Q: Does my mentally ill son need estate planning?
A: It is advisable for your mentally ill son to have his own estate planning documents in place. Moreover, your own estate planning documents should be drafted to best provide for your son during your lifetime and after your death.
Your son's limitations, ability to manage his affairs and finances, and personal needs may vary. If he has capacity, it is crucial that your son executes Advance Directives, including a Power of Attorney, Health Care Proxy, and Living Will. These documents empower another individual to manage his finances and health care decisions, if he cannot do so for himself. For example, if your son were to appoint you as his agent, you would be able to sign checks for him, manage his bank accounts, and apply for government benefits on his behalf. If he becomes incapacitated and does not have these documents, a guardianship proceeding will be necessary.
If your son is receiving or may receive government benefits in the future, it is advisable to set up a Third Party Supplemental Needs Trust (SNT). Inheriting money can impact eligibility for Social Security Income (SSI) benefits. While Social Security Disability (SSDI) typically remain eligible for benefits regardless of inheritance, SSI recipients may experience a reduction or loss of benefits.
Therefore any gifting or inheritance left to your son in an SNT would not jeopardize his eligibility for government assistance programs such as Medicaid and Social Security. This is done in your own estate planning documents, either through your Will, living trust, or through a free-standing Third Party SNT. Any excess funds left in the trust at your son’s death can be distributed to any person or entity that you name in the trust. An SNT ensures he can keep or apply for these benefits while also preserving trust assets for his benefit.
It may also be useful for your son to have his own First Party SNT to preserve his own assets during his life. A First Party SNT, like a Third Party SNT, preserves assets while maintaining government benefits. Unlike a Third Party SNT, a First Party SNT must contain a pay-back provision to the government at the beneficiary’s death. Since a First Party SNT uses the beneficiary's assets, any monies paid out by the government during the beneficiary’s lifetime must be paid back.
Even if your son has no plans to apply for government benefits, leaving him assets in a less restrictive trust may make sense. A trust ensures that any money left to him is effectively managed by whomever you appoint as trustee. It is important to discuss all these factors with an estate planning attorney who can guide you through your options and devise a custom plan.
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Michal Lipshitz, Esq. and Dylan Stevens, Esq. are attorneys at Burner Law Group, P.C. focusing their practice areas on Estate Planning and Elder Law. Burner Law Group P.C. serves clients from Manhattan to the east end of Long Island with offices located in East Setauket, Westhampton Beach, New York City and East Hampton.