How Do I Control My Disabled Daughter's Finances in Texas?
Full Question:
Answer:
A person may grant someone a power of attorney or create a health care directive only if she is mentally competent to understand the consequences of the act. In Texas, a guardianship is a way of managing affairs of a disabled person who is past the age of majority. A guardianship can be set up after a judge decides that a person can't take care of themselves or their finances. Then the judge chooses another person or organization to be in charge of the person's care or finances, or both.
There are 2 types of guardians:
Guardian of the Person - The guardian is a family member or other interested person seeking appointment by the court through the guardianship petition. Once appointed, the guardian is responsible for the physical care, control, medical attention, protection and all the basic needs of the disabled or incapacitated person.
Guardian of the Estate - The guardian is responsible for managing the assets and financial affairs of the disabled or incapacitated person's estate.
People who want to provide for a developmentally disabled adult or other incapacitated family member will benefit from special needs planning. You can transfer assets through:
A supplemental needs trust, third party funded trust or self-settled supplemental needs trust.
The trust can be created inter vivos (while alive) or through a testamentary trust (upon death).
Minor Trusts.
A local probate or estate attorney would be able to offer specific assistance with planning for the long term needs of a disabled adult child. A petition would have to be filed with the local county probate court.
The court will appoint an attorney to represent the proposed ward called the attorney ad litem. The ad lirem's fees are approved and awarded by the Judge. If the Proposed Ward has sufficient assets, the Ad Litem's fees will be paid from those assets, not the applicant's assets. If the Proposed Ward has no assets, the County will pay the Ad Litem's fees. Ad Litem's fees range from $400 on up, but do not usually exceed $1000.
The County Clerk's fees vary from County to County and depend on the number of persons to be served, but $250 is a good estimate.
A Guardian of the Estate will need to obtain a surety bond, after the amount is approved by the Court, issued by a bonding company. Annual premiums are paid directly to the bonding company and are a percentage of the bonded amount. A Guardian of the Person must post a more nominal bond and the cost is not significant.
Links: Please see the information at the following links:
http://www.kronkosky.org/research/Research_Briefs/Guardianship%20April%202003.pdf
http://www.tlsc.org/lhot%20pubs/alternatives%20to%20guardianship%20under%20texas%20law.pdf
A representative payee is an individual or organization appointed by SSA to receive Social Security and/or SSI benefits for someone who cannot manage or direct someone else to manage his or her money. The main responsibilities of a payee are to use the benefits to pay for the current and foreseeable needs of the beneficiary and properly save any benefits not needed to meet current needs. A payee must also keep records of expenses. When SSA requests a report, a payee must provide an accounting to SSA of how benefits were used or saved.
A representative payee is an individual or organization appointed by SSA to receive Social Security and/or SSI benefits for someone who cannot manage or direct someone else to manage his or her money. The main responsibilities of a payee are to use the benefits to pay for the current and foreseeable needs of the beneficiary and properly save any benefits not needed to meet current needs. A payee must also keep records of expenses. When SSA requests a report, a payee must provide an accounting to SSA of how benefits were used or saved.
The law requires most minor children and all legally incompetent adults to have payees.
If adult beneficiaries are not be capable of managing benefits SSA may gather evidence and determine there is a need to appoint a representative payee. We suggest contacting the Social Security Administration for a determination of whether a representatve payee is needed. Please see the contact information at the following link:
http://www.ssa.gov/pgm/reach.htm
Please see also:
http://www.ssa.gov/pubs/10076.html
http://www.ssa.gov/payee/faqrep.htm
If the child lacks mental competency to understand the nature of the act, he is not capable of making a valid power of attorney. Otherwise, a limited power of attorney for bank matter may be used. Another alternative if he is competent to sign legal documents may be to establish a trust, such as a special needs trust. Another alternative may be to establish a guardianship by petitioning the court to establish a guardianship for a disabled adult child.
Supplemental needs trusts (also known as "special needs" trusts) allow a disabled beneficiary to receive gifts, lawsuit settlements, or other funds and yet not lose her eligibility for certain government programs. Such trusts are drafted so that the funds will not be considered to belong to the beneficiary in determining her eligibility for public benefits. As their name implies, supplemental needs trusts are designed not to provide basic support, but instead to pay for comforts and luxuries that could not be paid for by public assistance funds. These trusts typically pay for things like education, recreation, counseling, and medical attention beyond the simple necessities of life. (However, the trustee can use trust funds for food, clothing and shelter, if the trust provides him with such discretion, if the trustee decides doing so is in the beneficiary's best interest despite a possible loss or reduction in public assistance.) This trust is most often a stand alone document, but it can form part of a Last Will and Testament.
Very often, supplemental needs trusts are created by a parent or other family member for a disabled child (even though the child may be an adult by the time the trust is created or funded). Such trusts also may be set up in a will as a way for an individual to leave assets to a disabled relative. In addition, the disabled individual can often create the trust himself, depending on the program for which he or she seeks benefits. These "self-settled" trusts are frequently established by individuals who become disabled as the result of an accident or medical malpractice and later receive the proceeds of a personal injury award or settlement.