Estates, Gifts, And Trusts (EGT)

Planning for Disability (Portfolio 816)

  • This Portfolio identifies estate planning issues that are unique to families whose members include disabled children and adults, and examines techniques to address these problems.


The Bloomberg Tax Portfolio, Planning for Disability, No. 816, addresses planning for disability from two perspectives: when the client is planning for the client’s own disability or incapacity, and when the client is planning for the disability or incapacity of a family member. The Detailed Analysis discusses the various planning options available, based on whether the client is planning for the client’s own disability or incapacity or for that of a family member.

The analysis begins with an overview of disability and incapacity, including definitions and types and planning considerations. The analysis then turns to the planning options for situations where a client is planning for the client’s own disability or incapacity, examining the requirements for and use of advance health care directives as well as methods of making health care decisions. As well, the analysis examines the use of durable powers of attorney and representative payees, discussing the advantages and disadvantages of using these planning devices, along with some drafting suggestions.

The analysis then turns to the client’s planning for disability or incapacity of a family member, discussing topics such as the selection of a suitable trustee, the effect of beneficiary designations, and tax implications of such planning.

Next, the analysis turns to the topic of paying for long term care, examining the cost of long-term care, and tax deductions available for long term care costs and long term care insurance premiums. Some of the applicable government assistance programs are then briefly examined. The analysis divides the discussion of the government programs into health care (Medicare and Medicaid) and income (Social Security and SSI) assistance.

In the final section, special needs trusts are discussed. The analysis covers the issues in establishing and administering these trusts. The types of trusts, the interrelationship between special needs trusts and certain public benefits, the trustee’s duties and obligations in administering the trust, and some of the unique issues a trustee will face (and how to resolve them) are discussed in this section. The analysis also covers the issues of taxation when using a special needs trust and concludes with an examination of the use of these trusts in settling personal injury cases.

This Portfolio focuses on Uniform Acts and federal laws and regulations There is some analysis of state cases and statutes, but this Portfolio does not provide an in depth analysis of various state laws.

The Portfolio may be cited as Fleming and Morgan 816 T.M., Planning for Disability.

Table of Contents

I. Introduction
II. Managing Assets During Disability: Basic Tools
III. Protecting Financial Security During Disability: Private Insurance
IV. Health–Care Decisions
V. Public Insurance and Benefit Programs
VI. “Third Party” Planning: Estate Planning for Families with a Disabled Child
VII. Medicaid – Financial Eligibility and State Recovery for Benefits Provided
VIII. Medicaid Long-Term Care Planning Considerations

Robert Fleming
Fleming & Curti, PLC
Rebecca Morgan
Professor, Boston Asset Management Chair in Elder Law
Stetson University College Of Law
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