Planning For Your Special Needs Child November 9, 2016 Stanbridge Academy

1. Planning For Your Special Needs Child November 9, 2016 Stanbridge Academy

2. Jennifer CunneenPrincipal, Cunneen Law • Mom to Nick Cunneen • 17 year old • High School Senior • Film and Drama Enthusiast • Diagnosed with Asperger’s and ADHD • Founder of Cunneen Law • Providing Estate Planning and Planning for families with Special Needs

3. Planning Options forSpecial Needs Beneficiaries • 3rd Party Special Needs Trusts •ABLE Accounts •Conservatorship

4. 3rd PartySpecial Needs Trusts (“SNT”) •A SNT set up by a third party, usually parents, grandparents or other family members, to benefit a disabled beneficiary. •No limit on the amounts that may be contributed to a 3rd Party SNT. •Funds may be contributed during donor’s lifetime, or at death, or with life insurance proceeds.

5. •Beneficiary is not deemed the owner, and has no right to access the funds. Trustee is appointed to manage, invest and distribute funds. •Beneficiary is not permitted to contribute to the 3rd Party SNT. •Distributions may be made in accordance with the instructions, but generally intended to supplement and not supplant, government benefits.

6. • 3rd Party SNT assets do not interfere with SSI or Medicaid. •At beneficiary’s death, no claims by Medicaid. Balance passes to beneficiaries chosen by the creator of the 3rd Party SNT. •Trust protector may be named to oversee the Trustee (review financial activity, power to remove and replace Trustee).

8. Housing – may result in 1/3 reduction in SSI • Entertainment – Gift Cards • Vehicle • Education – includes higher education and vocational • Vacations • Medical – not covered by Medi-Cal • Personal Care

9. 1st Party SNT“(d)(4)(A)” Trust • Assets awarded to the beneficiary in a lawsuit • Other assets owned or inherited by the beneficiary • Once established, enjoys many of the same benefits as a 3rd Party SNT • But subject to Medi-Cal payback rules!

10. Must be established and funded before age 65 for a disabled beneficiary 42 U.S.C. §1382c(a)(3) • Only one beneficiary • Established by parent, grandparent, legal guardian or court • Change coming? Special Needs Trust Fairness Act

11. ABLE Account Basics and EligibilitySteve Beck, Jr., Achieving a Better Life Experience Act – “ABLE” Act Overview: •529A accounts •Legislation passed on December 19, 2014, but implementation will be on a state-by-state basis. •California chaptered SB 324 and AB 449 – but when will these accounts be available?

12. Eligibility requirements: 1)Age requirement – must be disabled before age 26 2)Severity of disability – either • qualify for Supplemental Security Income (SSI) or SSDI • Have a disability certification from a physician

13. Permitted Uses of ABLE Account FundsMany more than 529 plans! • Education • Legal/professional fees • Housing • Technology • Transportation • Support services • Health • Funeral/burial expense • Employment training • Other (TBD) If spent for non-permitted expenses, expect to pay tax and penalties (10%)

14. Important Aspects of ABLE Accounts • Beneficiary is the account owner (but there may be others with access and check writing authorization). • Aggregate contributions to an ABLE account will be limited to the annual federal gift tax exemption (currently $14,000). • Multiple donors may contribute to an ABLE account, subject to the aggregate contribution rule above.

15. • Each beneficiary may have only one ABLE account (first account opened “wins”). • ABLE account may be established in beneficiary’s state of residence . May be established in another state if that state allows. • Upper limit of account will be tied to the applicable state limit, but beware of $100,000 limit for eligibility for benefits!  Limit includes income on the ABLE account!  What happens on violation?  For SSI purposes, payments will be suspended, but not terminated.  No impact to Medicaid benefits.

16. Other Important Points to Ponder • Medicaid Payback: Any assets in ABLE account after beneficiary’s death are subject to Medicaid claims. Compare Third Party Special Needs Trust: No Medicaid claims. • Contributions are made with post-tax dollars. • Account assets grow tax-free for federal income tax purposes.

17. Limited Conservatorship • What is a limited conservatorship? When a judge appoints a responsible person (conservator) to assist an adult with developmental disabilities (conservatee) with his or her personal and/or financial needs. • Limited conservatorship of the person: 1) Provide for the conservatee’s daily needs 2) May include some financial responsibilities

18. • Limited conservatorship of the estate: 1) The conservatee has assets not in a special needs trust or other trust and needs help managing them 2) Conservator may collect income and pay bills

19. Applying for a Limited Conservatorship • Timing: Can be effective upon the proposed conservatee’s 18th birthday or anytime thereafter. • Notification/Reports: 1) The proposed conservatee must be notified and attend the hearing 2) Close relatives must receive notification 3) The Regional Center 4) Physician (if asking for medical powers)

20. • Duties and Responsibilities of Limited Conservator of the Person: 1) To help the conservatee develop the maximum self-reliance and independence • Take care of the conservatee’s food, clothing, housing and overall well-being

21. • Additional Powers that a Limited Conservator of the Person May Request: 1) Fix the conservatee’s residence • Access the conservatee’s confidential papers and records 3) Enter into contracts on the conservatee’s behalf 4) Give or withhold medical consent 5) Make education decisions

22. • Less Common powers include powers to 1) Consent to or deny the conservatee’s marriage 2) Select social and sexual relationships