Protecting Disabled Adults
At Keystone Elder Law, P.C., many of our clients have a disabled loved one, such as a child or sibling. They want to provide for this special person after death, but there are legal pitfalls involved in doing so. Many disabled individuals rely on Medicaid and Supplemental Security Income for basic needs. Unfortunately, leaving someone’s assets in a will could create problems later.
Call our law firm. We use all legal resources available to help our clients provide for beloved family members in ways that do not jeopardize their continued eligibility for government assistance. A Harrisburg special needs planning lawyer is standing by to answer your questions.
Why Special Needs Planning is So Important
Many disabled individuals are currently receiving government assistance, such as Supplemental Security Income and Medicaid. These programs are means-tested. If an applicant earns too much or has too many assets, the government will deny them benefits. Of course, many disabled individuals pass the means test because they cannot work. These assistance programs provide crucial support, which they do not want to lose.
Unfortunately, leaving money or assets in a will could change that. There’s a real risk that your child, sibling, or other family member might suddenly become ineligible because you left them too much money. Now they are over the income or asset limits—and the government reduces benefits or cuts them off entirely.
The good news is that there are ways to leave assets for disabled adults which does not impair their eligibility for the most common assistance programs. Our Harrisburg special needs planning lawyers can walk you through your options.
The Special Needs Trust
A special needs trust is an excellent way to leave assets to a disabled adult which will not jeopardize their eligibility for assistance programs. Our lawyers have created many of these trusts and can create the one that works for you.
When you place assets in the trust, they are not “owned” by your loved one—who nonetheless gains the benefit of the trust. Because they do not own the assets, they do not go over the income or asset limits imposed by SSI and Medicaid.
These trusts come in two varieties:
- First-party special needs trust: You fund this trust with assets that belong to the beneficiary, such as an inheritance. These assets now go into the trust and are owned by it. Still, the beneficiary continues to gain access to the funds while maintaining eligibility for assistance programs.
- Third-party special needs trust: Someone other than the beneficiary funds this trust. A classic example is a parent of a disabled adult who puts their own money into a trust, naming their disabled child as the beneficiary. You can create this trust while living or have it created after you pass.
What Can Someone Use Trust Assets For?
A beneficiary does not have unlimited access to assets in the trust. Instead, a trustee will manage the funds and pay for certain allowed expenses, including:
- Some medical services are not covered by the state’s Medical Assistance
- Private rehabilitation services
- A motor vehicle
- Educational expenses, such as training or school
- Hobbies and entertainment
- Vacations
- Home Furnishings
- Insurance
- Burial expenses
Generally, the trust assets should not pay for any expense that a government assistance program pays for, such as food or covered medical services. If they did, then the government would probably reduce benefits accordingly.
A trustee should also avoid giving the beneficiary cash or cash equivalents because they might be used to pay for expenses covered by government programs. Still, a special needs trust can make your loved one’s life more comfortable.
Why You Should Work with an Expert
Instead of searching for a fill-in-the-blank form online, call our law firm. There are many considerations that go into leaving assets to a disabled adult:
- Choosing the right trustee to manage the trust
- Deciding which assets to place in the trust
- Transferring assets the correct way
- Identifying any tax advantages to creating a trust
- Discussing who should inherit any assets that remain in the trust after the beneficiary passes
- Determining whether a special needs trust is even the right legal vehicle for you
Providing Special Needs Planning to Harrisburg & Surrounding Areas
Keystone Elder Law, P.C., is an established family law firm in Harrisburg. We have provided the community with estate planning services for years, and look forward to many decades more. We are eager to help families plan for the future, including for the protection of a beloved disabled adult. Call us today to schedule a meeting with our Harrisburg special needs lawyers.
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REGISTER HERE for LONG-TERM CARE PLANNINGPower of Attorney
A Power of Attorney can be used to give another person the right to sell a car, home, or other property in the place of the maker of the Power of Attorney. A Power of Attorney might be used to allow another person to sign a contract for the maker of the Power of Attorney (the person who makes a power of attorney is called the “principal”). It can be used to give another person the authority to make health care decisions, do financial transactions, or sign legal documents that the principal cannot do for one reason or another. With few exceptions, Powers of Attorney can give others the right to do any legal acts that the makers of the Powers of Attorney could do them themselves. A General Power of Attorney gives the “power of attorney Agent” or simply “Agent” (the legal name of the person who is authorized to act for the principal) very broad powers to do almost every legal act that the principal can do. When Elder Law Attorneys draft general Powers of Attorney, they still list the types of things the Agent can do but these powers are very broad. People often do general Powers of Attorney to plan ahead for the day when they may not be able to take care of things themselves. By doing the General Power of Attorney, they designate someone who can do these things for them.
Normal Powers of Attorney terminate if and when the principal becomes incompetent. Yet many people do Powers of Attorney for the sole purpose of designating someone else to act for them if they cannot act for themselves. It is precisely when persons can no longer do for themselves that a Power of Attorney is most valuable. To remedy this inconsistency, the law created a Durable Power of Attorney that remains effective even if a person becomes incompetent. The only thing that distinguishes a Durable Power of Attorney from a regular Power of Attorney is special wording that states that the power survives the principal’s incapacity. Even a Durable Power of Attorney, however, may be terminated under certain circumstances if court proceedings are filed. Most Powers of Attorney done today are durable.
Yes. At the time the Power of Attorney is signed, the principal must be capable of understanding the document. Although a Power of Attorney is still valid if and when a person becomes incompetent, the principal must understand what he or she is signing at the moment of execution. That means a person can be suffering from dementia or Alzheimer’s Disease or be otherwise incompetent sometimes but as long as they have a lucid moment and are competent at the moment they sign the Power of Attorney, it is valid even if they do not remember signing it at a later date. At the time it is signed, the principal must know what the Power of Attorney does, whom they are giving the Power of Attorney to, and what property may be affected by the Power of Attorney.
Any competent person eighteen years of age and older can serve as an agent. Certain financial institutions can also serve. There is no course of education that agent must complete or any test that Agent must pass. Because a Power of Attorney is such a potentially powerful document, agents should be chosen for reliability and trustworthiness. In the wrong hands, a Power of Attorney can be a license to steal. It can be a big responsibility to serve as an agent.
For Medicaid
Medicare is health insurance and covers medical services such as physician appointments, therapy, blood tests, x rays, medical procedures and hospitalization. Medicare will sometime pay for rehabilitation in a long-term care facility for a period of 20 to 100 days, but not longer. In long-term care, Medicaid covers the cost of ongoing support services for daily functioning, such as room and board in a nursing home.
Medicaid is a federal program that is overseen by the Center for Medicare and Medicaid Services (CMS). In Pennsylvania, Medicaid is called Medical Assistance and is administered by the Department of Human Services (DHS).
In Pennsylvania, Medicaid funds are not available to pay for assisted living or personal care.
For Medicaid to pay for care in a nursing home, an individual recipient must be determined to need a nursing home level of care by a physician and the local Office of Aging. An individual whose income is not greater than three times the poverty level may keep up to $8,000 of total resources, but may otherwise keep only $2,400. The cash value of life insurance counts as a resource, but one car and a residential home does not count as a resource.
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Empowering Clients with Holistic Planning at
Keystone Elder Law
At Keystone Elder Law, we believe that the physical, social, legal, and financial considerations of our clients all intertwine. We utilize an interdisciplinary approach to evaluate each area, which allows for the creation of a plan that addresses the concerns of the individual as a whole as well as the family. To this end, our model of practice includes a Care Coordinator (usually a nurse or social worker), whose expertise complements our team of attorneys.
When the road of life is smooth, decisions about legal and financial matters are easy to push aside for “a rainy day.” Planning ahead, however, will allow for more options as you view the map of where you’ve been and where you want to go. Don’t let a crisis limit your choices or derail your plans.
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