© 2019 gaughan & connealy, estate planning attorneys ... · •licensed attorney in kansas,...

© 2019 Gaughan & Connealy, Estate Planning Attorneys. Private & Confidential. 1

Special Needs Trusts and The Essential 6 Documents Everyone Needs

© 2019 Gaughan & Connealy Estate Planning Attorneys. Private & Confidential

SpecialNeedsTrustsandTheEssential6DocumentsEveryoneNeeds

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@ 2019 Gaughan & Connealy Estate Planning Attorneys. Private & Confidential

• Licensed attorney in Kansas, Missouri and various Federal Courts

• BA, MBA, JD – University of Kansas

• Missouri & Kansas Rising Star Top 2.5% under age 40 (2013 -2018)

• National Advocates Top 100 Estate Planners 2015, 2016, 2017

K.C. Connealy (Casey)

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About Our Firm

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• Our law firm practices exclusively in the areas of Estate Planning and Elder Law

• Offices in Missouri and Kansas

• All attorneys are Super Lawyers or Rising Stars

• Our firm is AV-rated

• Only the top 5% of law firms, as rated by our peers

Gaughan&Connealy

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• Six years old

• Developmentally average

• Loved singing, dancing, being silly

• Playing outside

This is Olivia…


• November 9, 2017 Massive Seizure

• At Children’s Mercy with anoxic brain injury about four months, now home

• Non-verbal, doesn’t engage

• CVI

• In a wheelchair most of the time, walks with assistance

• Therapy 5 days a week at Ability KC

This is Olivia…


If you didn’t make it home tonight, who takes care of your children?

Where do they live?

Who pays for things?

How do they keep their benefits?

Question

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Agenda

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1. The Essential 6 – Estate Planning 101

2. Guardianship and Conservatorship

3. Special Needs Trusts

4. Practical Considerations for Everyone

5. Questions and Answers

Whatwe’llcovertoday


The Essential 6

Part1


• Everything you own makes up an estate

What is an Estate?

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• House

• Investments

• Life Insurance

• Personal Property

• Retirement Plans

• Bank Accounts

But Don’t Forget


• Distributing Wealth

• Honoring Decedent’s final wishes

• Transferring wealth and protecting families

What is Estate Planning?


1. Will

2. Living Trust

3. Durable Power of Attorney for Financial Decisions

4. Health Care Power of Attorney

5. Living Will (Advance Directive)

6. HIPAA Release

The Essential 6

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1. Will• A written set of instructions to a

court for what happens to your assets when you die

• Pros: Simple, relatively inexpensive

• Cons: Guarantees probate, does nothing in the case of incapacity

The Essential 6


2. Living Trust• Written set of instructions for what

you want to have happen if you die or become disabled

• Most sophisticated, handles almost any contingency in the case of death or incapacity

The Essential 6



• Allows a trusted person to act in financial situations in the case you are incapacitated or disabled

• May apply without incapacity• Power of Attorney has NO Authority

after you die

The Essential 6

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4. Health Care Power of Attorney

• Allows trusted individual of your choice to make medical decisions in the case you are disabled or incapacitated

The Essential 6


5. Living Will (Advance Directive)• Instructions to your loved ones and

medical professionals that if you have an incurable injury, disease or illness you want to die peacefully and naturally

• Religious considerations may be taken into account

The Essential 6


6. HIPAA Release

• Allows family members and close friends to get access to medical information

The Essential 6

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Guardianship & Conservatorship

Part2


• Let’s start at the very beginning

• Why do we need to worry about this issue in the first place?

Why Would You Need a Guardian or a Conservator?


Why Would You Need a Guardian or a Conservator?

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• Guardianships and Conservatorships are intended to help and protect a person

who is incapable of self-care or acting in his or her own best interest

• Courts are very reluctant to impose guardianships and conservatorships because

they impose on someone’s freedoms

• Are only used as a method of last resort if all other lesser restrictive

alternatives have been explored

Purpose

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When Would You Need a Guardian or a Conservator?

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“Incapacity” means an individual whose ability to receive and evaluate relevant

information, or to effectively communicate decisions, or both, even with the use of

assistive technologies or other supports, is impaired to the degree that the person

lacks the capacity to manage the person's estate, or to meet essential needs for the

person's physical health, safety or welfare

~K.S.A. 59-3051(a)

WhenAnIndividualMeetstheStatutoryDefinitionofIncapacity


Why Can’t Family Just Handle Things?

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• Parents have the legal authority to make medical decisions, get accesss to private

medical information, and manage finances for their minor children

• Parents of minor children are considered Natural Guardians

• These rights go away once the child turns 18

• You have no right to manage health or financial issues for your spouse,

children over 18, or your aging parents

OnceSomeoneis18YearsOld,the RulesChange



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• The incapacitated individual signed three key documents before his/her

incapacity:


2. Durable Healthcare Power of Attorney

3. HIPAA Authorization

• The agents named in these documents can manage the incapacitated person’s

affairs

ThereAreOnly TwoOptions(AndHere’stheFirst)

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• Guardianship and Conservatorship

• There are no other options if an individual is legally incapacitated

SecondOption


Guardianship v. Conservatorship

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• Guardians are in charge of physical health, safety or welfare

• Shelter

• Sustenance

• Personal hygiene

• Health care

Let’sTalkAbouttheDifferenceBetweenGuardiansandConservators



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• Conservators are in charge of property and finances

• Income

• Benefits

• Maintaining existing benefits and obtaining new benefits

• Property

• Managing bills and paying expenses


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• A person who has a Guardian is called a “Ward”

• A person who has a Conservator is called a “Conservatee”

• Often the incapacitated person is both a Ward and a Conservatee because a

Guardian and a Conservator have been appointed

• The Guardian and Conservator can be (and often are) the same person



A Few Other Important Definitions

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• Courts often appoint a “backup” Guardian or Conservator

• This assures there’s a smooth process in place in case the Guardian or

Conservator is sick, hurt, dies, is on vacation, etc.

StandbyGuardiansorConservators


A Few Other Important Definitions

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• Appointed to succeed the original Guardian or Conservator

• This is a permanent appointment, which is why it is different than a Standby

Guardian or Conservator

SuccessorGuardiansorConservators

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• What’s the process?

• How long does it take?

• When should you get started?

The Process of Appointing a Guardian or Conservator



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• The first step is to file a Petition

• Typically prepared by an attorney

• The court system can be hostile for DIY’ers

• Petition identifies the proposed Guardian and/or Conservator

StepOne– FileaPetition



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• After receiving the Petition, the Court does several things:

• Schedules a trial

• Appoints an attorney for the proposed Ward or Conservatee

• Orders attorney to meet with proposed Ward or Conservatee

• If there’s no medical report with the Petition, the Court orders an examination

and evaluation

MandatoryOrders

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• Physical and mental condition

• Cognitive and functional abilities and limitations

• Adaptive behaviors and social skills

• Educational and developmental potential

• Prognosis for improvement

• Recommendations for treatment

MedicalEvidence(ExaminationandEvaluation)



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• Can be held before a judge or jury, but is usually before just a judge

• Proposed Ward or Conservatee can request a jury trial before a six-person

jury

• Often more informal than a run-of-the-mill trial

TheTrial



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• Court will grant Letters of Guardianship and/or Conservatorship

• This is the legal document the Guardian or Conservator will use to act on behalf

of the Ward or Conservatee

LettersofAppointment

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• The Court’s fees are normally around $500

• The Petitioner’s attorney’s fees (if all goes well) are usually $2,000 to $2,500

• The Ward / Conservatee’s attorney’s fees (if all goes well) are usually $500 to

$1,000

HowMuchAreCostsandFees?



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• If everyone’s getting along, 60 to 120 days

• This assumes you have the medical reports in hand before the Petition is filed

• If there are disagreements, it can take a very long time

• Always start this process as soon as possible

HowLongDoesItTaketoGetaGuardianorConservatorAppointed?


Special Needs Trusts

Part3

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Entitlement Programs• Medicare• Social Security Disability (SSDI)

What Benefits are Available to Child with Special Needs?

Means Tested Programs• Supplemental Security Income (SSI)• Medicaid• In Home Supportive Services (IHSS)• Subsidized Housing (Section 8)• Temporary Aid to Needy Families (TANF)


Entitlement Programs• No need for special needs planning unless

there is the possibility that the child with special needs may need “means tested” government benefits in the future

What Benefits are Available to Child with Special Needs?

Means Tested Programs• Receipt of inheritance will generally

disqualify the child with special needs from “means tested” benefits until they have “spent down” the inheritance to qualify

• Around here, this is generally $2000


1. Disinherit child with special needs

2. Pay child with special needs’ Inheritance to Siblings or Others

3. Establish a Special Needs Trust

What Options for Estate Planning Are Available?

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1. Disinherit child with special needs• No loss of government assistance• Perception that parents or

grandparents did not love child with special needs as much as others

• No funds available to the child with special needs to provide for needs or wants not covered by government



2. Pay Child with Special Needs’ Inheritance to Siblings or Others• No loss of government assistance

• Subject to the creditors of the sibling

• Subject to claims of a divorcing spouse

• Subject to mismanagement or misappropriation by the sibling

• If sibling becomes disabled or predeceased, who provides for child with special needs?



3. Establish a Special Needs Trust• No loss of government assistance

• No need to reimburse Medicaid

• Not subject to creditors or divorcing spouses

• If advisable, professional trustee can be appointed to minimize mismanagement or misappropriation

• Continuity of Management


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1. First Party Trust

2. Third Party Trust

Types of Special Needs Trusts


1. First Party Trust (d)(4)(A)

• Holds inheritance or litigation proceeds

• Created by parent, grandparent, guardian or court

• MUST repay Medicaid at death of person with special needs



Why Use a First Party Trust?

• Litigation with no other option

• Inheritance given improperly

• Don’t want to stop benefits


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• Not an “available resource”

• Fully discretionary to provide “supplemental needs” of a child with special needs

• Can be incorporated in estate plan or drafted as “stand alone”




• At the death of the child with special needs, the trust remainder will be paid to designated beneficiaries

• No need to reimburse Medicaid




• Incorporated into an estate plan

• Part of a will or trust


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• “Stand Alone Trust”

• Revocable or irrevocable

• Can be used by third parties (like grandparents) to make lifetime or testamentary gifts

• Funded at death with cash, life insurance, IRAs or other assets



Sibling or other trusted relative

• Knowledge?

• Successors?

Professional Fiduciary

• Bank, Trust Company, Distribution Committee

Selecting a Trustee


Practical Considerations

Part4

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1. Family Meeting• Hard conversation to start, but one that

needs to happen

2. Meet with a professional• Talk to someone about these issues before

it’s too late – don’t leave this to chance!

Practical Considerations for Everyone in the Room


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Questions?

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