Parents of children with special needs must be concerned with ensuring that medical and financial decisions will continue to be made in the child’s best interest once the child reaches age 18 — the age of legal capacity. In most states, once a child reaches age 18, he is presumed to have decision-making capacity and the parents’ legal authority ends. Parents of children with special needs have various options, each with advantages and disadvantages depending on the situation, to establish a new legal authority to continue making important decisions for the child.
If the child is incapable of making personal or financial decisions once she reaches the age of majority, a parent — or anyone else who is an adult, is not incapacitated, and does not have a significant conflict of interest — can petition the court to be appointed the adult child’s guardian or conservator (the terminology is different in different states). The downside is that guardianship and conservatorship requires a court process, which can be time-consuming, costly and emotionally trying for the person with special needs and her family. In order to protect against abuse, the individual who is the object of the guardianship or conservatorship proceeding (the “ward”) will be represented by her own attorney and the court must determine if the disabled person is incapable of making her own decisions.
In cases where someone is appointed to make financial decisions, the court may require that person to be bonded, file annual financial statements and request the court’s permission before dealing with the property of the person with special needs. This is meant to increase oversight and protection, but it also decreases family control.
There are ways to avoid the time and expense of a guardianship or conservatorship process while accomplishing the same basic goals. If the person with special needs has sufficient capacity to understand, he can appoint an agent using a durable power of attorney over medical or financial matters, or both. Depending on the type of power of attorney, the agent will have the authority to make financial and property decisions or medical and personal decisions on behalf of the adult child, all without court intervention or direct oversight.
If the adult child receives either Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) and cannot manage the income, the Social Security Administration allows another person – a “representative payee” — to receive the funds to use on the child’s behalf. However this option also requires the filing of an annual report showing how the money was used.
Another option for parents to consider is establishing a special needs trust. The trust allows a person with special needs to shield assets for certain purposes while maintaining eligibility to receive SSI and Medicaid benefits. The trustee invests and manages the trust assets, usually avoiding the need for a financial guardian or conservator.
Parents should consider, in consultation with an attorney familiar with special needs law, whether any or a combination of these approaches best fits their particular situation. Factors to consider include the nature of the child’s special needs, the source and type of the child’s assets and whether the child has sufficient capacity to understand his or her choices.