I discussed in last week’s post how a guardianship may not be possible where Mom needs help but is not necessarily incompetent.  So, what other options are there?  Mom’s health has been in gradual decline.  The family sees it.  Sometimes they agree that action is necessary, some times not.  They have had more than one conversation with Mom about the need for long term care planning, for example moving Mom to a safer environment. 

The problem, however, is that the family (usually the children) are uncomfortable in their role.  Mom, understandably, is not thrilled with the suggestions, and may even be hostile.  Roles are reversed.  The child assumes a parental role, taking care of the parent, who cannot, or will not, consider the risks that lie ahead.  Yet the child is waiting for the parent to say “yes” and can only go so far on his/her own without that permission.  So nothing is accomplished and the family simply moves from crisis to crisis, always seemingly reacting to events, not preparing for them.

That’s when you need to introduce an outside person into the conversation.  As I explain to clients, I can say things to your parents that will be heard differently than if you say them to your parents, or if I say them to my own parents.    I may, in fact, say the very same things that the family has been telling Mom.  But, now it’s different.  Mom may have been waiting for the children to take the next step.  It isn’t just talk anymore.  One step turns into the next and that’s how problems get solved.  That process can start with an elder law attorney.  It can also begin with a trusted advisor, such as your financial planner or accountant.

            Another opportunity that so many families let pass is when a crisis occurs.  Mom is in the hospital or rehabbing in a subacute care facility.  She wants to go home.  The family relents.  That may, however, be the best time to make a change.  It doesn’t have to be a permanent one from the start. But you’ve got doctors and medical staff to support you as well.  If everyone is telling Mom what needs to be done the focus isn’t on the children.  It is a whole lot easier for Mom to accept.

            Just a few options to consider.  Time isn’t on Mom’s side.  Her health will continue to decline.  Sometimes it’s a matter of waiting for, and recognizing, the opportunities that present themselves, and then seizing upon them.  In the end, Mom may come to accept the changes as necessary, or at least grudgingly allow the children to take the action they know is necessary to insure Mom’s continued well being.

Mary calls with the following problem.  Her father recently passed away and left a sum of money to each of his grandchildren, including Mary’s son, John.  “So, what’s the problem”, you ask.  John is 25 and mentally challenged.  He is disabled, doesn’t work and receives Medicaid.  Mary is concerned because she heard that receiving the inheritance will cause  John to lose his benefits.  She’s correct if John’s assets exceed $2000.  “Is there anything that can be done?” she asks desperately.

 The answer is to set up a special needs trust, but the timing of doing so is critical.  The law has established certain safe harbor trusts that allow recipients of Medicaid and other needs based government benefits to keep those benefits and place their assets into a trust to be used for their “special needs”.  These trusts, however, have very technical and specific rules surrounding their set up and administration.

 For example, the trust must be irrevocable and established by a parent, grandparent, guardian or court.  The disabled individual cannot set it up him/herself.  The trust must provide that the disabled individual is the only beneficiary and that the assets can only be used for special needs and not for food, clothing or shelter.  The trust may also need to include a “payback provision”, which states that any assets left in the trust when the beneficiary dies will be used to pay back government benefits first.  Oh, and the trust cannot be set up if the disabled person is over the age of 65.  These are just some of the many restrictions and requirements.

 So, let’s go back to Mary and her problem.  We can absolutely place John’s inheritance in a special needs trust.  It probably is best to have the court act as the grantor so we’ll need to make an application to the court.  It is also important that we do this before assets are ready to be distributed from the grandfather’s estate.  Once the inheritance is made available to John he may lose some months of benefits before the court establishes the trust.  He doesn’t actually have to receive the assets for them to “be available”.  A typical estate can take several months or longer to administer so while the executor is gathering estate assets and paying debts and taxes is the best time to get the trust set up.

 Keep in mind that the laws in this area are very technical so it is always best to hire an elder and disability attorney who is very familiar with these types of trusts.  And, where possible, it is better for the family member leaving assets to the disabled relative to set up a special needs trust in his/her will or leave the gift to a trust that already has been established by another family member.  That is what we call a “third party special needs trust”, but that’s a discussion for another day.