Planning for potential disabilities is often avoided, but preparing for the possibility facilitates greater peace of mind for all.
Amid the pandemic, many have experienced a heightened sense of their own and their loved ones’ essential human fragility.While this has manifested in immediate precautions, it has also resulted in many considering, potentially for the first time, the possibility of their own temporary or permanent disability or death.
In addition, the isolation and periodic shutdowns of schools and other support institutions have resulted in significant mental health challenges for both adults and children — a conversation that has also been brought to the forefront recently by high-profile mental health advocates such as Olympic gymnast Simone Biles and tennis star Naomi Osaka. While disability and mental health can be uncomfortable topics to face, their importance has never been more apparent.
According to the U.S. Centers for Disease Control and Prevention (CDC), one in four individuals in the United States deals with some type of disability — mobility, cognition, hearing, sight or difficulty living independently or caring for themselves. The numbers increase for individuals over age 65, with 2 in 5 dealing with some type of disability.2
The challenges go well beyond health concerns, however. If a spouse who was the primary wage earner for the family becomes disabled, it is vital to be able to replace that income flow quickly. This can include Social Security, Social Security Disability Income (SSDI) and employer-provided or privately obtained disability insurance, but it is vital to understand the totality of such benefits. As an example, employer-provided disability insurance may be capped at 65% of wages (if no additional coverage has been purchased by the employee); in addition, many policies have a cap on the amount that can be paid regardless of salary, which can result in significant income gaps for high wage earners.
In a recent national poll, 46% of parents reported that their teenage child had developed a new or worsening mental health condition since the pandemic began.1
Planning for the unexpected needs of children presents a different set of challenges. The CDC estimates that up to 20% of children under the age of 18 are dealing with a mental health issue.3 One in seven children age 2-8 has a mental, behavioral or developmental disorder, while the rate in children age 9-17 reflects as many as one in five with these diagnoses.4 Perhaps most disconcerting, the number of mental health diagnoses among minors increased more than 30% between 2011-2017.5 Planning for a child with mental health issues can be especially complex, given that the concerns and severity may fluctuate over time, resulting in varying needs at different ages.
Many estate plans use boilerplate language to address disability. Instead, consider including more intentional language around who should make a determination of disability and who will be entitled to distributions after disability. Specifically, consider if the determination of disability (which would lead to a successor trustee stepping in and making decisions about distributions and management of assets) should be made by a physician, a family member, multiple family members or a combination of all of them. In deciding, be sure to assess how difficult it would be to obtain the determination — an unduly burdensome process can lead to costly delays in an emergency. In addition, decide who would be entitled to receive funds after you are disabled — should children be entitled to ongoing gifts? If you are currently helping to support parents or other family members, should they be specifically included?
Review your fiduciaries and powers of attorney. The individuals named as trustee under a revocable trust and agent under powers of attorney for both health care and property will have a great deal of authority to make decisions about investments, distributions of money and health care. Review who is named to ensure that the individuals remain the best choice. If multiple people are named, assess if they will be able to work effectively together.
Also, determine if any special terms should be included in the powers of attorney. Standard powers of attorney forms rarely include provisions that can be helpful upon disability. These may include the ability to transfer assets to a revocable trust (to avoid a probate proceeding at death) or the explicit ability to make annual exclusion gifts. In addition, powers of attorney for health care may not include language that could be important to you regarding the type of care you wish to receive at the time. Ensuring that the documents accurately reflect your wishes is essential.
C. S. Mott Children’s Hospital, 2021
Disability Impacts All of Us Graphic. Centers for Disease Control. Sept. 16, 2020. https://www.cdc.gov/ncbddd/disabilityandhealth/infographic-disability-impacts-all.html
Data and Statistics on Mental Health. Centers for Disease Control. March 22, 2021. https://www.cdc.gov/childrensmentalhealth/data.html
Behavioral Health Integration in Pediatric Primary Care. Milbank Memorial Fund. March 15, 2017. https://www.milbank.org/publications/behavioral-health-integration-in-pediatric-primary-care-considerations-and-opportunities-for-policymakers-planners-and-providers
Childhood Mental Illness Diagnoses up 31%. Fierce Healthcare. May 28, 2019. https://www.fiercehealthcare.com/payer/childhood-mental-illness-diagnosis-up-31
