FW: [Indiana_Family_Connection] A special-needs trust ensures future help for children with disabilities

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A special-needs trust ensures future help for children with disabilities

By SU BACON

Special to The Star

Corby is an active, curious 5-year-old boy.

The playroom of his home in St. ph is stocked with typical childhood

amusements — toys, puppets, blocks, books, chalk and a mini-trampoline.

Yet Corby's room has some extra features.

" It's a rather small room, but serves a big purpose, " said Tausha

, his mother.

Corby has been diagnosed with high-functioning autism. His playroom is also

a therapy room. Rather than a closet, for example, shelves line the walls where

toys are stored and can be seen by Corby.

Keeping them visible helps teach Corby to use language to identify what he

wants.

The therapy room is one of the ways Tausha, 32, and , 39, have

adapted their home and lifestyle to meet the needs of their son.

Recently they took another important step in planning for Corby's continuing

care. The s met with Kara Burgess to draw up special-needs trusts.

Burgess is a lawyer with McCormick & Fracassa PC in

Liberty and a member of the Academy of Special Needs Planners.

The trusts provide for the s' son and for their daughter,

Caton, who turns 10 on Monday. was treated for a brain tumor behind her

left eye when she was 3 years old.

A special-needs trust provides financial protection to those with

disabilities or diagnoses such as autism, cerebral palsy and Down syndrome. It

also preserves an individual's eligibility for Medicaid, Social Security income

and other need-based benefit programs.

The s' situation is not isolated. In fact, the U.S. Census

Bureau found that one in every 26 American families reported raising

children with a disability, and that more than one in 10 Americans between ages

16 and 64 has some form of physical, mental or emotional impairment.

Yet, according to a MetLife survey, more than 80 percent of

parents of children with special needs have not established a special-needs

trust. Part of the problem is an information shortfall: Many parents are simply

unaware of the resources available for special-needs planning. The survey also

noted that parents may be overwhelmed with the day-to-day issues of caring for

children with special needs, leaving little time to focus on the future.

The cost for establishing the trust can be several thousand dollars.

Burgess, for example, said her fee ranges from $1,200 to $2,000. Yet preserving

public assistance can be priceless.

" The medical benefit alone may be worth hundreds of thousands of

dollars over the family member's life, " Burgess said.

Preparing for an uncertain future

It's a common sentiment: " If something happens to us, we want Corby and

to get the services and care they need, " Tausha said.

A special-needs trust helps make that possible by placing family assets in a

trust rather than in the name of the child. To qualify for government

assistance, individuals with special needs must have limited resources in their

own name, usually around $2,000 or less. A special-needs trust does not belong

to the individual with a disability — the child is the beneficiary of the

trust.

Ideally, what the s hope is that their children grow up to be independent

and not require special services.

" We hope they get jobs and have their own insurance benefits, "

Tausha said.

But it isn't easy to predict what the future may hold for their children. The

s know that Corby now needs occupational, physical and speech therapy.

is undergoing hormone therapy because radiation treatments interfered

with her growth and caused a cognitive disorder.

If the children need medical care throughout their lifetimes, their

special-needs trusts will help them get services they are entitled to receive

through government programs.

" The trustee's job is to use funds only to supplement those

benefits, " Burgess said. " Essentially, distributions from the trust fund

may be made for any item not covered by Medicaid and which is not for food or

shelter. "

Medicaid, for example, will pay for a person to go to a doctor, Burgess

said. For medical care not covered by Medicaid, the assets in the trust can be

used. That care might include special dental work, new therapies, modifications

to the home or adaptive equipment.

" Support from government agencies is not nearly complete, " said

Kent Yaros, 53, a Lee's Summit architect.

He and his wife, Regina Yaros, 47, recently had Burgess draw up a

special-needs trust for their 10-year-old son, Josh, and a separate support

trust for twin sister .

Like Corby , Josh has been diagnosed with high-functioning autism.

The Yaroses have found their insurance does not acknowledge as medical

necessity the therapies recommended for Josh. So they must budget for

out-of-pocket expenses such as behavioral therapy at $90 to $120 an hour. Josh

requires 40 hours a week of such therapy.

Because they anticipate costs for such care to be higher in the future, the

Yaroses said the special-needs trust gives them peace of mind, knowing that

Josh will continue to receive necessary medical services and that the money in

the trust will be managed professionally.

" The trustee must use the trust for benefits that contribute to Josh's

quality of life — trips, vacation, a clothing allowance — anything above the

subsistence range, " Kent Yaros said.

The Yaroses remain hopeful about Josh's future. A provision in the

special-needs trust allows the trust to be terminated and the money transferred

to a support trust if, as an adult, Josh is able to support himself and live on

his own.

A special-needs trust differs from a support trust in one important way.

Eventually, will have access to the funds in her support trust, whereas

only trustees have that access in a special-needs trust.

Funding the trust

What the two families have acknowledged by establishing special-needs trusts

is that their children may never be financially independent. And that Mom and Dad

probably will not outlive their children.

Historically, this has not always been the case. In the past, parents often

outlived children with Down syndrome and other special needs.

But with today's medical advances, special-needs children have longer life

spans, said Mike with New England Financial in Overland

Park. is a specialist with MetLife's Division of

Estate Planning for Special Kids, MetDESK.

After a lawyer establishes a special-needs trust, a financial professional

such as will help figure out how to fund the trust based on family

assets, as well as the costs of the child's current needs and projected future

care.

The cost of medical care can be considerable.

A survey conducted by MetLife in 2005, for example, found that parents spent

an average of $326 a month on out-of-pocket medical expenses for children with

special needs. helps families determine how to replace these resources

when the parents are gone.

begins the planning process by asking parents to account for all their

possible assets: pensions, life insurance policies, retirement plans,

beneficiary designations, any earnings of the special-needs child and other

resources available.

" Our goal is to make sure support continues for the child, "

said.

Tread carefully

Despite thorough planning by parents, support for the special-needs child

can be put at risk by the good intentions of friends and relatives.

To avoid jeopardizing the child's future, recommends that parents

draft a letter as part of their estate planning. In it, parents explain to

family members that any assets or inheritance for the child should be left in

the name of the special-needs trust rather than in the child's name.

If a gift is made directly to the child and is more income than allowed by

Medicaid or Social Security, the child may lose those benefits and be forced to

spend down the income to pay for medical care and living expenses.

Parents often think they cannot afford to plan or feel so overwhelmed that

they don't know where to begin, said Dawson with Legacy Financial

Group in Overland Park.

Dawson and Hepler are special-care planners who work together as a

team to help families plan for the lifetime care of special-needs children.

" The best advice is to start today, " Dawson said.

Another mistake is seeking advice from someone not familiar with

special-needs planning.

" The special-needs trust must be drafted properly to ebb and flow with

changes to Medicaid, " Dawson said.

But planning should not focus on legal documents alone.

Another way to provide long-term security for a child with special needs is

a letter of intent.

Although not legally binding, in a letter the parents can clarify their

intentions, share insights about the child's likes and dislikes, and provide a

medical history and other relevant information.

The letter will help future guardians, trustees and advocates of the child

make sure that care continues in the best interest of the child.

10 STEPS TO SPECIAL-NEEDS

PLANNING

1. Address issues pertaining to helping the child develop in the best way

possible.

2. Develop a special-care vision. Consider the future. Will the individual

work? Will he or she need some kind of residential care when the parents are no

longer living?

3. Choose guardians and trustees.

4. Identify financial resources available from the family and public and

private assistance.

5. Determine costs for care.

6. Prepare a letter of intent. Spell out caregiving instructions to future

guardians, trustees and advocates.

7. Prepare wills.

8. Establish a special-needs trust.

9. Hold a family meeting. Inform all relatives about the special-needs trust

and what they should know if they leave assets for the child's benefit.

10. Review plans annually.

Source: Dawson and Hepler, Massachusetts Mutual Life Insurance

Co., special-care planners with Legacy Financial Group in Overland Park

Resources

•Academy of Special Needs Planners www.specialneedsplanners.com

•Centers for Medicare and Medicaid Services www.cms.hhs.gov

•Special Needs Alliance www.specialneedsalliance.com