MICHELE N. O’BRIEN
BOARD CERTIFIED IN ESTATE PLANNING AND PROBATE LAW
BY THE TEXAS BOARD OF LEGAL SPECIALIZATION
LAW OFFICE OF MICHELE O’BRIEN, P. C.
6363 Woodway, Suite 902, Houston, Texas 77057
(P. O. Box 37308, Houston, TX 77237)
713.960.8543, Facsimile: 713.260.3987
E-MAIL: This email address is being protected from spambots. You need JavaScript enabled to view it.
WEB SITE: www.mob-law.com
OCTOBER 2011


1. FINANCIAL MANAGEMENT / PERSONAL MANAGEMENT
A. (UNIVERSAL) DURABLE POWER OF ATTORNEY
Texas Universal Durable Power of Attorney Statutory Form (effective 1993)
Caregivers should have this for transition planning and emergencies.
Can be made effective immediately or upon the disability of the person who signs
the Power of Attorney.
B. i) DIRECTIVE TO PHYSICIANS (Living Will)
ii) POWER OF ATTORNEY FOR HEALTH CARE
iii) HIPAA AUTHORIZATION (PROVIDES ACCESS TO MEDICAL RECORDS)
iv) DECLARATION OF SUCCESSOR GUARDIAN
These documents help avoid family arguments as to care/ avoid allowing those you
do not want to exercise control over your situation.
Texas allows two forms of Directives to Physicians, one of which is more detailed
Attached: Exhibit A Statutory Durable Power of Attorney
Exhibit B Medical Power of Attorney
Exhibit C Broad Directive to Physicians
Exhibit C-1 Detailed Directive to Physicians
C. LIVING (INTER VIVOS) TRUSTS
Revocable and changeable trust is created (“Grantor Trust” assets are deemed to
be in the Grantor’s estate, simpler income tax planning for Grantor).
Alternative: A Trust may be made irrevocable for federal estate tax planning
as well as for “first party” Special Needs Trusts.
Special Needs and Property Management Planning are assured by your selection
of the Trustee (person or entity who has power to control all the assets in the Trust).
Assets owned by the Trust are not in your “probate” Estate.
D. TESTAMENTARY TRUST
Comes into effect upon the death of the party that creates the Trust (irrevocable
upon creation). Used for similar purposes as “living trust”, i.e. general and estate
tax- minimization, Special Needs and Asset Management Planning, etc.
E. PROTECTION THROUGH THE COURT
i. GUARDIANSHIP OF THE ESTATE
Extensive planning strategies can be used to avoid this type of guardianship and still
protect the person with special needs. Requires Guardian to report with “Annual
Accounting” and request permission to deal with accounts.
Management Trust Alternative in Texas.
ii. GUARDIANSHIP OF THE PERSON
Some planning strategies can be used to avoid guardianship and still protect the
person with special needs. Guardianship of the Person can be specifically directed
to allow an incapacitated person to retain more rights.
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2. COORDINATING GOALS WITH AVAILABLE STRATEGIES
OVERVIEW: GENERAL GOALS FOR THE FAMILY OF A PERSON WITH SPECIAL NEEDS
- PERSONAL SECURITY AND SAFETY
- MAINTAIN CURRENT STANDARD OF LIVING
- STABILITY WHEN PRIMARY CARETAKER DIES
- SMOOTH TRANSITION OF CARE PROVIDERS
A. FAMILY ESTATE MANAGEMENT / DISTRIBUTION ALTERNATIVES
i. If no planning is done:
a. Special Needs Person is presumed competent to manage his or her Person,
to contract and make discretionary decisions for health care, residence,
activities and association.
b. Estate - Effect of principal support person dying without a Will?
If the caretaker (parent) dies WITHOUT A WILL, then TEXAS will
determine to whom, what amount and when the Estate will be
distributed.
All children will receive the (Texas) law defined share at age 18 (community and
separate property of deceased person).
The Person with Special Needs may be rendered ineligible for SSI/ Medicaid
benefits until assets are “spent down” and that person is without assets.
ii. Simple Will / Contingent Trust / Tax Planning Will with general bequests.
A valid written Will avoids the estate distribution problems of the person who has no
Will. The estate document can even provide for asset management through a Trust.
HOWEVER, if assets are deemed (valued over $2,000, directly or through a trust)
to be owned by a Special Needs Person who otherwise qualifies, (s)he will be
disqualified for “Needs Tested” federal and state benefits (SSI and Medicaid).
See Review : GOVERNMENT BENEFIT PROGRAMS.
iii. Simple Will / Contingent Trust / Tax Planning Will where nothing passes directly
to the individual with Special Needs. All Estate assets are owned and managed by
a Special Needs Trust (created through the Will or by a separate Trust
Agreement):
a. Create Special Needs Trust now, which can be revocable (Grantor Trust) or
irrevocable.
- Avoids probate process for assets owned by the Trust.
- “THIRD-PARTY CREATED” SPECIAL NEEDS TRUST EXCEPTION FOR TEXAS
MEDICAID ELIGIBILITY.
- Assets placed into the Trust are not in probate when the Grantor(s) dies, but
are owned by the Trust and pass under terms of the Trust Agreement.
- Privacy is maintained.
- Named Trustee manages the property and distributes according to Trust
Agreement directions.
iv. Dealing with the ownership and management of Assets that are owned by the
person who has special needs but whose special needs make him or her otherwise
eligible for “needs tested” governmental benefit programs.
See Review: GOVERNMENT BENEFIT PROGRAMS
LAW OFFICE OF MICHELE O’BRIEN, P.C. (www.mob-law.com) PHONE 713.960.8543 Page 2 of 3
3. GOVERNMENT BENEFIT PROGRAMS
Every state that participates in the (Federal) Supplemental Security Insurance program must
provide Medicaid coverage to qualified individuals. Texas qualifications are based on the SSI
(Federal) qualifications. “Medicaid waiver” programs operated in Texas expand benefits to people not
eligible for SSI (Further information from the Texas Department of Health and Human Services [DADS] can be
found by calling 211 or 1.800.833.5948).
Individuals with qualifying physical or mental conditions with a certain level of income and
assets are eligible for SSI / Medicaid. Texas Medicaid Waiver eligibility is currently 300% of the SSI
payments (approximately $2,000) and no assets valued above certain level ($2,000 for individual +
exempt assets).
A. FINANCIAL ELIGIBILITY (TEXAS)
i. GENERAL RULE
Countable resources can not exceed $2,000 per person (or $3,000 for married persons).
Excluded Assets for qualification: Homestead, regardless of value or extent (caution as to
residency), life insurance with a face value up to $1,500, automobile of any value if needed for
transportation for medical services / employment, furnishings/ personal belongings each
having a certain value are not evaluated, and burial funds.
ii. “THIRD-PARTY” TRUST
The Assets funding the Trust were never owned by the Special Needs Person so there
is no “Medicaid Lien” that can limit the disposition of assets after the death of the Special
Needs Person (contrast with “self-created” trusts, below). Planning is important !
B. “SELF-CREATED” TRUSTS
Must comply with Federal Law and Regulations issued by Social Security Administration
(OBRA 1993, FCA 1999) in order for the Beneficiary that is otherwise eligible to retain financial
eligibility.
[Examples of funds deemed to be owned by a person with special needs: Trust created under a lawsuit
(settlement), Gifts from family members directly to the Person with Special Needs.]
“Self-created” Trusts must be submitted to SSA or Texas Department of Health and Human
Services and approved for eligibility determination.
TRUSTS THAT RETAIN ELIGIBILITY FOR SSI / MEDICAID
1. Trust for disabled person under 65 containing his/her assets if established by parent,
grandparent (if Person is under age 18), legal guardian or Court. Upon the
beneficiary’s death the trust assets must be used to reimburse the state for medical
assistance paid. Section 1396p(d)(4)(A), a “Supplemental Needs Trust” *
2. Trust funded with pension, Social Security and other income payable to the person.
Upon the death of the individual the state has the right to medical reimbursement.
(“Miller Trust”)
3. Trust for disabled person managed by a nonprofit association under a pooled income
fund approach. After person’s death the unused funds remain in the pooled fund for the
other beneficiaries or are applied to repay the state for Medicaid expenses (excess may
be directed to the family). Example: ARC of Texas Pooled Trust
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