Planning Strategies for Individuals with Special Needs from Mid Life and Beyond

by: Danielle Mayoras, Attorney and Director of Education of The Center for Special Needs Planning

A lot of articles explore Special Needs Trusts and the wonderful benefits that they provide to both parents and individuals with special needs who are on government benefits. When a parent leaves an inheritance over $2,000 to an individual with special needs, the inheritance is actually a gift to the government because it eliminates that child’s qualification for government benefits. The use of a Special Needs Trust eliminates this disqualification because the inheritance is not left to the special needs individual, but rather to his or her trust. As a result, the individual maintains his or her government benefits and receives an inheritance. These trusts provide peace of mind to the parents and an additional fund for the individual with special needs. The Special Needs Trust answers questions, such as follows: “who will look after my loved one with special needs when I pass away?” and “how will my loved one’s extras be paid after I pass away?”

This article, however, goes beyond the basic Special Needs Trust and also focuses on the planning for an individual with special needs from mid life and beyond. In addition to the general concerns that parents of special needs children have, parents also worry about the long term care costs of their special needs loved ones. Specifically, what if the individual with special needs outlives his or her parent and needs long term care? What if the parents are not around to provide the long term care? How will the long term care costs be paid?

The statistics show that it is likely that an individual with special needs will require some type of long term care. They are currently 1.2 million disabled Medicaid enrollees either receiving acute care or long term care. There are several different long term care options including home care, assisted living, adult foster care, and nursing homes. Each of these will be addressed separately below.

Home care is health and supportive care provided to an individual in their own home by a licensed medical professional. The advantages of home care are obvious – your loved one receives care in the comfort of their own home. This ensures more privacy for your special needs loved one and also allows the family to better monitor the quality of health care that their special needs loved one is receiving.

Assisted living facilities are a middle ground between home care and nursing home care. Typically residents of assisted living facilities require help with their activities of daily living, but do not need skilled nursing home care. The advantages of receiving care in an assisted living facility are clear – the environment is more residential and less restrictive with a greater emphasis on privacy and autonomy.

With the average hourly rate for home care at $19.18 per hour, and the average cost of assisted living at nearly $40,000.00 per year, receiving care in these environments will be cost prohibitive for most families. Some long term care alternatives to these high costs are Adult Foster Care and nursing homes.

Adult Foster Care (AFC) is a licensed, sheltered living arrangement for adults with special needs who are unable to live alone. AFC homes provide five basic services: room, board, supervision, protection, and household services (laundry, cleaning, etc). Additionally, adult foster care homes may provide the following services:

1. Assistance with dressing, personal hygiene, and/or eating;
2. Transportation to appointments, senior centers, shopping, or activities;
3. Medication reminders of administration; and
4. Assistance with money management.
Typically there is a minimum room and board payment made to providers per month, which is set by the State. This amount is typically equal to the monthly income that the adult with special needs receives in governmental benefits. Adult foster care may be a cost-effective alternative to nursing homes or larger assisted-living facilities. For many special needs individuals who need long term care, Adult Foster Care is appropriate medically and financially is a good long term care option as well.

On the other hand, nursing care facilities are places of residence for people who require constant care and assistance with their activities of daily living. Residents include both the elderly and individuals with special needs. The numbers are startling – the average cost of nursing home care in the United States exceeds $77,000.00 per year and is expected to reach $190,000 per year in 2030. Furthermore, almost 56% of nursing home residents spend at least one year in the nursing home, with another almost 26% spending at least three years in the nursing home. Many parents wonder how their special needs loved one will be able to afford it.

One way is to qualify your adult child with special needs for Medicaid. Medicaid is a state administered program that pays for long term care costs if certain eligibility requirements are met. Although this is a Federal program, each state has its own guidelines regarding eligibility and services. Therefore, it is critical to consult with a special needs attorney who is familiar with the specialized Medicaid laws in the state where your loved one resides.

Certain requirements must be met to qualify for Medicaid. These may include your age, whether you are disabled, blind, or aged; your income and resources; whether you are a United States citizen or a lawfully admitted immigrant. The rules for counting your income and resources vary from state to state and from group to group. There are special rules for those who live in nursing homes and for disabled children living at home.

A single individual who resides in a nursing home may own certain assets, which Medicaid views as exempt assets, and still qualify for Medicaid. For example, in the State of Michigan, those exempt assets for Medicaid eligibility are as follows:

1. Home (with certain restrictions);
2. Car;
3. Personal Property;
4. Burial Blot and Burial Space items;
5. Funeral Contract worth up to $11,450.00;
6. Life Insurance with face value of $1,500.00;
7. $2,000 in cash assets;
8. Assets that are in a Special Needs Trust, an OBRA Trust or a Pooled Income Trust; and
9. Immediate Annuity.
All other assets are countable and an adult child with special needs will not be Medicaid eligible until those assets are spent down or converted into one of the above exempt assets.

You can ensure that your child with special needs qualifies for Medicaid upon your death by planning ahead. By completing a full estate plan, parents are able to place the adult child’s portion of their inheritance into a Special Needs Trust. This trust allows the adult child to maintain government benefits as the Trust is an exempt asset under Medicaid guidelines. When the parents create their own estate plan, their revocable living trust will provide the inheritance, for the benefit of their special needs child, be funneled into the Special Needs Trust

The Special Needs Trust has a trustee, who is responsible for administering the trust and ensuring that the adult child’s needs are met. Assets in a trust of this nature are not countable and in the event that the child requires long term care and needs to qualify for Medicaid, these trust assets will be preserved for the adult child’s benefit. A trust of this nature can be used for most any item the adult child may need with the exception of food and shelter. For example, the trustee can purchase clothing, an automobile, electronic equipment, furniture, fitness equipment, funeral expenses, vacation and travel costs, vocational programs, therapy, personal care items and much more. The trustee can also use the funds from the trust for non-reimbursed medical expenses.

While government agencies recognize Special Needs Trusts, there are strict rules and it is critical that you work with an experienced special needs attorney to draft the Trust. We have reviewed countless Special Needs Trusts that do not comply with Social Security Insurance and Medicaid Rules. If the funds are used for food or shelter, however, then there is the potential that the adult child’s governmental benefits may be reduced or eliminated. With respect to shelter, your child can use the money to purchase a home, but cannot use the money for rent. In fact, one wrong word or phrase can make the difference between an inheritance that benefits your child and one that causes your child to lose the many services, assistance, and benefits available.

In the event that the parents pass away without having the proper estate planning in place, there are still planning strategies that can be implemented to preserve the inheritance of the adult child with special needs allowing the adult child to maintain or qualify for government benefits. The inheritance can be placed into an OBRA Disability Payback Trust or into a Pooled Income Trust. These trusts provide the same protections as the above discussed special needs trust with one important difference – both of these trusts have a provision that require the assets to be used for specific purposes after the death of the adult child with special needs. The OBRA Trust requires that in the event there are any funds remaining in the trust at the death of the adult child with special needs, Medicaid is paid back for any services rendered up to the full amount of assets in the trust. The Pooled Income Trust, which is run by a non profit organization, requires that the organization be the remainder beneficiary of the trust.

Something else to keep in mind is the possibility of your special needs loved one executing Durable Powers of Attorney. If your adult child with special needs is competent, then he or she can execute Durable Powers of Attorney. There are two types of Durable Power of Attorney: Financial Durable Power of Attorney and Medical Durable Power of Attorney/Patient Advocate Designation. By executing a Financial Durable Power of Attorney, your child appoints an attorney-in-fact to handle his or her financial affairs in the event that he or she is physically or mentally unable to do so. For example, this may include banking, real estate, signing tax returns, hiring and firing agents, and commencing litigation.

The Medical Durable Power of Attorney/Patient Advocate Designation addresses all of your loved one=s medical decisions including, residential placement, surgery and treatment, and daily medical decisions. If your adult child with special needs is able to execute Durable Powers of Attorney, this will generally eliminate the need to go through the probate court system to obtain a guardianship or conservatorship. These documents cannot be executed by your child until he or she is an adult and is 18 years of age. As probate court can be expensive (legal fees and court costs), burdensome (annual report requirements and multiple trips to court), and time consuming, it is highly advisable that if your adult child with special needs has the requisite capacity to execute legal documents that they do so. Most importantly, he or she would be able to maintain control of his or her financial and medical decisions.

We know that every parent=s greatest worry is what will happen to their special needs loved one after they are gone. With the proper planning, there are government programs that can ensure that your adult child with special needs receives long term care after you are gone and receives an inheritance from you that does not disqualify them from government benefits. Estate planning is always important to do; however, when one of the beneficiaries is a special needs loved one, the planning becomes critical.

It is important to note that the laws are constantly changing and it is vital that parents concerned about special needs planning consult with an expert. If you would like more information, a referral to an attorney to assist you, or training and workshops on this topic, you can contact The Center for Special Needs Planning at 1-877-PLAN-758. You can also subscribe to our monthly e-letter at to keep current on the laws.

This article provides general information concerning a variety of legal topics. It is not intended to be a legal opinion and should not be relied upon as legal advice. Legal advice should not be given without investigation of your particular circumstances.

Plundered by her own children? Feud rages over estate

It’s a she said, she said on wealthy, elderly mom’s missing money

Francine Stanton Cohen says she knew there would be trouble when her 94-year-old mother entrusted her financial affairs to Cohen’s two youngest sisters in 2007.

In the months that followed, Cohen said, her sisters persuaded their mother to add their names to her bank accounts.”They’ve been ripping through her money ever since,” Cohen, 71, a retired schoolteacher, said last week.

On Dec. 8, a Wayne County probate judge jailed one of the daughters, Janice Stanton Hines, 58, a City of Houston disaster relief coordinator, for refusing to return most of the $789,288 she withdrew from her mother’s accounts in 2008 — and used to buy $150,000 worth of gold coins and ingots that have since vanished.

The case highlights legal perils families face as Michigan’s population ages and a growing number of older parents can no longer manage their affairs.

Judges and legal experts said they’re seeing more family fights play out in the courts partly because of Michigan’s poor economy and high unemployment. They said the case underscores the importance of carefully choosing the person to handle your affairs.

Her story, her mother’s money

Hardly anyone believes Hines’ account about how she obtained and disposed of more than a half-million dollars of her mother’s money.

Not the judges who have reviewed the case, nor the lawyers who are trying to recover the missing loot.

“I think the money is hidden somewhere, but I don’t know where and neither does anyone else,” said Royal Oak attorney Steven Geller, whom Wayne County Probate Judge David Szymanski appointed last year to try to recover the loot.

Geller and others say they believe Hines, with the help of her daughter Akwokwo Redhead, 36, of Atlanta, looted the estate of M. Louise Stanton, a 94-year-old retired Detroit schoolteacher and widow of a successful Detroit pool hall and storefront owner. They think the money is hidden in an offshore bank account.

“It’s pretty obvious that Janice Hines and her daughter are lying,” Geller said.

Hines and Redhead, a $90,000-a-year research scientist, insisted in sworn depositions last year they are telling the truth.

Hines, who has been in Wayne County Jail for the past seven weeks for disobeying Szymanski’s order to return the money, said by phone Friday: “If I had the money, don’t you think I would have returned it?” Besides her problems in Michigan, she is being sued in Houston, where she works, by her mother’s estate.

As for Redhead: “The only comment I have is that it’s unfortunate, in 2010, that my mom can’t get due process in the State of Michigan.”

Choose who you trust wisely

She moved in with her daughters after falling and breaking her hips in 2005 and 2007, lawyers for Stanton’s estate say. Stanton’s estate contends she added her daughters’ names to her bank accounts so they could pay her bills while she recuperated. She also gave them power of attorney over her affairs.

Legal experts said the incident is a cautionary tale about what can happen when people pick the wrong person to handle their affairs.

Michigan judges and lawyers say they’re seeing more family brawls in probate court as children jockey with siblings and other relatives for control of their parents’ assets in the aftermath of the recession.

“People are fighting more, we’re seeing more contested cases, and we’re spending more time mediating family feuds,” said Milton Mack, chief judge of Wayne County Probate Court. He said he referees such disputes almost daily.

Mack and others said picking the wrong person to handle your affairs is a prescription for having your estate plundered. By the time the case winds up in probate court, if it ever does, there often is little the court can do to get the money back. So, whether creating a comprehensive estate plan or putting a child’s name on a house or bank account, they said it’s critical to choose wisely.

“Clients sometimes make the mistake of wanting to choose the child that lives the closest, or the oldest child to handle their affairs, instead of thinking about who they really trust to make decisions on their behalf,” said Danielle Mayoras, a Troy estate lawyer and coauthor of the 2009 book “Trial & Heirs: Famous Fortune Fights.” Even then, there’s no guarantee they’ll do the right thing, she said.

“Clients sometimes make the mistake of wanting to choose the child that lives the closest, or the oldest child to handle their affairs, instead of thinking about who they really trust to make decisions on their behalf,” said Danielle Mayoras, a Troy estate lawyer and coauthor of the 2009 book “Trial & Heirs: Famous Fortune Fights.” Even then, there’s no guarantee they’ll do the right thing, she said.

“Given the aging of our society and the downturn in the economy, there needs to be a more aggressive posture by law enforcement to prosecute these cases and send a message to offenders,” he said.

The $363,281 bag

In last year’s deposition, Hines, 58, who also is a lawyer, said her mother gave her permission to withdraw $789,288 from Stanton’s accounts in October 2008.

Hines said that, as a co-signatory on the accounts with her sister Cynthia Grant Brown, she had the legal right to take the money.
“They were my funds,” she said in the deposition. “I could put them anywhere I wanted to put them. … Anybody who was a signer on the account could use moneys out of the account.”

After withdrawing the money, Hines said she bought $149,281 worth of gold — two 2-pound ingots and 117 gold coins — which she gave to Redhead in a duffel bag in Washington during President Barack Obama’s January 2009 inauguration.

The bag also contained $214,000 in cash, she said.

Vanishing gold

Redhead, in her deposition in the Texas lawsuit, said she returned to Atlanta with the bag and hid its contents in a closet and pantry. She said she spent the cash in six months on such things as a $60,000 time-share retreat in the Dominican Republic.

The gold disappeared in August, she testified.

“We’ve looked all over the house,” Redhead told estate lawyer James Plummer. “Maybe it got misplaced. … My son might have thrown it away.”

Plummer, expressing disbelief that her 2-year-old son was capable of throwing away gold coins and ingots, replied: “Now, you’re blaming your kids? That’s amazing.”

Redhead didn’t report the loss to the police or her insurance company.
The explanations haven’t gotten much traction in Wayne County Probate Court.

On Dec. 8, Szymanski jailed Hines for contempt for refusing to return the money. Hines earlier returned $285,889 to the estate, leaving a shortfall of about $500,000.

“I think it’s very conniving and suspicious that you took that money,” Szymanski told Hines, admonishing her for violating her fiduciary duties to her mother. “You’re trying to cover up some stuff here.”

In late December, Wayne County Circuit Judge Robert Colombo Jr. upheld the jailing, saying he didn’t believe the women.

On Jan. 13, Circuit Judge Prentis Edwards also refused to free her. Hines’ lawyer, Charles Murphy of Birmingham, said: “It’s a miscarriage of justice for her to be held in Wayne County Jail under the circumstances of the case.”

Murphy said Szymanski should have delayed jailing Hines until she had a lawyer, and until the judge had determined whether Hines’ mother gave her the money.

Szymanski has set a Feb. 5 hearing to decide whether Hines or her sister Brown misused the accounts.

Sibling rivalry

Hines contends Brown, 61, a retired insurance company trainer, withdrew at least $127,000 for her own use. Hines said Brown was willing to overlook what Hines had done if Hines had given her a cut.
Brown disputes that and insisted that any money she spent was solely for her mother’s care.

Brown declined to comment to the Free Press.

Her lawyer, Denise Hudson of Detroit, said: “She was shocked by what happened and she’s conflicted. She loves her sister, but she has a duty to get back what belongs to her mother.”

A third sister, Francine Stanton Cohen, 71, a retired Detroit teacher, says both sisters are unfit to handle their mother’s affairs. But Szymanski declined to put her and her son in charge of Stanton’s affairs.

A fourth sister, Constance Stanton Molette of Nashville, Tenn., told Szymanski in a letter last year that Cohen is interested in only their mother’s money, which Cohen denies.

Although the incident put a major dent in Stanton’s retirement funds, court records show she is getting by on nearly $3,000 a month in Social Security and her pension. She’s living with Brown in Detroit.

Geller, meanwhile, said Hines controls her fate: “All she needs to do is give back the money.”

Contact DAVID ASHENFELTER: Avoiding estate fights

Here are tips that Troy lawyers Andrew and Danielle Mayoras offer for avoiding battles over your estate. They wrote a book, “Trial & Heirs: Famous Fortune Fights,” (published by Wise Circle Books, $19.95, available at to help people avoid mistakes in estate planning.

•Get expert advice: Consider consulting an estate lawyer who will know the ins and outs of estate planning. It’s usually money well spent.

• Beware of joint accounts: When you add someone else’s name to your accounts, they usually can remove money even without a durable power of attorney.

• Consider a springing power of attorney: Your attorney can draft the power of attorney so that it takes effect only when you are found to be incompetent.

• Choose wisely: You should designate individuals to act on your behalf that you trust the most, not merely the oldest child or the closest relative.

• Have checks and balances: Talk with your attorney about designating more than one person. But to avoid fights, consider having a tie-breaker, or majority vote.

• Select someone to monitor your accounts: You can give another family member, or even a trusted adviser, the ability to monitor your accounts, such as Internet banking, to make sure that your assets are protected.

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