A Letter of Intent is a document that goes hand-in-hand with a Special Needs Trust or a Supplemental Needs Trust. Also known by the names “Plan of Care,” “Memorandum of Care,” and “Memorandum of Intent,” the purpose for writing a Letter of Intent is to provide instructions and information to new caretakers when a person with special needs is transitioning out of the direct care of a parent or legal guardian. Since the parent or guardian is the ideal source of details about a beneficiary’s specific needs, preferences, and personality traits, writing a Letter of Intent is key for preserving the beneficiary’s quality of life.
As you can imagine, Letters of Intent often take some time to write because there is much information to record. Not only should the names and addresses of doctors, financial advisors, and close family members be provided, it is also crucial to include the Beneficiary’s favorite foods, entertainment preferences, daily habits, future goals, and friends. Making this information available will help enhance the Beneficiary’s ability to adjust to the change of scenery and caretaker. It will also assist the new caretaker with supplanting a personal connection with the Beneficiary. Since Letters of Intent are not legal documents and do not need to be notarized, keep in mind that they are malleable. A Letter of Intent should be edited and re-printed as the Beneficiary’s needs and preferences evolve. Remember, if you are the guardian, review the Letter of Intent with the Beneficiary and other members of his or her network of support on a regular basis and make sure that the most current edition travels with the legal documents.
For more information about Letters of Intent and transitions of care for your child with special needs, consult an attorney or visit www.pacer.org and www.thearc.org.
Parents and guardians of children with special needs can do everything perfectly from qualifying their child for government assistance, to establishing a trust, to ensuring that their daily needs are fully met. However, not having a legal Will in place may jeopardize much of the effort that you and your family invest into the care for your child.
When somebody without a Will passes away, the government determines how the estate is distributed. If the decedent is not survived by a spouse but is survived by children, the assets will pass to the children. If one or more of these children has special needs and has been receiving government benefits, assets from the estate provided directly in the child’s name may disqualify them from receiving the public assistance funding.
This is why having a legal Will in place is crucial. The Will can be used to designate any distribution from the estate for the benefit of a special needs child to be put in a Supplemental Needs Trust. Not only will executing a Will go a long way in preventing government involvement with estate distribution, it can assure that assets will be provided to your child with special needs in a way that will not affect his or her qualification for public assistance. The key is to make sure that you do not leave money directly in the child’s name. The distribution should instead be made to the Trustee of the child’s Supplemental Needs Trust. Along the same lines, be sure that the portion of your life insurance proceeds to be paid out for your child with special needs is held in the trust, as well. Remember, you should consult with an Elder Law attorney to discuss the best way for your Will to be drafted according to your unique situation.
For parents of a child with a disability, it is important to establish a Supplemental Needs Trust when their child is still young. Even though eligibility for many government assistance programs does not begin until a child is at least 18, it is beneficial to establish a trust before the child is old enough to qualify because it is a preemptive measure that goes a long way in protecting the child’s future.
One major benefit of establishing a Supplemental Needs Trust at a child’s young age is providing a destination for gifts. Once the trust is created, family members may begin providing funds for the trust and designating it as the recipient of an inheritance. This way, collection of trust funds may begin early in life, and the child’s eligibility for government benefits will not be jeopardized should he or she receive a large gift later in life, whatever the age of the Beneficiary.
Another reason for establishing a trust while the child is young is that it provides parents with peace of mind that the child’s needs will be met if something were to happen to them. Having assets secured in a trust ensures that there will be funds available for the child if it is ever unexpectedly needed. In conjunction with establishing the Supplemental Needs Trust, many parents choose to execute their own estate planning documents, which grant assets such as money, stocks, and even a home to the trust. In addition, they may purchase a life insurance plan to be held in the trust. Following these steps are a great way to maximize the amount of funding available to a child with special needs. For more information about establishing a Supplemental Needs Trust for your child, be sure to consult with an attorney in your state who specializes in Special and Supplemental Needs Trusts.
One of the most important and common questions that Trustees ask is regarding the specific sorts of items that funds from a Special Needs Trust and Supplemental Needs Trust may purchase for the Beneficiary. Generally speaking, there are three important questions to keep in mind when making this decision: 1) Is the good or service provided by government benefits? 2) Is the distribution allowed by the Trust Agreement? 3) Is the distribution for the sole benefit of the Beneficiary?
Let’s say, for example, that the Beneficiary’s transport vehicle needs a repair to its accessible ramp. This repair cost can paid with trust funds if it is not covered through government assistance, if this type of expense is allowed in the Trust Agreement, and if the distribution is for the sole benefit of the Beneficiary. In most cases, an accessible ramp repair fits the bill. Some other examples of common trust purchases are a new TV for the Beneficiary’s room, a hotel room rental on vacation, a class at a local community college, or non-government funded medical expenses such as massage therapy.
Things may get a little bit more confusing when it comes to paying for food and shelter. Government assistance is intended to cover housing and food, so in order for the Beneficiary to continue receiving all of his or her available funding, it is important to make sure that trust funds do not pay for groceries, regular restaurant meals, rent, utilities, or home insurance. Also, the Beneficiary should not receive cash directly from the trust. Legally speaking, these types of expenditures are an increase to the Beneficiary’s personal income, which triggers a reduction in government funding. However, one caveat to keep in mind is that when trust funds are used for food and shelter costs, there is a reduction of only $1 dollar to SSI benefits for every $3 dollars spent. For some beneficiaries, this tradeoff may actually be the best course of action. That is why it is helpful to consult with an attorney who specializes in Special and Supplemental Needs Trusts. Not only will the attorney explain the full range of goods and services that the trust may provide, he or she will also be able to hash out the best spending options for your given situation.
Taking on the role of Trustee of a Special Needs Trust or Supplemental Needs Trust is an important responsibility. It is a Trustee’s duty to manage trust funds with careful discretion and disburse the funds for the sole benefit of the Beneficiary. The Trustee has the additional responsibility of seeing that the trust funds are properly invested and protected. Considering the scope of the undertaking, there are a few things potential Trustees should consider before accepting the role.
First, make sure that you have the opportunity to read the trust agreement and learn the specific duties unique to the trust nominating you as Trustee, such as what sorts of expenditures can be funded with trust assets, what are the legal responsibilities and duties you assume in the Trustee role, and whether the Trust provides for financial compensation for your role as Trustee. In addition, you should also establish the Grantor’s objective for creating the trust, the personal goals that you can help the Beneficiary achieve while you serve as Trustee, and how long your services as Trustee will be needed. Finally, taking time to become familiar with the Beneficiary’s needs, habits, and preferences is very important since it is the Trustee’s job to provide distributions to meet the Beneficiary’s supplemental needs.
If you are nominated as the Trustee in a Special Needs Trust or Supplemental Needs Trust, it is a good idea to consult with the attorney who drafted the trust agreement so the ins and outs of your duties may be fully clarified. As drafters of the trust, attorneys are ultimately your best source of answers for your preliminary questions. Keep in mind that it is important to be honest with yourself as you consider becoming a Trustee. If the trust agreement is unavailable for your review or if you do not feel that you have the time to undertake the Trustee role, it is wise to reconsider for your own good and the good of the Beneficiary.
What Is A Supplemental Needs Trust?
A Supplemental Needs Trust is established for the benefit of a person with special needs as long as the Beneficiary is not over the age of 65. and residing in long-term care without a reasonable expectation of discharge. Use of a Supplemental Needs Trust allows the Beneficiaries, to retain their government assistance and also have funds available for opportunities like advanced medical treatments, education, and leisure activities. The objective behind establishing a Supplemental Needs Trust is similar to that of a Special Needs Trust, which the subject of a previous blog article.
The trust’s “Grantor,” which is the title given to the person who establishes the Supplemental Needs Trust, may be a parent, grandparent, actually anyone other than the Beneficiary or the Beneficiary’s spouse. Similarly, funds in the trust may come from anyone other than the Beneficiary or the Beneficiary’s spouse. Grantors typically establish the Supplemental Needs Trust with their own assets through a Will or through a “stand-alone” Supplemental Needs Trust. In doing so, the Grantor may appoint herself or another person as the Trustee, who has the responsibility to disburse funds to pay for expenses of the Beneficiary not covered by government assistance. Funds from the trust are not allowed to be disbursed directly to the Beneficiary. Disbursements from the Supplemental Needs Trust can be made only to the person or entity providing the goods or services to the Beneficiary. When the Beneficiary passes away, the funds or assets in the trust are not subject to claim by the government; it is disbursed according to the terms of the trust agreement; i.e., to family members, friends, non-profits, or whomever the Grantor designates.
The information in this article just is a short overview of what there is to know about Supplemental Needs Trusts. The best way to learn more about a Supplemental Needs Trust offers is to schedule a consultation with an attorney in your state who specializes in this area of practice.
For families and friends of individuals with special needs, the primary concern is sustaining the individual financially. Not only do we want to ensure that their requirements for daily care are met, but we also want to make every effort to provide the best quality of life possible. One of the best ways to meet both goals is to establish either a Special Needs Trust or a Supplemental Needs Trust which allows a person with special needs to continue receiving government assistance for standard care while the trust money can be used for supplemental benefits such as advanced medical treatment, education, entertainment, and even vacations.
A key to success is knowing whether a Special Needs Trust or a Supplemental Needs Trust is right for the situation at hand, and this series is intended to inform readers about some of the basics and benefits of each. Because the laws and terminology involving trusts vary from state to state, it is helpful to consult with a local attorney who specializes in this area. If the Beneficiary lives outside the state of Minnesota, the special needs trust attorney will inform you about the options available for your loved one and help you take the steps necessary to safeguard their well-being.