Most Adults With Special Needs Require Estate Planning Documents

signing document

Advisor note: This article was published in 2016. However, the information  provided is still relevant today.

Mental disabilities take many forms, and not all of them affect a person with special needs' ability to make decisions. In fact, although many, if not most, people with either mental illness or some form of cognitive disability may require significant care, they can still carry out most day-to-day activities. In most cases, people with disabilities have the capacity to create their own estate planning documents, and in some cases it is crucial that they do so.

One scenario that often arises has to do with "HIPAA" regulations. HIPAA, which stands for Health Insurance Portability and Accountability Act of 1996, is the primary federal regulation governing a patient's private medical information. HIPAA gives a patient the right to manage her medical information and regulates who can access that information. Because medical providers must follow HIPAA regulations, it is difficult for caregivers who legitimately need to access another person's medical records, often in an emergency, to do so without a health care proxy or durable power of attorney that authorizes the information's release. Under HIPAA, doctors in these situations can disclose medical information to patients' families, but they are not required to do so without a release from the patient.

Parents of children with special needs often bump into these restrictions for the first time when their child reaches 18 and obtains his own right to privacy under HIPAA. If the child is not under guardianship, either because he does not require it or because no one has obtained it, it may be hard for a parent to obtain information from a doctor or hospital without some form of HIPAA release from their child. In these cases, it is important for the child to execute a valid health care proxy, if they are able to do so. The health care proxy will not only allow access to medical records, but will also provide that the child's wishes are carried out if he ever requires serious medical care.

Another case for estate planning involves adults with episodic mental illness. These adults may be perfectly functional and rational 99 percent of the time, yet they are completely disabled when their illness does strike. Having a functional health care proxy and durable power of attorney allows a health care agent or an attorney-in-fact to help a person with mental illness manage his affairs when necessary, without having to obtain an emergency guardianship when that person falls ill.

Finally, there are people with cognitive disabilities who require assistance only with certain tasks but who are perfectly capable of making estate planning decisions, including the choice of who receives their property. Take John, for instance. John suffers from moderate cognitive disabilities, and like most children with or without a disability, lived with his parents well into his twenties. John now lives in a group home close to his parents' house. John has worked for years and has saved quite a bit of money in his IRA. When John turned 18 his parents filed for guardianship, but John was independent enough that they eventually withdrew. While he requires assistance at work to complete his job, and has support at his group home with some activities, John can make his own decisions and he has strong opinions about who should get his estate after he is gone. Most special needs planners would agree that John can, and should, create his own estate planning instruments.

A special needs planner can help you or your family member create these important documents, and can also recommend additional ways to carry out other important estate planning goals.

This information is not intended to be a substitute for specific individualized tax, legal or estate planning advice as individual situations will vary. Neither Royal Alliance Associates, Inc., nor its registered representatives or employees, offer tax or legal advice. As with all matters of a tax or legal nature, you should consult with your tax or legal counsel for advice.

Securities and investment advisory services offered through Royal Alliance Associates, Inc. member FINRA/SIPC. Royal Alliance Associates, Inc. is separately owned and other entities and/or marketing names, products or services referenced here are independent of Royal Alliance Associates, Inc. Special needs consulting services are not offered through Royal Alliance Associates, Inc.

Content provided by the Academy of Special Needs Planners, Copyright 2022

Contact us

Questions? Contact us at Special Needs Hawaii

Special Needs Hawaii
1163 S. Beretania St | Honolulu , HI 96814
Phone: (808) 536-1933