Sheri R. Abrams, P.C., Attorney at Law
Social Security Disability &
  Special Needs Trusts News from
 Sheri R. Abrams, P.C. Attorney at Law
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In This Issue
Social Security Benefits Not Expected to Increase in 2010 or 2011
Most Adults With Special Needs Require Estate Planning Documents
The Problems With Commingling Special Needs Trust Assets with Personal Funds
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Issue: # 11 June 2009
Picture of Social Security Card and Dice

Welcome to the eleventh edition of our newsletter.  In these monthly newsletters we will be showing you how not to gamble with your or your patients/clients Social Security Disability and/or SSI benefits.  We will also be providing you with useful information on Wills, Living Wills, Powers of Attorney and Special Needs Trusts.
Social Security Benefits Not Expected to Increase in 2010 or 2011
Treasury Check
For the first time in more than three decades, recipients of Social Security benefits (including Social Security Disability benefits) will not get any increase in their benefits next year, federal forecasts show.

The absence of a cost-of-living adjustment, calculated under a formula set by law, will be a shock to older Americans and the disabled already hit by plummeting home values, investment losses and rising health costs.
More than 50 million people receive some form of Social Security benefits. Social Security Recipients have received automatic cost-of-living adjustments every year since 1975. The increase this year was 5.8 percent.

The forecasts, by the Obama administration and Congress, indicate that Social Security beneficiaries will not receive any cost-of-living increase in 2010 or in 2011.  The COLA is intended to preserve the purchasing power of Social Security, by increasing benefits to keep pace with consumer prices. In the last year, overall inflation has been low, largely because of the economic downturn and a decline in energy prices.

The Congressional Budget Office, predicted that inflation would remain low for several years, so Social Security might not pay a cost-of-living increase until January 2013. President Obama's budget assumes no increase in 2010 or 2011, then a 1.4 percent COLA in 2012.

For more information on Social Security Disability benefits please click here.

Most Adults With Special Needs Require Estate Planning Documents
Scale of Justice
Disabilities take many forms, and not all of them affect a person with special needs' ability to make decisions. In fact, although many, if not most, people with either mental illness or some form of cognitive disability may require significant care, they can still carry out most day-to-day activities. In most cases, people with disabilities have the capacity to create their own estate planning documents, and in some cases it is crucial that they do so.

One scenario that often arises has to do with "HIPAA" regulations. HIPAA, which stands for Health Insurance Portability and Accountability Act of 1996, is the primary federal regulation governing a patient's private medical information. HIPAA gives a patient the right to manage his/her medical information and regulates who can access that information. Because medical providers must follow HIPAA regulations, it is difficult for caregivers who legitimately need to access another person's medical records, often in an emergency, to do so without a health care power of attorney that authorizes the information's release. Under HIPAA, doctors in these situations can disclose medical information to patients' families, but they are not required to do so without a release from the patient.

Parents of children with special needs often bump into these restrictions for the first time when their child reaches 18 and obtains his/her own right to privacy under HIPAA. If the child is not under guardianship, either because he/she does not require it or because no one has obtained it, it may be hard for a parent to obtain information from a doctor or hospital without some form of HIPAA release from their child. In these cases, it is important for the child to execute a valid health care power of attorney and living will, if they are able to do so. The health care power of attorney and living will not only allows access to medical records, but will also provide that the child's wishes are carried out if he/she ever requires serious medical care.

Another case for estate planning involves adults with an episodic illness. These adults may be perfectly functional and rational 99 percent of the time, yet they are completely disabled when their illness does strike. Having a functional health care power of attorney and Financial Power of Attorney allows an agent to help a person with an illness manage his/her affairs when necessary, without having to obtain an emergency guardianship when that person falls ill.

Finally, there are people with cognitive disabilities who require assistance only with certain tasks but who are perfectly capable of making estate planning decisions, including the choice of who receives their property.

Attorney Sheri Abrams can help you or your family member create these important documents, and can also recommend additional ways to carry out other important estate planning goals.

For More Information on Wills, Living Wills, Health and Financial Powers of Attorney please click here.
The Problems With Commingling Special Needs Trust Assets with Personal Funds
It can be very easy for an untrustworthy trustee to steal from a Special Needs Trust designed to benefit a child with special needs.

Trustees of Special Needs Trusts have what is called a "fiduciary duty" to manage the trust in the best interests of the beneficiary. One of the key aspects of a Special Needs Trust (or any trust, for that matter) is the separation of trust assets from the beneficiary's and the trustee's personal property.  In this sense, the trust serves as a separate entity.  A trustee who takes the funds intended for the beneficiary and uses them for his or her own personal gain without approval has not only violated his or her fiduciary duty, but has also broken the law by stealing trust funds.   This is perhaps an extreme example of commingling trust funds with personal funds, but it should serve as a warning for more reliable parents who are the trustees of a Special Needs Trust.

Busy parents who are also trustees can commingle funds accidentally, especially if they are using their own money to pay for most of the goods and services their child with special needs requires.  The easiest way to avoid even the appearance of impropriety is for the trustee to maintain a separate trust account and to never transfer trust funds into a personal account for any reason. 

One solution to this problem is to establish a committee of trust protectors or trust advisors, who suggest treatment options for the beneficiary and also monitor the trustees. Having an independent trustee serve alongside a family member could also lessen the risk of mismanagement. In any case, the best remedy is for the trustee to always keep the best interests of the beneficiary at heart and to work with an Attorney such as Sheri Abrams to set up, monitor and manage the Special Needs Trust.
For more information on establishing a Special Needs Trusts please click here.
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We provide legal services in the areas of Social Security Disability Law and prepare Wills, Special Needs Trusts, Living Wills, Health Care and Financial Powers of Attorney for clients in Virginia, DC and Maryland, and we are always happy to provide FREE friendly phone advice.
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