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What to Consider When Planning Ahead for the End of a Trust

What to Consider When Planning Ahead for the End of a Trust


This article is a part of True Link’s Guest Expert Series. We have interviewed leaders knowledgeable in disability planning, elder law, and trust administration and will be sharing their expertise with you in a series of videos and posts. Note: this article is not intended to provide investment, legal, tax, accounting or medical advice. Before making decisions involving investing, legal, tax, accounting or medical concerns, you should consult appropriate professionals regarding your specific situation.

It makes sense to focus on the early stages of estate planning when you’re first setting up a trust for a loved one. But before you put the final pen to paper on an estate plan there are a number of important considerations. Here are some recommendations from our guest experts.

Establish and document end-of-life healthcare decisions (and inform everyone)

Elder Law Attorney Stuart Zimring emphasizes that people with disabilities should be as involved as possible in their healthcare decisions, “it is important to us that our clients understand that they have the ability to direct healthcare decision making which includes end-of-life decision making.”

In many cases this may involve supported decision making to help individuals understand their options like Do Not Resuscitate (DNR) or Do Not Intubate (DNI) orders and decide what’s right for them. 

Once decisions are made, documentation is key. “Our job is first to put it into a legal format that will be legally enforceable. Second, and almost as important if not more important, get the word out,” explained Zimring. “Studies have shown that even though the client may think the family members know what their wishes are, they don’t, […] so we encourage them to not only put it in writing but to discuss their wants.” Resources like The Conversation Project can be helpful to start these often difficult conversations. 

Plan for what happens to leftover funds

While the goal for many Special Needs Trusts is to deplete the funds during a person’s lifetime, it’s important to understand what happens if funds remain in the trust after the beneficiary passes away. 

Yolanda Mazyck, the Executive Director of Shared Horizons (a Pooled Special Needs Trust nonprofit organization), notes the importance of understanding Medicaid payback requirements, “If someone that has a self-funded Special Needs Trust passes away, most of the time there is a Medicaid payback.”

It is also important to decide what happens to funds that may remain after the Medicaid payback. Mazyck shares, “And [make] sure if you are the grantor of the trust that you identify [at the beginning] who the beneficiary will be should funds remain in the account.” If you don’t do this, the trustee has the fiduciary responsibility to send these funds to small claims court or the probate division or find the beneficiary’s next closest relatives if the beneficiary dies intestate (without a will). Mazyck stresses that you want to “avoid [this] if at all possible.” 

Set up a prearrangement  

As Zimring explains, Medicaid will not cover healthcare expenses after a beneficiary passes away, “End of life planning is particularly important for someone receiving public benefits whether it’s SSI or Medicaid. And that’s partly because [a Special Needs Trust] cannot pay for funeral expenses after the fact, it is not an allowable expense.”

Fortunately, you can plan ahead and pay for any funeral expenses in advance – this is known as a “prearrangement.” There are a number of options available from burial insurance policies, to prepaid plans with funeral homes. Of note, however, is that these plans must be irrevocable.  

As Zimring reinforces, end-of-life planning is an important step of establishing a trust: “For us this is a key part of any estate plan [...] taking care of yourself and making sure you’re taken care of the way you want is a critical piece of this whole process.” 

Want to watch these videos on Vimeo? Here are the links to the guest expert videos related to this topic:

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