low-cost platforms and templates give the idea that special needs planning is straightforward and one-size-fits all. Some parents or guardians might believe that they understand their situation best, and don’t want to put their family into the hands of a complete stranger. DON’T do it yourself! A trust or plan that is not customized to your individual family, financial status, or state of residence…

Funds held in a properly drafted special needs trust (SNT) will not affect a Supplemental Security Income (SSI) or Medicaid recipient’s benefits. However, funds disbursed in a manner that violates SSI or Medicaid rules can impact these benefits. It is important to understand what an SNT can and cannot pay for in order to avoid this. What Is an SNT? Special needs trusts (also known as “supplemental needs trusts”) are an important component of planning for a disabled person. An SNT can play an important role in preserving the financial security and lifestyle of a person with special needs. It…

Trying an alternative to guardianship can be important for several reasons. First, it prevents a court from ruling that someone is “incapacitated,” which carries with it a stigma and can be hard to undo. Second, it puts the person in the driver’s seat. Third, it is much less expensive and time-consuming. There are less restrictive options, such as supported decision-making, power of attorney, or revocable trusts that could be a better fit. What Is Guardianship? Every adult is assumed to be capable of making his or her own decisions unless a court determines otherwise. If an adult becomes incapable of…

Medicaid is a state- and federally funded, means tested program that pays for long-term care. For applicants who fall into certain categories, Medicaid imposes specific rules on how much income and resources they can have and still qualify for benefits. Each state has different rules for how much an applicant may have in income and assets to qualify for Medicaid. In addition, the qualifications are different for home care Medicaid versus nursing home Medicaid. To qualify for Medicaid, you must fall under your state’s corresponding limit. For example, in New York State, an individual may have up to $28,133 and a…

Every adult is assumed to be capable of making his or her own decisions unless a court determines otherwise. If an adult becomes incapable of making responsible decisions, the court will appoint a substitute decision maker, usually called a “guardian,” but called a “conservator” or another term in some states. What Is Guardianship? Guardianship is a legal relationship between a competent adult (the “guardian”) and a person who because of incapacity is no longer able to take care of his or her own affairs (the “ward”). The guardian can be authorized to make legal, financial, and health care decisions for the…

A diagnosis of dementia, a category of diseases affecting memory and thinking that includes Alzheimer’s disease, can feel overwhelming and upsetting. You might worry that you will lose control over your life and ability to make your own decisions. Fortunately, receiving a diagnosis of dementia or Alzheimer’s does not mean that you cannot execute legal documents or make decisions about plans for your future finances and health care. People with dementia can execute legal documents to plan for their futures when they have the mental state — or capacity — to do so. Capacity refers to your ability to understand…

So, you are officially divorced. In starting this new chapter of life, you should update your estate planning documents as soon as possible. You may no longer be legally married, but divorce does not automatically remove your prior spouse from your will, trust, or beneficiary designations. Here are some items to consider updating: Change Your Advance Directives When you engage in estate planning, it is standard to complete forms such as a health care proxy or living will. Often, spouses will choose each other as their agents for making health care decisions if they become incapacitated. After a divorce, your…

As life circumstances change (births, marriages, divorces, and deaths), it may become necessary to make changes to your will.  If an estate plan is not kept up-to-date, it can become useless. The best way to make changes is either through a codicil — an amendment to the will — or by creating a new will. If you have small changes to make to your will (e.g., changing your executor or updating a name that has changed), a codicil may be appropriate. The benefit of a codicil is that it is usually less expensive than redoing the entire will.  If you have…

Most seniors prefer to stay at home as long as possible rather than move into a nursing home. For many families, this means eventually hiring a caregiver to look after an aging relative. There are two main ways to hire someone: directly or through a home health agency. Hiring directly When you hire a caregiver directly, you need to consider all the tax and liability issues. As an employer, you are responsible for filing payroll taxes, tax forms, and verifying that the employee can legally work in the United States. If you pay $2,400 or more in wages in 2022…