This blog first appeared in 2011 but it still shares a valuable message.
Estate planning is never easy,if only because it means thinking about protecting your loved ones when youâ€™reno longer around. Itâ€™s bad enough making plans to protect self-sufficient heirswho take care of themselves and an inheritance. However, it can be a realchallenge when planning for heirs with special needs for a variety of personaland legal reasons. Unfortunately, as TheWall Street Journal Online recently pointed out, with the economy andpolitics as they are, there are new concerns to bear in mind as you plan.
Both the State and federalbudgets are strapped for cash and the burden is falling on Medicare andMedicaid. Itâ€™s up to the Congressional Special Committee to consider the futureof Medicare now, but many Medicaid programs already are feeling the squeezewith tighter income restrictions for benefits and services.
Of course, much of the disabledpopulation (12% of the overall population) relies on state and federal servicesfor those services that they couldnâ€™t afford in the private market. To plan foran heir with special needs, then, means planning to provide for them withoutrisking their main sources of care. Now, more than ever, that means a â€œspecialneeds trust,â€ tailored to provide the inheritance as a safety net withoutendangering the continuation of benefits. [Sidebar: Sometimes an older parentcan make this move and kill two birds with one stone. How? They create thetrust now for themselves and a loved one with special needs so that bothqualify for government benefits, once the â€œlook backâ€ period has past foreligibility disqualification. As budgets get tighter, expect greatergovernmental scrutiny of such moves.]
The other major issue, and arelated one, is housing. Many Americans with special needs live in grouphousing programs. These programs are, in turn, subsidized by governmentagencies, but are increasingly unable to meet demand and are cash-strapped. Forone, the same political/economic pressure is keeping those agencies fromexpanding.
At the same time, there simplyare more prospective residents due to lengthening life expectancies. The US would havehad to expand its residential-services capacity by 28% to meet the demand as oftwo years ago. Clearly, housing has been an issue and it will only get worse.
Amidst all of this uncertainty,you still need to plan where your loved one will live. This might mean anotherform of trust. For example, a â€œQualified Personal Residence Trustâ€ (QPRT) wouldprovide that you live in your home until your death, but that your familymember with special needs would live there (without disqualifying ownership).Great care would need to be given in the preparation of such an arrangement.Also, it may be possible to provide a home to shelter several persons withspecial needs. For example, say several families pool resources, or even toleave a home to a non-profit that can convert the home into a new group home. Theoptions are limited by your creativity.
Ultimately, the best plan will depend on yourown unique family circumstances, as well as the current state and federal lawsgoverning benefits and services. Unfortunately, according to a recent study byArc, an advocacy group, only one-third of those affected actually has plans tocontrol what happens when the caregiver grows old and after they are gone.
At IdahoEstate Planning we are the expertsyou need to know and trust. Work with us and we'll put together a plan thatworks for you and your loved ones. Remember, goodplanning is no accident.