Guardianship and Your Special Needs Child: A Primer
Presented by:
Marisa Lepore Hovanec, Esq.
About me:
Disclaimer:
What is guardianship?
Guardianship is a legal right given to a person to be responsible for the decision-making and financial management of a person over the age of 18 who is incapable of making these decisions.
When is a guardian needed?
A guardian is needed when an individual over the age of 18 is incapable of managing his or her life as a result of a mental or physical disability, alcohol or drug addiction.
When is a guardian not needed?
There mere fact that a person has a disability does not necessarily mean that he or she needs a guardian. A guardian is not needed if a person can make and understand the nature/consequences of his or her decisions, and communicate the decisions to others. A guardian is not required for someone who has a physical disability but is otherwise capable of managing his or her affairs, and it is not needed if a person merely has a problem managing money or property. In that case, there are less drastic options available to assist your child, such as Power of Attorney.
Why is guardianship important? (1 of 2)
Upon reaching the age of 18 all New Jersey residents become legal adults. Becoming a legal adult means one becomes legally responsible for his/her own actions. Whereas prior to reaching the age of 18 your child is incapable of entering into legally binding contracts, making medical decisions, or making decisions with regard to his or her education without your approval, after your child turns 18 years old he or she becomes automatically entitled to do those things, regardless of his or her capacity to understand what he or she is doing, and often to the exclusion of his or her parents.
Why is guardianship important? (2 of 2)
For instance, after your child turns 18 years old you no longer become automatically entitled to be involved in his or her medical treatment. In addition, upon reaching the age of 18 your child becomes legally entitled to make his or her own educational decisions. By having a guardian appointed for your child you are able to maintain the status quo you and your child enjoyed while he or she was under the age of 18.
Who can be a guardian?
Generally, a close relative or a person with a close relationship to the child who will act to protect his or her best interests can be guardian. That includes the child’s parent(s), grandparent(s), sibling(s), etc. When a close friend or relative is not available, the Court may appoint an Attorney to serve as guardian. More than one person can serve as co-guardians of the child.
What is the process for obtaining guardianship of a special needs child? (1 of 3)
What is the process for obtaining guardianship of a special needs child? (2 of 3)
What is the process for obtaining guardianship of a special needs child? (3 of 3)
The application and forms needed to apply for guardianship are very specific. In addition, they are constantly changing. Although it is not impossible to obtain guardianship of your child without an attorney, it is advisable to retain one to assist you in such matters as the legal system can be quite frustrating and confusing for non-professionals.
When should you start the guardianship application process?
The guardianship application process can take months and it is often impossible to avoid a slight lapse in your ability to govern your child’s decisions. That said, to avoid a substantial lapse, it is advisable to meet with an attorney and/or familiarize yourself with the steps and forms necessary to complete the guardianship process not later than 2 months before your child’s 18th birthday.
What is a special needs trust?
In general, a special needs trust is a trust established for the purpose of allowing an adult with special needs to possess/accumulate assets/income without compromising his/her ability to qualify for Social Security Income (“SSI”), Medicaid, and other “need-based” services/benefits.
In order to be effective, the funds in a special needs trust may not be used for the beneficiary’s shelter or food, or paid to to the beneficiary directly. Otherwise, it is considered income to the individual and may disqualify him/her from benefits.
Generally, the funds may be used for the beneficiary’s “supplemental” needs, some examples of which may be entertainment, travel, education, and the like.
Who needs a special needs trust?
Most of the time, only individuals seeking to qualify for SSI and Medicaid will need a special needs trust. Individuals receiving only Social Security Disability Income (“SSDI”) and Medicare do not need a special needs trust because these benefits are not “need-based.”
For those seeking to qualify for SSI and Medicaid, a special needs trust is needed if the individual has, or expects to have, $2,000 in assets during his/her lifetime. This is because a disabled person will be disqualified from receiving SSI or Medicaid benefits if he/she has $2,000 in assets or more. In addition, SSI benefits, which are currently maxed out at $794 per month, are reduced about $.50 for every dollar of income earned by the disabled individual. NOTE: SSA does not consider you disabled if you are capable of making over $1,310 per month.
The value of a $794 per month SSI benefit is obvious, but the value of Medicaid benefits can be even higher, considering the complex medical needs of individuals with disabilities and the group home benefits available.
What are the types of special needs trusts? (1 of 2)
In general, there are two types of special needs trusts: first-party trusts and third-party trusts.
What are the types of special needs trusts? (2 of 2)
2. A third-party trust is a trust established by someone other than the beneficiary, i.e. a third-party.
What are the main differences between first-party and third-party trusts?
There are many differences between first-party and third-party trusts.
However, the most important difference is that after the beneficiary dies any funds remaining in a first-party trust must be paid to Medicaid as reimbursement for benefits paid to the beneficiary during his/her lifetime.
Funds remaining in a third-party trust do not need to be paid back to Medicaid and can instead be distributed to an alternate beneficiary/ies.
Final Caveat Regarding Special Needs Trusts
This presentation is only intended to give you a brief overview of special needs trusts for individuals seeking to qualify for need-based benefits in the United States of America. Special needs trusts must adhere to extremely strict and complex rules and regulations in order to be effective. In addition, even within the United States of America the rules and regulations on special needs trusts can vary from state-to-state. Having an incorrectly worded trust can result in disqualification for benefits, mandatory repayment of benefits, and other unpleasant consequences. Therefore, it is extremely important to consult with an attorney familiar with this area of the law in your state or country before attempting to create one.
Questions?