My husband and I are really getting up in years. We have a daughter with Down syndrome who lives with us. From what we knew when she was born, her life expectancy was short. She's in her 40s now, and in pretty good health. Cynthia lives with us, and we've always taken care of her. How do we plan for her care after we are gone?
I turned your questions over to Keith Koenigsdorf, an Overland Park attorney specializing in elder law. Here is his advice:
Elder law practitioners typically encounter two challenges when planning for a disabled child. First, elderly citizens may be desperately worried about what will happen to their retarded, mentally ill or physically disabled children after they are no longer alive or physically able to provide care, emotional strength or financial support.
Second, younger clients, aware of the intricacies of trust planning and knowledgeable of Medicaid law and practice, may consult the practitioner about long-range plans for a child who will not be capable of self-support or who may have periods when work is impossible and extensive acute or custodial medical care will be required.
If the concerned parent has adequate financial resources, excellent planning results can be achieved by artful trust drafting. In fact, the results for disabled children are, in a sense, better than those that can be achieved for an elderly client for his or her own benefit.
For example, a supplemental needs trust can result in a better outcome for persons under 65 than for older people (as long as the trust's settlor does not have a legal obligation to support the beneficiary). Assests in the trust may belong to the beneficiary, but are not deemed "available" for Medicaid-qualifying purposes. No such exemption is available for those over 65.
Uncertainty, a major obstacle in planning for the elderly, is removed when planning for a disabled child. With older persons, the planner may deal with a healthy client and spouse. Should plans be made that limit the client's present financial well-being in order to provide a favorable result in case of a disabling illness that never occurs? Will transfers be made from one spouse to another? Who might die first or who might require custodial care? In the case of a disabled child, the need for custodial care is already present or forseeable and the uncertainty is removed.
The discretionary trust is another popular planning tool. The trustee is given discretion to determine when income will be distributed to the disabled child and when principal can be invaded for his benefit. The trust specifies that it is intended as a supplement to public benefits, not a substitute for them. In this way, trust income and principal is not used to pay for costs otherwise payable out of the public treasury. The disabled child, of course, does not have any power to demand income or principal.
Professional advice is always appropriate when determining the best plan for a disabled child -- especially when eligibility for government benefits is at stake. Eligibility for such benefits depends on state law, the degree to which the authorities and trustees are willing to litigate, and where the judge's sympathy lies.
-- If you have a question or comment for "Sense for Seniors," write to Betty Gibb, Kansas Senior Press Service, 11875 S. Sunset, Suite 200, Olathe 66061.
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