May 2, 2008
Providing for a disabled child
~ written by Thomas J. Bonasera
Government benefits are often essential for the continued well-being of a disabled child after the parents’ death. Even for parents who might be able to afford large insurance policies (or have other assets to care for the child), the preservation of government benefits can substantially decrease the costs of care over the lifetime of the child. In addition, some social service programs are accessible only through government programs.
Most government benefits, including Medicaid, are available only to those who have no substantial assets or income. The parent’s dilemma is how to ensure their child has adequate resources while not rendering the child ineligible for Medicaid and other government programs. One solution is to place assets for the benefit of a disabled child in a “wholly discretionary trust.” A wholly discretionary trust names the disabled child as its beneficiary but does not provide any standards for how or when the money is to be used for the child, giving complete discretion to the trustee. A recent Ohio Supreme Court decision, rendered on January 17, 2008, affirms the use of wholly discretionary trusts as effective means of preserving Medicaid eligibility for disabled children.
There are other available options for parents in addition to the wholly discretionary trust, but they have significant disadvantages. Parents can choose to set aside a portion of their assets for a disabled child in “supplemental services” trusts or “special needs” trusts. These trusts are generally adequate for the one-child family, but each contains government “payback” provisions which are a concern for parents with more than one child. The “supplemental services trust” requires a distribution of one-half of its assets to the government at the beneficiary’s death, and it limits the amount that the trust can initially hold (currently $228,000). There is no limit on the amount that can be held by a “special needs trust,” but it requires a “dollar for dollar” payback at the beneficiary’s death for all Medicaid expenditures during the beneficiary’s life. These payback provisions prevent some or all of the disabled child’s trust assets from passing to the other children at the disabled child’s death. Finally, a wholly discretionary trust can be combined with one of these other trusts to ensure maximum protection of the disabled child’s eligibility while still preserving the remaining trust assets for the other living children after the disabled child’s death.
To learn more about “Special Needs Trusts Including Applicable Ohio Trust Code Provisions” to be presented by Tom Bonasera, plan to attend the 2008 Probate Law Institute on Friday, May 9 between 9:00 a.m. – 4:00 p.m. for 6.0 hours of CLE credit and 6.0 hours toward Estate Planning Trust and Probate Specialist Certification.
Other topics to be discussed during the institute include “Attorney Fees in Probate Matters” with Judge Lawrence Belskis; “Recent Judicial and Legislative Developments” with R. Douglas Wrightsel; “Tax Apportionment: How It Works, Why It Matters” with Robert R. Dunn; “Special Needs Trusts Including Applicable Ohio Trust Code Provisions” with Thomas J. Bonasera; “60 Law Office Technology Tips, Tricks and Websites in 60 Minutes” with Paul J. Unger; “Funeral Arrangements, Child Care, Mental Health, and Other Concerns of Clients in Drafting Estate Plans” by Jay E. Michael; and “Charitable Gift Annuities and Donor Advised Funds” to be presented by J. Bradley Britton of The Columbus Foundation; and “Guardian of the Estate: The Investigator, Protector, and Reporter” with Kelly C. Patton, Magistrate of Franklin County Probate Court.
Click here to register online, or phone 614/221.4112 for event #3704. The cost is $195 prepaid/$210 day of for members, $250 prepaid/$265 day of for non-members and $170 prepaid/$185 day of for paralegals. Spaces are filling quickly. Register today.