FEBRUARY 6, 2012 VOLUME 19 NUMBER 5
Here’s an anecdote that we expect to see repeating itself over the next few years. It involves a fifteen-year-old boy with severe disabilities, and the Maine state Medicaid program. It also involves Maine’s efforts, like those of other states (including Arizona), to trim its eligibility roles for Medicaid, and the real problems that creates for individuals needing services.
CT (his full name is edited out of the reported court case) requires full-time, one-on-one adult supervision to prevent him from injuring himself. His mother applied for and got him on Maine’s program for home and community-based services, so that he could be cared for in a residential center or even at home rather than being institutionalized. That was in 2005 — two years after CT had been placed in a New Hampshire residential facility after failed trials in programs at his family home and in New Jersey.
CT’s mother assumed that getting him eligible for assistance from the State of Maine would mean that he would begin getting services — but that didn’t happen. The problem wasn’t his eligibility, but the availability of programs. He was placed on a waiting list in case a suitable placement opened up, but only twelve children in the state were getting services under the program and it didn’t look too promising.
Just after CT got eligible Maine decided to try to cut its Medicaid program by withdrawing its home and community-based services. Since those programs operate under a special waiver, it would be simple — Maine just stopped running a waiver program. But rather than re-institutionalize all patients already in the community, Maine announced that it would simply cut off new entries into the program, but would not remove services to those already receiving services.
Program officials assured CT’s mother that he would stay on the waiting list for placement. She received a letter from a program official telling her that Maine would “honor our mutual commitment to the children currently receiving, or those having already been approved for services in this waiver program.” Problem was, that letter was incorrect. Because CT was only eligible, not actually receiving services, he would be cut off from any future possible placement under the program.
Four years later CT’s mother finally got a residential home in Maine to make a proposal to care for CT. The proposal was contingent on funding through the waiver program he had been eligible for during those four years. Unfortunately, the Maine Medicaid agency denied the request, pointing to the 2005 cut-off of all new service requests.
CT’s mother appealed, arguing that she had relied on the state’s misrepresentations and that CT was injured by the reversal. The agency denied her again, and a judge upheld that denial. She appealed to the Maine Supreme Court.
The Supreme Court Justices upheld the denial of services for CT. They analyzed the arguments by applying the legal principle of “equitable estoppel.” Under that doctrine, the courts can give relief to someone who has relied on another person’s representations if that reliance has worked to their detriment. The courts can order a result that would not be possible under contractual or other theories, in order to prevent a miscarriage of justice.
There are at least two problems with the application of equitable estoppel to CT’s case, however. First, there is a general rule that one can not assert equitable estoppel claims against the state itself. If an agent of the state misrepresents state policy, that does not usually create a right to recover on behalf of someone who was injured by relying on that misrepresentation.
The second problem with applying equitable estoppel principles to CT’s case is more serious, though. The Supreme Court noted that, though CT (through his mother) relied on the state’s misrepresentation, he was not injured by that reliance. Yes, he was injured — by the withdrawal of eligibility that had previously been extended. But that injury did not occur because he relied on the state’s misrepresentation — it occurred because the state cut back its program.
The Court notes that if CT’s mother had found him a placement shortly after his eligibility, she could have gotten him into the waiver program before it was closed. But the Justices did not see any persuasive evidence that she would have found such a placement but for the misrepresentations that he would remain eligible for future placements if they opened up. Mrs. T v. Commissioner of Department of Health and Human Services, February 2, 2012.
What might CT’s mother have done if she had known how his eligibility would be cut off? She might have found him a placement in Maine more quickly, but in Maine, as in other states, there simply were not enough providers to take care of all the state’s residents with disabilities. As state budgets shrink, we can expect to see variations of CT’s story play out in other states as programs and services are withdrawn from a vulnerable and needy population.
JANUARY 16, 2012 VOLUME 19 NUMBER 3
Let’s say you have a child with “special needs,” or a sister, brother, mother or other family member. You have not created a special needs trust as part of your own estate plan. Why not?
We know why not. We have heard pretty much all the explanations and excuses. Here are a few, and some thoughts we would like you to consider:
I don’t have enough money to need a special needs trust. Really? You don’t have $2,000? Because that’s all you have to leave to your child outside a special needs trust to mess with their SSI and Medicaid eligibility.
I can’t afford to pay for the special needs trust. We apologize that it can be expensive to get good legal help. But the cost of preparing a special needs trust for your child is likely to be way, way less than the cost of providing a couple month’s worth of care. That is what is likely to happen if you die without having created a special needs trust, since it will take several months of legal maneuvering to get an alternative plan in place. Even if there is no loss of benefits, the cost of fixing the problem after your death will be several times that of getting a good plan in place now.
I’ve already named my child as beneficiary on my life insurance/retirement account/annuity. Ah, yes — our favorite alternative to good planning. If your child is named directly as beneficiary, you may have avoided probate but complicated the eligibility picture. Their loss of benefits will occur immediately on your death, rather than waiting the month or two it would have taken to get the probate process underway. This just might be the worst plan of all.
It’ll all be found money to my kids. I’ll let them take care of it if I die. We have bad news for you: “if” is not the right word here. That aside, you should understand that a failure to plan means you are stuck with what’s called the law of “intestate succession.” That means (in Arizona — if you are not in Arizona you might want to look up your state’s law) that if you die without completing your estate plan, your spouse gets everything unless you have children who are not also your spouse’s children. If you are single, your kids get everything equally. If your child on public benefits gets an equal share of your estate, we will probably need to either (a) spend it all quickly or (b) put it into a “self-settled” special needs trust. That means more restrictions on what it can be used for, and a mandatory provision that the trust pays back their Medicaid costs when they die. All their Medicaid costs. Including anything Medicaid has provided before your death. Wouldn’t you like to avoid that result? It’s simple: just see us (or your lawyer if that’s not us) about a “third-party” special needs trust. The rules are so much more flexible if you plan in advance.
My child gets Social Security Disability (or Dependent Adult Child) Benefits and Medicare. Good argument. Because those programs are not sensitive to assets or income, your child might not need a special needs trust as much as a child who received Supplemental Security Income (SSI) and Medicaid (or AHCCCS or ALTCS, in Arizona). But keep these three things in mind:
Even someone who gets most of their benefits from SSD and Medicare might qualify for some Medicaid benefits, like premium assistance and subsidies for deductibles and co-payments. Failure to set up a special needs trust might affect them, even if not as much as another person who receives, say, SSI and Medicaid.
Even someone receiving Medicare will have some effect from having a higher income. Premium payments are already sensitive to income, and future changes in both Medicare and Social Security might result in reduced benefits for someone who has assets or income outside a special needs trust.
If your child has a disability, it might be that a trust is needed in order to provide management of the inheritance you leave them. If they are unable to manage money themselves the alternative is a court-controlled conservatorship (or, in some states, guardianship). That can be expensive and constraining.
I’m young. We agree. And we agree that it’s not too likely that you will die in the next, say, five years (that’s about the useful life of your estate plan, though your special needs trust will probably be fine for longer than that). But “not too likely” is not the same as “it can’t happen.” You cut down your salt and calories because your doctor told you it’d be a good idea — even though your high blood pressure isn’t too likely to kill you in the next five years, either. We’re here to tell you that it’s time to address the need for a special needs trust.
I’m going to disinherit my child who receives public benefits and leave everything to his older brother. That will probably work. “Probably” is the key word here. Is his older brother married? Does he drive a car? Is he independently wealthy? These questions are important because leaving everything to your older child means you are subjecting the entire inheritance to his spouse, creditors, and whims. And have you thought out what will happen if he dies before his brother, leaving your entire inheritance to his wife or kids? Will they feel the same obligation to take care of your vulnerable child that he does?
I’ll get to it. Soon. OK — when?
I don’t like lawyers. We do understand this objection. Some days we’re not too fond of them, either. But they are in a long list of people we’d rather not have to deal with but do: doctors, auto mechanics, veternarians, pest control people, parking monitors. Some days we think the only other human being we really like is our barista. We understand, though, that if we avoid our doctor when we are sick the result will not be positive. Same for the auto mechanic when our car needs attention. Also for the vet and all the rest. In fact, the only one we probably could avoid altogether is the barista, and we refuse to stay away on principle.
Seriously — lawyers are like other professionals. We listen to your needs, desires and information, and we give you our best advice about what you should do (and how we can help). Most of us really like people. In fact, all of us at Fleming & Curti, PLC, really like people — it’s a job requirement. We want to help, and we have some specialized expertise that we can use to assist you. Give us a chance to show you that is true.
APRIL 4, 2011 VOLUME 18 NUMBER 12 My son will be 18 in a little more than a year. He is in high school, in the special education program. What do I need to do to prepare for his eighteenth birthday?
Excellent question. Assuming it is limited to legal matters (those are the only ones we’re particularly good with), we have a number of things for you to consider:
Guardianship. You may need to seek a guardianship in order to maintain your ability to make medical decisions for your son. You will undoubtedly begin hearing from all sorts of concerned (and mostly well-informed) people about how difficult and expensive that process is, and how you need to get a head start on it. Relax. The news is mostly good.
Arizona, like a number of other states, gives family members the ability to make medical decisions for an incapacitated relative. Parents have a high priority under Arizona law. Of course, if you are no longer married to your son’s other parent, that can mean a conflict over who will be first. It may be perfectly obvious to you, but the law assumes you and your ex have equal rights until a court decides otherwise — and a childhood custody order does not resolve the question.
Assuming you get along with your ex, or you are still married to your son’s other parent, does that mean no guardianship is necessary? Not exactly. There are some circumstances where it still might be appropriate to seek guardianship; you will want to consult with a lawyer who knows something about guardianship to review the concerns and options.
Some parents go ahead and file for guardianship even if it may not be completely necessary. They reason that they want the security of knowing they have legal authority, and that is not a foolish mistake. Other parents reason that they want to maintain as much autonomy and self-determination for their children as possible, despite whatever limitations they might have. That is also not a foolish point of view. What does that mean? Every family circumstance is a little bit different, and good advice is needed.
If you do decide to file for guardianship, there probably is no rush. The Arizona legislature is right now considering changes that would allow you to file before your son turns 18, but until those changes are final (perhaps by September of this year) you can’t really file until after that anyway. The process will take about six weeks, and probably cost about $1,500 to $2,000 in legal and filing fees. That assumes, of course, that it is clear that your son needs a guardian, and that he doesn’t disagree.
One thing that would help with the decision-making process, and get everything going more quickly: get a letter from your son’s physician that indicates whether the doctor thinks he can make medical and personal decisions on his own. That letter will be necessary for the permanent hearing anyway, and it will help us counsel you on whether and how to proceed.
Child Support. Is there an old child support order requiring your ex to pay you monthly? Arizona permits child support to continue past age 18 if the child is disabled. You need to jump on this issue right away.
One caveat: child support (whether it is paid to you, directly to your son or to someone else on his behalf) will probably keep him from getting Supplemental Security Income (SSI) payments — unless you plan carefully. This is not a simple issue, and few divorce lawyers have dealt with the kind of planning necessary to keep child support and SSI both coming in. We need to talk about this one at some length.
Social Security. Is your son now receiving Supplemental Security Income (SSI) payments? If not, it may be because of your assets and income, which are imputed to him for eligibility purposes. If that is the case, your assets and income will no longer count once he turns 18. If he is “disabled” (and that’s different from “has a disability”) then it would be good to get that established and get SSI benefits flowing immediately.
Promptly after your son’s 18th birthday you should apply for SSI for him. If he gets it, he will automatically qualify for AHCCCS (Arizona’s Medicaid program). That will also help assure that he gets services from the Division of Developmental Disabilities (DDD) if his disability is developmental.
There are a number of things to keep in mind once your son’s SSI eligibility is set:
If he lives with you without paying rent (or paying toward the costs of his food and shelter), his SSI will be reduced by about $250 per moth (the number changes with the maximum SSI benefit rate). If that happens, you might consider charging rent as a way of increasing his benefit — but it won’t change his eligibility for AHCCCS.
In any event, it is important to get his disability established by Social Security before he turns 22. If you do, then he will probably qualify for dependents’ and survivors’ benefits under your Social Security account. That means that when either of his parents retires, his SSI may suddenly switch to Social Security (or a combination of Social Security and SSI) and he will qualify for Medicare coverage instead of (or in addition to) his AHCCCS coverage. Similiarly, upon the death of either parent his benefit will probably bump up again.
If you help your son secure employment, perhaps in a family business or other friendly and unchallenging environment, he may lose his future eligibility for Social Security benefits on your account. That might not be best for him long term. Same result if he marries — it can cut off his future dependents’ or survivors’ benefits.
Graduation. You may want to have your son graduate with his high school class. It is often a matter of pride and self-respect, and friends and family may have encouraged that perspective for years. Unfortunately, graduation might not be best for your son.
Programs offered through the school systems are often more appropriate, more easily available and better staffed than those offered to adult participants in DDD-sponsored programs. Usually students who have been identified as developmentally disabled can stay in high school until age 22; that is often in their best interests. You might talk to lawyers familiar with the local social service scene, and to parents of other children who have been through the graduation decision.
UTMA Accounts. Do you have an old Uniform Transfer to Minors Act account you (or maybe your parents) set up for your son years ago? It’s time to deal with that, too. The good news: you actually still have a couple years. Rather than ending at 18, they mostly end at age 21. But when that day arrives, the UTMA account will keep your son from receiving SSI benefits and maybe even AHCCCS. Let’s get that problem dealt with in advance.
Estate Planning. When your son was still a minor it was important that you sign a will identifying your choice for his guardian if you had died. Thank goodness you are going to make it to his majority — but the problem hasn’t gone away. You still need to do your own estate planning, or to update it if you have already done it.
Have you created a special needs trust to receive any share you intend to leave to him? Do you have life insurance, IRAs or retirement accounts, bank accounts or even real estate listing him as beneficiary? You need to get on this project right away — you are now almost two decades older than you were when you first thought about his future care.
OCTOBER 4, 2010 VOLUME 17 NUMBER 31
Last week we wrote about how you can go about leaving your IRA (or 401(k), 403(b), etc.) to a child with a disability. In passing we mentioned that the discussion about how to leave your IRA to any trust could wait for another day. Today is that day. Let’s tackle this as a Q&A session (or, if you prefer, we can call it a FAQ list).
Can I name a trust as beneficiary of my IRA?
Yes. That was easy.
Are the rules the same for 401(k), 403(b) and other retirement accounts?
Generally, yes. If you have more esoteric retirement accounts, talk to someone to make sure you are doing the right thing. What the heck — talk to an expert in any case. Our purpose here is just to give you some background and introduce the language and issues, not to give you direct legal advice.
Before you tell me how to do it, why would I want to name a trust as beneficiary of my IRA?
There are several reasons you might:
If you have a child who is a spendthrift, or married to a spendthrift, or who is involved in tax issues or legal proceedings, you might want the retirement account to be protected against creditors.
If you worry that your child might get divorced and want to keep your retirement account out of the divorce calculations and proceedings, a trust might help protect the account (and, for that matter, other assets you are considering leaving to that child).
You might just want to delay the withdrawal of your retirement account as long as possible. Of course, you could name your child as beneficiary and trust him or her to withdraw the money as slowly as is permissible. With a trust you can help assure that “stretch-out” of the IRA.
Why is my banker/broker/accountant telling me I can’t name a trust as beneficiary?
That used to be the rule, and lots of professionals are not yet caught up. There are also a couple of special rules that apply when you name a trust as beneficiary — though they are not at all hard to comply with, so it’s not clear why advisers get hung up on those rules. Finally, even though the rules permit naming a trust as beneficiary they do not require all account custodians to go along — so your broker might be telling you that, while the rules permit naming a trust, your account can not take advantage of those rules.
If I want to name a trust as beneficiary, what must I do?
There are a handful of requirements. The important ones: give the IRA custodian a copy of the trust (that, by the way, can be taken care of later — but you can do it now if you want), name only one income beneficiary for the trust, and make sure your beneficiary designation comports with the trust set-up and your larger plans. That probably means you should get competent professional assistance, but that’s usually a good idea for your estate planning anyway.
Are there bad things that happen if I name a trust as beneficiary?
Yes, but not very bad. Depending on the ages of all the beneficiaries and potential beneficiaries, you might have shortened the stretch-out time to a period less than the life expectancy of the primary beneficiary.
Uh, could you please repeat that — in English?
Of course. Let’s use an illustration.
Suppose you have three children: Abigail, Ben and Candy. You are OK with Abbie and Ben getting their shares of your IRA in their names — you trust them to make sound judgments about how quickly to withdraw the money, and you don’t want to bother with a trust for them. Candy is a different story. The details of that story don’t matter: you just want to put Abigail in charge of deciding whether to withdraw more than the minimum amount each year from Candy’s share of the IRA.
You can name a trust for the benefit of Candy as beneficiary of 1/3 of your IRA (naming Abbey and Ben as the other two beneficiaries outright). But what will happen if Candy dies before the IRA is closed out?
As it happens, Candy does not have children. You decide to have the trust say that upon Candy’s death the remaining trust interest in “her” share of your IRA will go to Abigail and Ben. Abigail is ten years older than Candy. That all means that Candy will have to make her IRA withdrawals using Abigail’s age and life expectancy.
But wait. Candy does have children?
Well, why didn’t you say so? That makes it even easier. You can have the trust provide that if Candy dies before the last IRA withdrawal her children become the beneficiaries of the trust (and, indirectly, the IRA). As before, we use the oldest potential beneficiary as the determining age — and we are going to assume for the sake of this piece that Candy is older than all of her children. No effect on Candy’s withdrawal rate. But note that if Candy does die, her children will still have to withdraw from the IRA at Candy’s rate, not their own.
What about estate taxes?
Now you’re talking about a whole different kettle of fish (or something). As you know, the estate tax situation is in flux right now, and some states have their own estate tax rules. That makes it very hard to generalize, and unnecessarily complicates this discussion. Suffice it to say that your IRA will be part of your estate for estate tax purposes, and just because there is income tax due on it does not mean that there won’t also be an estate tax liability attached to it. But if your entire estate is worth less than $1 million, you probably are not going to care very much. Stay tuned for a new number to be inserted in that sentence sometime before the end of 2010.
That sounds pretty simple. Could you please make it more complicated?
We’d be happy to, but it’s not required. We could give you information about what lawyers call “conduit” trusts and “accumulation” trusts. We could explain why you can’t have the money go to a charity upon Candy’s death. We could even try to give you some better names for your imaginary children (while still adhering to the A, B and C convention). But for most of our clients, those complications are unnecessary.
The bottom line: it is not that hard to name a trust as beneficiary of your IRA, 401(k) or other qualified retirement plan. You just need to review the rules, and understand why you might want to do such a thing.
It is also permissible to consider all that, try to get the rules straight, and then decide not to bother. One thing that we don’t want to allow you to do, though: ignore the issue, prepare a will that seems to handle all of your assets, and then have an IRA beneficiary designation that doesn’t agree with the rest of your estate plan, imposes an undue burden on your children and beneficiaries, or fails to address your child’s disability, money problems or legal or financial situation.
We hope this has helped demystify a subject that lawyers and accountants often seem to enjoy complicating. Your life, however, tends to be complicated. Please get good legal, financial and investment advice before you decide what you should do.
Most people are familiar with modern concepts of child support. It can be awarded to the custodial parent in a divorce proceeding. The amount of support is usually calculated by reference to standardized computations promulgated by the courts. A support award usually includes an automatic assignment of wages to help ensure the payments get made. It ends when the child reaches age 18. Wait — that last one is not necessarily correct.
Most states (Arizona included) permit courts to order continued child support for an adult child with a serious mental or physical disability. The rules vary from state to state, but Arizona’s approach is not particularly unusual. If you are concerned about this issue because you know about an adult child with a disability living in another state, be sure to check that state’s laws before assuming the Arizona rules are identical.
In Arizona, child support can be awarded to an adult child with a disability if:
The child is severely disabled, either mentally or physically, and is “unable to live independently and be self-supporting,”
The disability began before the child turned eighteen, and
The court considers the financial resources and needs of the child and both parents, along with the effect of the disability on those needs.
[There are actually two circumstances in which child support can extend past age 18 under Arizona law. The court can also continue child support until age 19 if the child is still in high school.]
See Arizona Revised Statutes section 25-320(E) for the precise language of Arizona law. Note that the law does not require the parents to be divorced, separated or even pending divorce or separation. A court proceeding can be initiated solely for the purposes of establishing support requirements, and the resulting order can be directed against either or both parents — including against a parent with whom the adult child lives. Note also that the support request does not have to be filed before the child reaches age 18, though the disability itself must begin before that age.
A recent Arizona Court of Appeals case dealt with the issue of support for an adult disabled child. In Gersten v. Gersten, decided November 17, 2009, the appellate court dealt with a trial court decision denying support payments to the father of an adult child with a disability only because the father had not been appointed as his son’s guardian or conservator. The Court of Appeals directed that the matter be returned to the trial court, and the son’s interests considered either by having a guardian or conservator appointed or by joining him as an actual party to the divorce proceedings.
One common problem when support is ordered paid to an adult child with a disability (or to the parent with whom the child lives): the support will be treated as income for Supplemental Security Income (SSI) eligibility purposes. See, for example, the Social Security Administration’s POMS section SI 00830.420(C), which sets out the procedure an SSI eligibility worker must follow when assessing child support payments for an adult child with a disability.
That may mean that the support order reduces the beneficiary’s check by almost as much as the support order, and it might even result in elimination of SSI. That, in turn, might lead to the loss of Medicaid benefits paid for through the Arizona Health Care Cost Containment System (AHCCCS).
In some cases it might be possible to maintain eligibility for public benefits and still seek an award of support for the benefit of an adult child with a disability. A special needs trust for the benefit of the child support recipient can be set up (perhaps even by the court ordering the support) and the monthly payments assigned to the trust. The process is not always simple or straightforward, and an experienced attorney should be consulted.
Tax time is upon us yet again — just like last year and the year before. Funny how it rolls around every twelve months. OK — “funny” might not be the best word.
There is a certain irony in describing the tax deductions available to families raising or caring for a child with special needs. What families usually need is help (both financial and otherwise), and tax deductions may not provide much help for the family with income limited by the need to provide care for their child. Still, some deductions may be useful and many often go unclaimed; perhaps we can alert you to one or more you should consider while preparing or filing your own tax returns.
Claiming a dependent. Are you providing more than half the financial support for a person with a disability? You may be able to claim them as a dependent on your tax return. Of course, that means no one else can claim them as a dependent — including themselves.
Medical deductions. Remember that medical deductions are only useful on your federal income tax return to the extent that they exceed 7.5% of your adjusted gross income. Let’s use real numbers: if your income is about the national median this year, you will report something like $45,000 to $50,000 of income. In that case the first $3,500 (or so) of medical expenses you incur will not affect your tax return at all.
With that in mind, there are still expenses you should track. You might find that the 7.5% limit is easier to reach than you thought. You might also live in a state that does not apply the limitation (Arizona, for instance), so that medical expenses should be tracked.
What medical deductions most often get overlooked? Expenses for special schools might be deductible as a medical expense — if a medical professional has signed a recommendation. Tutoring, specialized books and software, evaluations and transportation might also be includible. Sometimes even special summer programs, residential schools — even disability-focused conferences — may be deductible as a medical expense.
Child and Dependent Care Credit. This one is not a deduction, but a credit — and that makes it valuable even for those who might not have enough medical expenses to deduct them. The credit is available to parents who have to pay caretakers in order to work (and earn income). The amount of the credit: up to 35% of the care costs incurred. See IRS Publication 503 for more information.
There are also other deductions and credits you might be overlooking. We were recently interviewed for a television report that indicated up to 30% of families with special needs children may failed to claim tax benefits due to them.
Individuals with disabilities, confused and vulnerable seniors and patients recovering from medical procedures often end up staying in nursing homes for weeks, months or years. Quality of care in those facilities is obviously important, and yet difficult to monitor. The good news: since most nursing homes accept Medicare and/or Medicaid dollars, they are subject to close scrutiny and, when they fall below basic levels of care, to penalties that can force them to improve. The bad news: the government agency charged with conducting that scrutiny does an inadequate job.
You won’t have to take our word for it. The Government Accountability Office (formerly the General Accounting Office, but better known as the GAO) is Congress’ investigative arm, and is famous for its non-partisan reviews of government programs. In a report finalized last month and issued to the public today, the GAO takes the government to task for its failure to impose meaningful sanctions on nursing homes that repeatedly harm residents.
The federal agency charged with monitoring nursing home compliance has a spotty track record of enforcement. The GAO report found that sanctions were too often delayed, and often voided altogether when the offending home submitted a plan for compliance. That practice did not change, notes the GAO, even for homes with multiple offenses.
The 63 homes (in four states) surveyed by the GAO, for example, had a total of 444 citations for deficiencies that actually harmed residents. It is important to note that those citations were not complaints—presumably there were many more complaints filed—but actual findings of deficiencies, and that those deficiencies resulted in actual harm to patients. So how many of those resulted in immediate sanctions? Just 69, or a little more than 15%.
Although given authority to impose fines as high as $3,000 per day against offending nursing homes, CMS (The Centers for Medicare and Medicaid Services) imposed fines of $350 to $500 per day, and those fines were not collected until the expiration of an appeal process that might take years in a given case. More than half the time CMS chose sanctions that gave the nursing homes another three months to correct deficiencies rather than the fifteen-day option available to the agency. In almost a quarter of cases meriting immediate sanctions, there was no evidence of any action being taken at all.
What did CMS say in response to the criticism? The agency “is taking additional steps to improve nursing home enforcement … but it is not clear whether or when these initiatives will address the enforcement weaknesses GAO found.”
If your child has a disability you will have thought about what would happen on your death. Who will take care of your child? Who will pay for that care? Your estate plan can help address those concerns—and should probably include what most in the disability community call a “special needs” trust.
Government benefits can be crucial to the welfare of a child with disabilities. Supplemental Security Income (SSI), Medicaid (in Arizona, AHCCCS or ALTCS), Title XIX and Section 8 housing benefits—each program has its own eligibility rules, but most require that the recipient not have significant assets or income.
Some parents choose to simply disinherit a child with disabilities—not because they love the child any less, but because they fear the loss of those government benefits. At the same time, reliance on government programs leaves parents concerned about who can provide the personal oversight and involvement they bring to their child’s care while they are still able to do so.
Parents of children with disabilities should always consider establishing a trust for the child. A properly drafted trust can help supplement the minimum benefits provided by government programs, without displacing those programs altogether. In this way the parents’ assets can enhance their child’s life without being consumed by the high cost of care.
A special needs trust can provide funds for case management, advocacy, supplemental medical and dental care, therapies not covered by government benefits, companions and other care for the child with disabilities. It can also pay for education, travel, entertainment, visits from (or to) siblings, furniture, adaptive aids and other items that improve the quality of the child’s life.
The central rules governing a special needs trust are that payments should not be made for necessities such as food, clothing or shelter, and that cash distributions are usually not permitted. A carefully drafted trust can, however, permit the trustee to make even those disbursements at least on an occasional basis, and recognizing that there may be a temporary effect on government benefits programs.
One problem that remains is for the parents to select a suitable trustee. Siblings may be the best choice to handle the funds, though they will need special training in what kinds of investments and expenditures they should authorize.
Of course the same principles apply when the person with disabilities is not your child but a grandchild, niece, nephew or simply a family friend. It is essential in all such cases that any inheritance left to anyone who now receives or might later be eligible for government benefits be properly protected. The same can be said for life insurance and retirement benefits, as well.
At Fleming & Curti, PLC, we prepare special needs trusts for our Arizona clients. We also provide assistance and advice to trustees, so that they can protect government benefits while encouraging the independence and autonomy of beneficiaries with disabilities. We regularly counsel parents of children with disabilities, whether they currently receive government benefits or want to protect the possibility of future program eligibility.
For more information about the subject look at our Legal Q&A section on Special Needs Trusts. The Special Needs Alliance, a national affiliation of lawyers with expertise in special needs planning, also maintains a website with useful information and links to practitioners in nearly every state.
Suppose your adult son is disabled and receiving both financial and medical assistance from the government. While you do not consider yourself wealthy, you have worked hard all your life and managed to build a modest estate. If you leave your disabled child his share of your estate he will lose his government benefits, and the money you saved for him will soon be consumed in paying his medical bills and care costs. Is there any way to help your son without disrupting his benefits?
Parents of disabled children face difficult choices when they complete their own estate plans. On one hand it might seem reasonable to simply disinherit the disabled child and rely on the public benefits system to provide for their future needs; the parent’s estate may have a larger beneficial effect if it is distributed to the non-disabled children instead. Parents may also choose to rely on those non-disabled children to help provide for their disabled siblings with some of the money they inherit. Depending on individual family dynamics, disinheritance of the disabled child may seem like the most logical choice.
Most commonly, though, parents of disabled children want to treat all of their children equally—or at least come as close to equal treatment as is possible. In most cases, however, any share of the parent’s estate which will be attributed to the disabled child should be held in a trust that provides only for “luxuries” for that child. Such a trust is sometimes called a “Special Needs” trust, and is established to provide assistance but not interfere with eligibility for continued public benefits like Supplemental Security Income (SSI) and Medicaid (or, in Arizona, AHCCCS or ALTCS).
Though recent changes in federal and state law have made the rules more difficult for some Special Needs trusts, those rules do not affect trusts set up for inheritance purposes. A properly drafted Special Needs trust is allowed to provide additional therapy, entertainment, education, travel, assistance with medical care, companionship and a host of other benefits to make life more comfortable for the disabled child without disrupting SSI or Medicaid eligibility. But such trusts are not automatic—if you fail to plan in advance, your child’s share may result in a loss of SSI income, medical care and even eligibility for group home placement and other assistance.
It is important to get good legal advice before establishing a Special Needs trust. For example: if benefits come solely from Social Security Disability Insurance (SSDI) and the federal Medicare program, a different trust arrangement may be more appropriate. Your attorney needs to be familiar with government programs, and must have complete information before making a recommendation.
As mentioned in previous Elder Law Issues, the Arizona White House Conference on Aging held in Phoenix two weeks ago dealt with issues facing the full White House Conference on Aging when it meets in May. Arizona’s delegation dealt with several issues expected to dominate the national aging agenda.
Problems of “Special” Populations
Of course, elderly citizens may also belong to minority or disadvantaged groups. Of particular concern to the Arizona White House Conference on Aging were the specific problems encountered by four subgroups:
Ethnic and racial minorities
Physically disabled,
Developmentally disabled,
Homeless, and
Veterans
Approximately one-quarter of all citizens belongs to a minority ethnic group. Elderly minority group members may suffer from double (or even triple or quadruple) jeopardy. In addition to the problems shared by all elderly citizens, the ethnic elderly are less likely to be home owners, are more likely to have transportation problems, and may find language and cultural barriers to securing services.
Our increasingly mobile society may cause special problems for the ethnic elderly. Divorce rates, changes in family structures (including increased frequency of grandparent custody and visitation disputes) and elder abuse (including financial abuse) may work special emotional and financial hardships for ethnic minorities.
In Arizona, Native Americans face special problems. State and Federal disputes over responsibility for services has left an especially needy population vulnerable.
Older citizens with developmental disabilities may face many of the same problems. Their problems are compounded by the fact that the aging services network is unfamiliar with their needs, and is strained by the additional demands imposed by this special population.
Physical disabilities are increasingly common among the elderly. Among the most elderly (those 85 and older), 62% of women and 46% of men need help at home or are living in a nursing home. Physical barriers are even more limiting to the elderly physically disabled than to their younger counterparts.
Homelessness is increasingly common among the elderly. Particularly the elderly mentally ill, who in previous decades would have been housed in institutions, may now be displaced.
Veterans as a group are getting older, and medical programs and facilities designated for their care are not geared to meet their changing needs. Only 10% of qualified veterans use VA facilities, yet overcrowding and long waiting periods are endemic.
