- DENNIS FORDHAM
- Posted On
Estate Planning: Caring for dependent adult children
Parents with dependent adult children with disabilities or mental illnesses are naturally concerned about who will care for their children when they can no longer do so themselves.
Dependent children, after all, often live at their parents’ home, receive substantial personal care and financial assistance from their parents and rely on their parents to manage their income and expenses.
Often a dependent adult child receives money from the Department of Social Security, like Social Security Disability or SSI that the parent manages as the child’s representative payee.
Hopefully, the parent, where possible, is also the child’s agent for financial, legal and property management, under a power of attorney, and also for health care decisions, under an advance health care directive.
These documents provide the parent with much broader authority. Otherwise, in the case of an incompetent and/or uncooperative adult child, the parent may become the child’s conservator.
Who will assist the child when the parent is incapacitated or eventually dies? If the adult child is competent and has a power of attorney and advance health care directive then alternatives agents, such as a trusted family member or friend, can be nominated.
But what if the child is not competent, is uncooperative, or there is no available friend or family to act as an alternative agent?
If the child is competent but there is no alternative family or friends who are qualified and willing to assist then a possible solution may be a relevant not for profit organization that assists such persons or a professional private fiduciary.
If the child is incompetent or uncooperative, however, then perhaps establishing a conservatorship while the parent is alive may provide a solution. A successor conservator can be appointed with less trouble once a conservatorship is already in place.
How will the parent’s own resources remain available to assist a dependent adult child when the parent is incapacitated or after the parent dies?
In case of the parent’s own incapacity, the parent’s own power of attorney and living trust, if relevant, should expressly provide that the parent’s resources are to be used to assist the adult child.
For example, the parent may wish to allow the child may continue to reside at home, even if the parent is in hospital or a nursing home, and that the child’s food and utilities are to be paid.
Further elaboration as to particulars can be provided in a letter of instructions by the parent to the alternative agent.
What happens when the parents eventually die and the estate is divided? Simply giving assets directly to the dependent child is a bad approach. Instead such assets should be held in a discretionary trust, and typically a special needs trust.
Why? Simply giving the child the assets outright will not only disqualify the child from any needs based government assistance but may likely result in the assets being squandered and the necessary care not being provided.
The right pooled special needs trust can receive and use the inheritance to hire a personal care advisor to visit the dependent adult, see that the child is taking care of him or herself, has food, transportation, and ensure proper living conditions.
One such pooled trust that specializes in caring for persons with mental illnesses and other brain disorders and operates here in California is proxy parent.
A pooled trust alone may not be the entire solution because pooled special needs trusts will not want to own and manage real estate.
Real property may need to be held in a separate special needs trust for the dependent child’s benefit managed by a relative, friend or private fiduciary acting as trustee. That way, the child can continue to reside in the residence.
Dennis A. Fordham, attorney (LL.M. tax studies), is a State Bar Certified Specialist in Estate Planning, Probate and Trust Law. His office is at 870 S. Main St., Lakeport, California. Fordham can be reached by e-mail at This email address is being protected from spambots. You need JavaScript enabled to view it. or by phone at 707-263-3235. Visit his Web site at www.dennisfordhamlaw.com .