When your child attains the age of 18, there are a number of legal issues that you should address:
Heath Care Decisions
When your child attains the age of 18, you no longer have the authority to make health care decisions for your child. If you want to continue to have a say in your child’s health care, then your child may designate you to serve as his/her agent with a health care advance directive. If your child is not capable of executing a health care advance directive, then you may file in probate court to be named to serve as the guardian of your child.
With a Maine Health Care Advance Directive, your child may designate another person to make health care decisions for him/her. This individual may make all health care decisions for your child, such as what medications they should take; whether surgery is appropriate; what doctors should treat them; and which hospital should provide them with care. Also with the health care advance directive, your child may state his/her preferences with regard to the withdrawal of life sustaining treatment; organ donation; and funeral arrangements.
An individual must have the capacity to understand and execute a health care advance directive and be 18 years of age or older in order to complete a health care advance directive. If an individual is not capable of understanding the document and is not capable of making his/her own health care decisions, then a petition must be filed in the probate court for the appointment of a guardian to make those decisions for the disabled individual.
If an individual is not capable of executing a Health Care Advance Directive, then the probate court may appoint a guardian to make decisions for that disabled individual (the “ward”). The guardian makes decisions on behalf of the ward, such as where the ward will live; whether the ward should be admitted to a nursing home or boarding home; and what medical treatment the ward will receive. The Court may appoint a guardian to make all life decisions for the ward or the court may limit the authority of the guardian to specific matters. The probate court will make the guardianship as least restrictive as possible. With a full guardianship, the guardian has the same power over the ward as a parent has over a child who is younger than 18 years of age.
If the child does not have many assets, then the guardian has the authority to manage the child’s money and property. If, however, the child has substantial assets or real estate, then a conservator must be appointed by the court to handle the child’s finances.
Unlike the agent designated under a health care advance directive, the court appointed guardian cannot be fired by the ward. If the child no longer wants to have a guardian or wants to change the person designated to serve as guardian, then a petition must be filed in probate court.
Anyone who is concerned about the incapacitated person may file a petition with the probate court seeking the appointment of a guardian for another. The probate courts are administered through the counties in Maine where the ward resides. Petitions for guardianship must be supported by a physician’s report. The report must document the incapacity and the need for the guardian, as well a plan of guardianship. If the allegedly incapacitated person objects to the guardianship, then the court will appoint counsel to represent that person.
When your child attains the age of 18, you no longer have the authority make financial decisions for your child. If you want to continue to have a say in your child’s finances, then your child may designate you to serve as his/her agent with a financial power of attorney. If your child is not capable of executing a financial power of attorney, then you may file in probate court to be named to serve as the conservator of your child.
With a financial power of attorney, your child may appoint someone (known as the “agent”) to stand in their shoes and act for them in financial and business matters. The agent can do whatever is specified in the document. Broad powers of attorney that allow the agent to do whatever your child may do (such as withdrawing funds from bank accounts, trading stock and paying bills) are the most common.
Granting broad powers to the agent is a double-edged sword. The broad powers are necessary to enable a family member to take care of necessary affairs; on the other hand, every power poses a risk of abuse, a risk that the agent will not exercise his powers in the disabled individual’s best interest. Thus, it is critical that your child have complete trust in the persons appointed to act as agent.
Powers of attorney may be drafted to grant the agent a great deal of authority or may provide the agent with only limited authority. Your child may designate successor agents as well in the document, in the event that the primary designated agent is unable to continue serving.
An individual may only execute a financial power of attorney if he/she is 18 years of age or older and if he/she has the capacity to understand the document. If the individual does not have the capacity to understand the document nor the ability to handle his/her finances, then a petition must be filed in probate court for the appointment of a conservator to handle the finances of the incapacitated person. Please beware of any form documents that you may find on the internet or on national computer programs, as those forms are often missing key provisions that are necessary in Maine for a financial power of attorney to be effective.
A conservator is a person who is appointed to protect and manage the funds and property of a person who is unable to manage his own assets due to a disability, or mental or physical illness. The conservator’s role is in effect to step into the shoes of the incapacitated person and make the decisions for that person. The assets of the ward must be protected and, where appropriate, invested in safe investments that are not speculative. The conservator may not engage in self-dealing with estate assets or anything that appears to be a conflict of interest. The conservator may not spend any of the ward’s money for himself/herself without a prior court order.
The rule governing the investment decisions of the conservator is called the prudent investor rule. The rule states that a conservator “shall invest and manage trust assets as a prudent investor would, by considering the terms, distribution requirements and other circumstances of the trust. In satisfying this standard, the trustee shall exercise reasonable care, skill and caution”. The Maine prudent investor rule requires that investments be diversified, unless special circumstances are present. In simple terms, diversification means that you should not put all of your eggs in one basket. It also allows the conservator to delegate investment functions to an agent. The conservator, however, must exercise care skill and caution in selecting the agents.
All monies belonging to the incapacitated person are carefully monitored by the court. Within three months of the appointment, the conservator must complete an “inventory” of the incapacitated person’s assets and file it with the court. This is essentially a list of what the ward owns, with the value of each item as of the date of appointment.
In addition, the conservator must file an accounting each year with the court, listing precisely how much money came into the estate and how the conservator has spent the money of the ward. The easiest way to keep track of your ward’s funds is to open a checking account in his/her name. If the conservator keeps all receipts and pays for everything by check, the conservator will have a good record at the end of the accounting year. The conservator’s responsibility to fulfill the ward’s legal obligations includes making certain that tax returns are accurately filed with the Internal Revenue Service and the state.
Health Insurance/Income Stream
When your child attains the age of 18, the Department of Health and Human Services and the Social Security Administration will no longer deem your assets to your child. This means that your child, if he/she meets the Social Security definition for disabled, may financially qualify for MaineCare coverage and/or a stream of income from the Social Security Administration. MaineCare is a comprehensive health insurance program, administered by the State, for disabled individuals who meet asset and income limitations. The stream of income from the Social Security Administration is designed to assist your child with food, shelter, and clothing.
When a disabled child attains the age of 18, he/she should apply for MaineCare and Social Security Income (“SSI”) benefits. MaineCare and SSI are needs-based programs. Essentially, MaineCare provides health insurance for disabled individuals and SSI provides a stream of income. In Maine, a person who qualifies for SSI automatically becomes eligible for MaineCare coverage. Thus, MaineCare and SSI often go hand in hand, and eligibility to receive SSI benefits of any amount will support eligibility for full MaineCare benefits.
A person must be aged, blind, or disabled to receive SSI. The definition of “disability” for SSI is the same as that for Social Security Disability: “inability to engage in substantial gainful employment (to perform remunerative work as available in the national economy) due to a medically determinable physical or mental impairment that has lasted, or can be expected to last, for a continuous period of not less than 12 months.” 42 USC §1382c(a)(3)(A). There are income and asset requirements, as well, to qualify for SSI.
In Maine, an individual who does not qualify for SSI, however, may still be able to receive MaineCare. If an individual does not qualify for SSI, he may apply directly to the MaineCare program for coverage. There are a number of Maine programs that are more generous than SSI. For example, a child may receive MaineCare benefits under the Katie Beckett program, yet not qualify for SSI. Under the Katie Beckett program, unlike SSI, the parents’s assets are not deemed to the child.
If your child is receiving public benefits and receives an inheritance from you or other family members, then the inheritance could jeopardize his/her continued eligibility for those programs. The preparation of a supplemental needs trust for any inheritance slated for your disabled child can protect his/her benefits.
Disabled individuals often need assistance and supervision to meet their daily living needs. This assistance may take many forms. A disabled individual may need 40 hours a week of assistance from an aide; or need coverage to pay for extensive and ongoing medical bills, or need a monthly stream of income because he cannot work. Government programs are the safety net for most of our country’s severely disabled. Individuals who are poor enough and sick enough to meet certain criteria may be eligible to receive public assistance, that over a lifetime can result in millions of dollars of assistance for that individual.
If a disabled individual directly receives assets in any way, this can profoundly affect that individual’s eligibility for public benefits. If a disabled person directly receives an inheritance, or receives a lifetime gift, or receives the proceeds of a personal injury settlement, that individual may lose all of his public benefits. He may no longer be seen as impoverished and hence no longer meet the eligibility criteria for the public benefits. What at first may seem like a cause for rejoicing may in fact wreak havoc on the delicate balance of public benefits that holds together the life of the disabled.
The Supplemental Needs Trust is a device for setting aside funds for disabled individuals. Essentially, with a Supplemental Needs Trust the funds are seen as owned by the trust and not by the disabled individual. Thus, the disabled individual is still poor enough to qualify for public benefits. Without Supplemental Needs Trusts, the disabled individual would always have to live in poverty and would never be able to afford any luxuries.
With the enactment of the Omnibus Reconciliation Act of 1993 (OBRA-93), these trusts have become an essential part of any estate plan or personal injury settlement for a disabled individual. They may be set up by a third party, such as a parent, as a way to make a gift to a disabled child, or they may be set up with the funds of the disabled person, for example, to receive the funds of a personal injury settlement. Each form of trust must be set up and structured in a different way.