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What You Need to Know About Special Needs Guardianships – Part 1

Published: August 25, 2022

It is particularly hard to protect and provide for children with special needs who require additional care to address their vulnerabilities. Structuring your estate plan to include the appropriate legal documents in the event of your death is crucial, especially when naming a guardian. Special needs children often require guardianship past the age of 18. However, if your child reaches the age of adulthood (18 years old in most states), as a parent, you need to apply for legal guardianship to make decisions on behalf of your adult child.

What is Guardianship?

A special needs guardianship is the legal process of giving a guardian permission to care for and make decisions for an incapacitated adult. The definition of incapacitation for this purpose is an individual with a clinical diagnosis for a condition keeping them from communicating decisions about their physical care, safety, and health. In legal terms, an incapacitated adult may receive the designation of a protected person or ward. The court is responsible for the approval and appointment of a guardian permitting legal authority and responsibility to care for the individual and their property. The court will oversee the guardian and require an annual report defining the current status of the ward.

Types of Guardianship and Conservatorship

There are several types of guardianships, and they may vary by state. A special needs planning attorney can help you identify your state’s guardianship associations, advocacy groups, and other local information important for your loved one’s care. Some of the more common guardianship types include:

  • Guardian of the person – This guardian is responsible for monitoring the care of the special needs person. They are not required to live with them, supervise them daily, or use their own money for care. However, they must ensure the ward receives proper care, supervision, and housing. Guardian decision-making includes most medical care, including end-of-life decisions, vocational planning, and education.
  • Conservatorship or guardian of the estate – Special needs individuals who can’t manage their financial affairs but have income from sources other than benefit checks, like other assets and property, require financial oversight to protect their estate. The conservator will handle the financial resources of the ward and file an annual accounting report of their asset status with the court.
  • Limited guardianship – This guardianship applies to only certain decision-making areas such as medical treatment, permitting the ward to make decisions in other areas of their life. This limitation provides the help a special needs individual requires in the least restrictive manner possible. The special needs person under limited guardianship has not been declared medically incompetent.
  • Temporary guardian or conservator – This individual is usually court-appointed in an emergency when certain decisions are immediately required. Many states require a permanent guardianship or conservatorship request along with a temporary appointment request. The temporary guardianship usually lasts for up to ninety days. The temporary guardian does not need to be the person requested as the permanent guardian.
  • Successor guardian – The parents of the special needs child should name in their legal documents the next person to be in the role of guardian upon their death or inability to provide care. A special needs lawyer may ask you to consider a co-guardianship with the successor guardian during your lifetime.

Preparing for the Need for Guardianship

Conservatorship or guardianship becomes appropriate when a special needs child reaches 18 years of age and their parents are no longer legal guardians. And exploring the legal options and potential guardians before they reach 10 lets you find the best solution. The following chart generalizes issues involved in self-determination versus guardianship. It is a guideline for understanding when to consider intervention. Usually, high-risk decision categories like requiring extensive medical care or supervision for transferring large sums of money are a good place to focus first.

Type of Decision -e.g., medical or involving a large sum of moneyIndividual’s Ability to Receive, Evaluate and Communicate Relevant Information Possible Action to Take
High RiskHigh CapacityAccept the individual’s right to make their own decisions. Explore supported decision-making (SDM).
High RiskLow CapacityLegal intervention indicated- e.g., guardianship or conservatorship
High RiskModerate CapacitySupported decision-making indicated; talking with the individual to reduce resistance, reduce risk and increase their capacity to understand

Guardianship Alternatives

Are there alternatives to guardianships? Yes, and courts generally favor placing persons in the least restrictive environment. Below are guardianship alternatives from the least to most restrictive.

  • A joint bank account can prevent excessive, unchecked expenditures. Most banks will arrange for benefits checks like Supplemental Security Income (SSI) or Social Security payments to be directly sent to the banking institution for deposit. Funds for repeatable expenses like rent can transfer directly to the landlord, and automatic bill pay can handle utility bills. Certain sums of spending money for the special needs person can be routinely available. The joint bank account owner can oversee the account’s budgeting and money management, remembering to keep the account balance below $2,000 if they receive SSI benefits.
  • A representative payee can receive and manage the funds of a special needs individual via Social Security, Railroad Retirement, or Veterans Benefits Administration. The representative payee receives, manages, and spends these funds to benefit the person with special needs.
  • A durable power of attorney (POA) for property is a document granting legal authority to handle the financial affairs of another. A POA is useful if the special needs person can make basic meaningful decisions and does not require full guardianship but might require support to make complex financial decisions.
  • A durable power of attorney for healthcare, sometimes called a healthcare proxy, grants decision-making powers to a healthcare agent on behalf of the special needs individual. Decisions like the right to remove a physician from care, the right to medical records, and change a course of treatment are within the scope of a durable POA. Even those patients who currently can make their health care decisions benefit from naming a future representative.
  • An appointment of advocate and authorization identifies an agent to advocate on behalf of the special needs persons with administrative agencies. These agencies can include the state department of cognitive disability, the department of medical assistance, and the department of mental health services. This agent may have specific powers granted to access school or rehabilitation records, the authority to release them, approve placement or services, attend meetings, and generally advocate for the person with a disability. This document must be in writing and witnessed. Some states will require notarization.
  • A HIPAA Release form allows a named individual access to protected medical information about the special needs person. Suppose the patient prefers their parents or other healthcare proxies to discuss their medical information with their doctors, therapists, etc. In that case, this release form must be on file with the attending medical professionals.
  • Trusts can be a less expensive option for conservatorship because there is no bond requirement, it stays out of the court system unless problems arise, and the trust design can protect the beneficiary’s assets without declaring them incompetent by a court. There are many different trust types; each has specific situational benefits that a special needs attorney can help you identify. Your attorney will understand how to set up the appropriate trust that will not render the special needs individual ineligible for SSI, Medicaid, and other important government benefits.
  • Supported decision-making (SDM) allows a designated person or team of trusted supporters to help disabled individuals make decisions about their lives while remaining in charge.

A special needs planning lawyer can help you decide which strategy is best for your adult child, knowing that their needs may change in the future due to either deterioration in health or improvement due to new treatments or drug therapies. We hope you found this article helpful. If you have questions or would like to discuss your legal matters, please do not hesitate to contact our office at 215-364-1111 to schedule a consultation.

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It is important to plan your estate to ensure that your assets, interests, and those you love will be protected after your death. However, without proper guidance and advice from a qualified estate planning attorney, many individuals make costly mistakes. Beyond undermining your intent and diminishing your financial legacy, poor planning can create additional stress to your heirs in their time of grief.

Six common errors frequently happen during the estate planning process. These mistakes often occur because the complete financial picture was not fully considered. It is easiest to avoid estate planning mishaps by knowing what they are before you begin or looking for these errors when reviewing and updating your plan.

Financial procrastination causes problems. While examining your mortality and making end-of-life preparations is not a particularly fun activity, try viewing it as helping and enhancing your loved ones' future lives while creating a sense of peace during your own. 

The need to protect your finances using wills, trusts, and power of attorney (POA) documents is not solely the domain of the elderly. Putting off the drafting of legal documents necessary to protect yourself and your inheritors can lead to disastrous outcomes.

By far, failing to create an estate plan is the most common mistake. Even if you do not have a lot of money, you need a will to protect any minor children you have by naming their guardians. Your will also ensures your asset distribution to heirs is carried out according to your intentions when you die and names a representative to handle debt obligations, final taxes, and other estate administrative duties. Dying without a will or "intestate" can lead to dire consequences.

Outdated wills, forms, and POAs create problems. If you made a will twenty years ago and have not reviewed and updated its contents, chances are many of the details no longer reflect current assets or beneficiaries. Estate planning is not a "set it and forget it" proposition. Reviewing estate planning documents and beneficiary forms every two years is generally adequate, barring a major life change such as divorce, birth, death, remarriage, or relocation to another state.

Beneficiaries without coordination can create expensive oversight. Beneficiary forms for retirement accounts like 401(k)s and IRAs, annuities, and life insurance policies may constitute a significant portion of your estate's assets. These beneficiary forms are legally binding and will supersede the contents of your will. Failure to update beneficiary forms can lead to an ex-spouse receiving assets that preferably would go to your heirs. Routine checks of all beneficiary designations are best practices for estate planning.

Failing to title trust assets properly can lead to probate. While not everyone requires a trust, those who do must carefully retitle their assets into the name of the trust. Forgetting to add more recently purchased property or opening a new account requires you to title them into the trust to receive trust benefits. Whether real estate, cash, mutual funds, or stocks, if you fail to move the asset into the trust, they become subject to the probate court, possible tax consequences (depending on the trust type), and a public record of these assets.

Life insurance can trigger estate tax. Life insurance can provide heirs with liquidity without the sale of assets and tax consequences when handled correctly. However, if a wealthy individual dies while maintaining ownership of their life insurance policy, they may inadvertently create a tax event for their heirs. Although life insurance death benefits are not subject to state or federal income taxes, any "incident" of ownership by the decedent can create an inheritance tax.

An estate planning attorney can help shelter life insurance proceeds from high-value estates by gifting the policy to an Irrevocable Life Insurance Trust (ILIT) or draft a new trust to purchase a new policy where the trust is the owner and beneficiary. A policy owned by the trust does not create a taxable situation to death benefits. Your attorney's careful structuring of this trust type is complex but can provide proper protection.

Joint ownership of assets with your children can lead to disastrous consequences. Naming your children as co-owners of assets, even digital, permits their creditors to access your money. The better way to address the situation is to give your adult child power of attorney and assign them as a beneficiary to a payable on death bank or brokerage account. This tactic permits them to access your funds if required during your lifetime. However, it keeps your assets from your child's estate and away from their potential creditors.

Ultimately the biggest error you can make is not finding the right estate planning attorney to guide you. This specialized attorney receives training on avoiding probate, tax implications, and asset protection if you require long-term care. Proper planning with the right guidance will help you avoid costly estate planning mistakes and protect your family's future financial well-being.

If you have questions or would like to discuss your legal matters, please do not hesitate to contact our office at 215-364-1111 to schedule a consultation.

- Estate Planning Mistakes to Avoid

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