Conservatorship, Trusts and Wills

for People with Developmental or Other Disabilities

-- A Guide for Families

6th Edition, Sterling L. Ross, Jr., Attorney at Law,
Commissioned by Association for Retarded Citizens-California

Revised in Part and Printed by Protection & Advocacy, Inc.

Association for Retarded Citizens-California (ARC-C) is a
non-profit, public benefit corporation founded over thirty years
ago by concerned parents and friends of people with mental
retardation. ARC-C represents over 30,000 members in local
member units in more than 65 California locations. Through the
years, ARC-C's primary thrust has been to represent progressive
public policy to its membership, the Legislature, government
officials, and other voluntary health and human service
organizations. In addition to legislative advocacy, ARC-C
provides technical assistance and services to local units, and
serves as an information exchange forum through its various
publications, seminars, meetings, workshops, and the annual
state convention. For additional information, contact:
Association for Retarded Citizens-California (ARC-C), 120 I
Street, Second Floor, Sacramento, CA 95814, (916) 552-6619.

Protection & Advocacy, Inc. (PAI) is a private, nonprofit
organization that protects the legal, civil, and service rights
of Californians who have disabilities. Federal law requires that
each state have a system for protecting the rights of people
with disabilities. PAI is designated to be that system in
California. PAI provides a variety of advocacy services for
people with disabilities -- including information and referral,
technical assistance, and direct representation. For information
or assistance, call: TOLL FREE 1-800-776-5746.

Central Office, 100 Howe Avenue, Suite 185-N, Sacramento, CA
95825, (916) 488-9950

Southern California Area Office, 3580 Wilshire Blvd., Suite 902,
Los Angeles, CA 90010, (213) 427-8747

Bay Area Office, 449-15th Street, Suite 401, Oakland, CA 94612,
(510) 839-0811

FORWARD

This handbook has been prepared by the Association for Retarded
Citizens-California (ARC-C), formerly the California Association
for the Retarded (C.A.R.) prior to changing its name on February
5, 1981.

The legal research and analysis for the first edition was
conducted by Sterling L. Ross, Jr., Attorney at Law, pursuant to
a contract with ARC-C. Mr. Ross has assisted numerous families
with disabled family members during his nearly 20 years of
private practice principally in San Francisco and Marin
counties. Mr. Ross was the first Staff Attorney for the C.A.R
and served from 1971 through 1973.

This handbook is designed to present complex legal issues in the
areas of conservatorship and limited conservatorship, and
special needs trusts, and to do so in language which can be
understood by the "average California reader." Because of the
general audience for whom this handbook has been designed, the
drafters have used language focusing on citizens who are
"mentally retarded" and "developmentally disabled" and their
"parents"; however, the legal scope is often broader. Changes in
the laws effective January 1, 1996, have been included in these
materials.

A glossary of legal terms frequently used in this area of the
law is included, starting on the back page. Please review it
prior to reading the handbook so that it can be helpful as a
reference.

Legal references and detailed explanations have been omitted
purposely. The reader must remember that this handbook is
intended to raise issues and questions which must be considered
when one explores the possibility of conservatorship, limited
conservatorship, a will or a trust.

If there are any questions about the applicability of the
contents of this handbook to individual situations, the reader
should seek the advice of an attorney.

CHAPTER 1

CONSERVATORSHIP, GUARDIANSHIP AND LIMITED CONSERVATORSHIP

DEFINITION OF TERMS

What Is Conservatorship?

Conservatorship is a legal proceeding in which an individual or
agency (to be known as the "conservator") is appointed by a
court to be responsible for a person who needs assistance in
activities of daily living (the "conservatee"). A conservator of
the person must ensure that the conservatee is properly fed,
clothed and housed. A conservator of the estate is responsible
for managing the conservatee's money and other property. One
individual may serve as either conservator of the person or
conservator of the estate or both. Conservatorship applies to an
adult, i.e., a person eighteen (18) years of age or older.

Before the court will grant a petition for the appointment of a
personal conservator, it must be shown that the proposed
conservatee is unable to provide properly for his or her
personal needs for physical health, food, clothing or shelter. A
conservator of the estate may be appointed for a person who is
substantially unable to manage his or her own financial
resources, or to resist fraud or undue influence.

What Is Guardianship?

Since January 1, 1981, guardianship applies only to minors,
i.e., persons under the age of eighteen (18) years. The
principal purpose of guardianship is to provide protection for a
child who has no parent.

Before 1981, guardianship applied to adult disabled persons and
was very similar to conservatorship. Any guardianship for a
disabled person in effect as of January 1, 1981, automatically
became a conservatorship if the subject of the guardianship was
over the age of 18 on January 1, 1981. This change in
guardianship was part of a sweeping revision of California's
guardianship and conservatorship laws.

Since general conservatorship and limited conservatorship are
the only protective legal arrangements for disabled adults after
1981, this handbook will include no further discussion of
guardianship.

What Is Limited Conservatorship?

Limited conservatorship is a form of general conservatorship and
applies only to adults who are "developmentally disabled" as
defined in state law,(1) and who are, or could be, clients of
California's regional centers serving developmentally disabled
citizens. This protective legal arrangement is "limited" because
the adult with developmental disabilities retains the power to
care for himself or herself and/or to manage his or her
financial resources commensurate with his or her ability to do
so, as determined by the court. A limited conservatorship is
used to promote and protect the well being of the individual and
is designed to encourage the development of maximum
self-reliance and independence.

QUESTIONS ABOUT CONSERVATORSHIP

Why Is Conservatorship Important?

If you are the parent of an adult child who is developmentally
disabled, conservatorship may provide you with the authority to
speak on behalf of your son or daughter, or to play a role in
his or her care, which you would not otherwise have.

As the parent of a minor child, you are the natural guardian and
possess generally the same powers and authority as a
court-appointed guardian. When your child reaches the age of
majority, he or she becomes emancipated from parental control.
The law presumes that the individual, regardless of handicapping
condition, is capable of exercising the rights of an adult.

When a developmental or mental impairment limits an adult's
capacity to exercise his or her rights, the person may need
someone else to exercise certain rights on his or her behalf.
Conservatorship would enable the parent to act on behalf of the
person subject to periodic reviews by the court.

Conservatorship is most important when consent is required for a
particular act, and a person with mental retardation or other
developmental disability is unable to give it. For example, the
"informed consent" of a patient is required before an operation
can be performed. If the patient is a minor with mental
retardation or other developmental disability, physicians and
hospitals will generally accept the consent of the parent. If
the patient is an adult with mental retardation or other
developmental disability, parental consent frequently is not
accepted unless the parent is also the patient's conservator.
Without requesting a conservatorship, a parent may petition a
court for authorization to give consent to medical treatment.
Additionally, in some situations, the director of a regional
center may consent to medical treatment for a regional center
client.

The powers and duties of the conservator will be set forth in
the order of appointment and statutory law. A clear
understanding of the effect of these powers and duties is
important when dealing with public agencies and managers of
residential and day programs. For instance, the parent
conservator may have to be notified of and approve proposed
changes in residence, education or habilitation services.

How Can I Determine If a Conservatorship Is Necessary?

The decision whether or not to seek conservatorship will depend
on the facts of your individual case, and you should seek the
advice of counsel. Some questions you should ask to determine
whether a conservatorship is necessary are:

1. What decisions affecting the financial well being of the
individual with developmental disabilities is he or she unable
to make? Can these decisions be made effectively through means
other than the creation of a conservatorship? For example, if
the individual's income is limited to SSI, money management may
be accomplished through a representative payee.

2. Is the adult who is mentally retarded or developmentally
disabled able to provide properly for his or her own personal
needs for physical health, food, clothing or shelter?

3. Will a family doctor continue to accept parental consent for
medical treatment for a child who is mentally retarded or
developmentally disabled, even though that child is an adult?

4. Does the regional center serving the developmentally disabled
person recommend conservatorship?

How Is Conservatorship Established?

The conservatorship proceeding begins by filing a petition with
the proper court, usually the Superior Court of the county in
which the proposed conservatee resides. Notices of hearing and a
copy of the petition must be mailed to certain persons and
agencies at least 15 days before the hearing and a document,
known as a citation, must be personally presented to the
proposed conservatee.

The proposed conservatee must attend the hearing unless he or
she is (1) out of the state when served, (2) certified as
medically unable to do so, or (3) unwilling to attend and does
not oppose the petition. Whether or not the proposed conservatee
attends the hearing, a court investigator must interview the
proposed conservatee and, among other things, inform him or her
of the nature of the proceedings and determine whether the
individual is able to attend the hearing, wishes to contest the
conservatorship, objects to the proposed conservator, or wishes
to be represented by legal counsel. This requirement of an
investigation and report does not apply if the proposed
conservatee will attend the hearing and is the person who
executed the petition for conservatorship or who nominated his
or her own conservator.

The statutes do not require that a person seeking a
conservatorship be represented by an attorney. However, in view
of the complexity of court procedures and rules, as well as
recent changes in the law, the parties may wish to retain
counsel in these matters.

Once established, a probate conservatorship need not be renewed
but continues until the death of the conservatee or until
otherwise terminated by order of the court. The death of a
limited conservator terminates the relationship of limited
conservator/limited conservatee. To fill the vacancy, a petition
for appointment of a successor limited conservator must be
filed.

Within 90 days after appointment, all conservators must file
with the court and the court investigator a general plan
detailing how the personal and financial needs of the
conservatee will be met. Notice of the filing of the plan must
be given to all those who received notice of the original
petition. The court has the option of scheduling a hearing if it
determines that the plan is not in the best interests of the
conservatee or if it receives objections to the plan within 30
days after mailing the notice of filing.

If the conservatorship includes estate management, an accounting
must be filed with the court at the end of the first year after
appointment and every two years thereafter. Whether or not an
accounting is required, the court investigator must interview
the conservatee again on or about the anniversary of the
establishment of the conservatorship and every other year
thereafter. The purpose of the interview is essentially to
determine whether the conservatorship continues to be necessary
and whether the conservator is acting in the best interests of
the conservatee. The investigator's report is forwarded to the
court with a copy to the conservator or to his or her attorney.
The investigator may visit persons other than the conservatee to
determine whether the conservator is acting in the conservatee's
best interests. Conservatees are charged the cost to the county
of the initial investigation and all subsequent periodic
investigations. However, if the conservatee does not have
sufficient funds to pay this cost, or if it would pose a
hardship, the court will waive this charge.

Who May Act as Conservator?

Any individual who is an adult may be a conservator if the court
is convinced that the person would act in the best interests of
the conservatee. If there is competition for the position and
the applicants are equally qualified, the law prefers the
following persons in the order listed: nominee of the proposed
conservatee, spouse of the proposed conservatee, adult child of
the proposed conservatee, parent of the proposed conservatee,
brother or sister of the proposed conservatee. Private
professional conservators may also serve in this capacity, as
long as they file a background statement annually about the
person(s) who perform the conservatorship services.

A non-profit corporation may serve as conservator of the person
or estate, or both, if the articles of incorporation authorize
the organization to accept such appointments and the corporation
has been providing care, counseling or financial assistance to
the proposed conservatee under the supervision of a licensed
social worker.

Two or more persons may serve as joint conservators. Because a
majority of the conservators must join in any action, it is
often cumbersome to have more than two conservators. The
advantage of having more than one conservator is that, if one
should die, the other may continue to act without the necessity
of filing another petition for the appointment of a new
conservator.

At What Point Should I Consider Conservatorship?

Parents may wish to seek the advice of an attorney regarding
conservatorship on two occasions: (1) when the child who is
mentally retarded or developmentally disabled has reached (or is
nearing) 18 years of age, and (2) when the parents are writing
their wills.

Conservatorship planning as a child reaches the age of 18 is
important for the reasons already discussed. When drafting
wills, one should consider conservatorship in the event that the
person who is disabled will require supervision after the
parents have died. If so, the will may be used to nominate a
conservator to be appointed upon the death of both parents.
Though the nomination is not legally binding, courts will make
every effort to honor it unless convinced that conservatorship
is unnecessary or that the person nominated would not act in the
best interests of the proposed conservatee.

How Do I Find an Attorney Knowledgeable in this Field?

Contact your local Association for Retarded Citizens (ARC). Most
associations are familiar with the attorneys in their area who
have had experience in advising parents with children who are
mentally retarded or developmentally disabled. If you are still
unsuccessful, many municipal and county bar associations have a
lawyer referral panel.

MAJOR CHANGES IN CONSERVATORSHIP RESULTING FROM PROBATE CODE
AMENDMENTS OF 1979 AND 1980

A. LIMITED CONSERVATORSHIP

What Powers Are Limited?

Like a general conservator, a limited conservator has the care,
custody and control of the limited conservatee except that,
unless specifically requested in the petition and granted in the
court's order, a limited conservator does not have any of the
following powers or controls:

1. To determine the limited conservatee's place of residence;

2. To have access to the limited conservatee's confidential
records;

3. To control the limited conservatee's right to marry;

4. To control the limited conservatee's right to contract;

5. To give consent for the limited conservatee's medical
treatment;

6. To control the limited conservatee's social and sexual
contacts and relations;

7. To make decisions concerning the limited conservatee's
education.

However, each limited conservator is required to secure for the
limited conservatee such habilitation or treatment, training,
education, medical and psychological services, and social and
vocational opportunity as appropriate and as will assist the
limited conservatee in the development of maximum self-reliance
and independence.

Any time a conservatorship petition alleges that the proposed
conservatee lacks the capacity to give informed consent to
medical treatment and asks that the court give the proposed
conservator exclusive power in that domain, the petition must be
accompanied by a medical doctor's declaration which states that
the proposed conservatee lacks the capacity to give informed
consent to any form of medical treatment. In addition, a limited
conservator of the estate has authority to manage only those
assets of the limited conservatee which are listed in the order
of appointment.

What Role Does the Regional Center Play in Limited
Conservatorships?

In every conservatorship involving a person who is
developmentally disabled (subject to the consent of the proposed
limited conservatee) the appropriate regional center must
perform an assessment of the proposed conservatee and submit a
report to the court. The report must specify the nature and
degree of the proposed conservatee's disability and the areas in
which the proposed conservatee may need assistance. The costs of
these assessments will be borne by the regional center. At least
five days before the hearing, a copy of the regional center's
report must also be sent to the proposed conservatee and to the
petitioner and/or to any attorneys representing the parties.

May a General Conservator, Rather than a Limited Conservator, Be
Appointed for a Person Who Is Developmentally Disabled?

If the cause of the incapacity requiring conservatorship
involves a developmental disability, the petitioner must file a
petition for a limited conservatorship. At the hearing on that
petition, if the court finds that the proposed conservatee lacks
the capacity to perform all of the tasks necessary to provide
properly for his or her own personal needs for physical health,
food, clothing, or shelter, the court has the authority to
establish either a limited or a general conservatorship.

Did Existing Conservatorships for Persons with Developmental
Disabilities Become Limited Conservatorships after January 1,
1981?

No. General conservatorships involving persons with
developmental disabilities did not automatically become limited
conservatorships after January 1, 1981. Many of the advantages
of limited conservatorship, including flexibility in determining
which rights and responsibilities may be affected by an order of
the court, are available under the general conservatorship laws.

B. GENERAL CONSERVATORSHIP

Did the New Law Change the Power and Authority of an Existing
Conservator?

1. Consent to Treatment -- Since January 1, 1981, a conservator
does not have the power to consent to medical treatment on
behalf of the conservatee unless a court order is obtained which
authorizes substituted consent. The only exception to this rule
is that consent may be given without a court order if the
conservatee does not object to the proposed treatment.

The order authorizing substituted consent may be one which finds
the conservatee incapable of giving consent to any form of
treatment and transfers the sole power of consent to the
conservator. Such an order need be obtained only once since it
applies to all forms of permitted treatment. If the conservatee
is capable of consenting to some forms of treatment but not
others, then the conservator must wait until treatment is
required and obtain an order relating to the specific form of
treatment proposed.

Under the Due Process Incompetence Determinations Act, effective
in 1996, a person has the capacity to give informed consent to
medical treatment if the person is able to do all of the
following:

(a) Respond knowingly and intelligently to questions about
medical treatment.

(b) Understand the nature and seriousness of the illness that
the person has.

(c) Understand the nature of the medical treatment that is being
recommended by the health care provider.

(d) Understand the probable degree and duration of any benefits
and risks of the medical treatment that is being recommended and
the consequences of lack of treatment.

(e) Understand the nature, risks and benefits of any reasonable
alternatives.

Of course no conservator may give consent to treatment which
would be harmful to the conservatee. Also, the law prohibits
either a conservator or a court from authorizing electro-shock
therapy, psycho surgery, or the administration of certain
experimental drugs. Sterilization may occur in the context of a
limited conservatorship but only under certain narrow
circumstances. Sterilization cannot occur in any instance where
it is determined that the individual knowingly opposes
sterilization. Even absent this opposition, for a sterilization
to occur, a special procedure must be followed which involves
many protections for the limited conservatee. These protections
include: mandatory appointment of counsel for the limited
conservatee, appointment of a "facilitator" to assist the
limited conservatee, assembly of a special panel of experts to
personally interview the limited conservatee and make a
recommendation to the court, and investigation by the
appropriate regional center.

2. Contractual Capacity -- Since January 1, 1981, a conservatee
cannot enter into contracts or other financial transactions in
excess of necessary expenses for food and clothing. To see the
significance of this change, it is necessary to review briefly
the nature of conservatorship prior to January 1, 1981.

Previously, there were two forms of conservatorship: one in
which the conservatee was adjudicated incompetent and one in
which he or she was not. Contracts for conservatees who were
declared incompetent were void and could not be enforced
regardless of the circumstances surrounding the transaction. The
financial dealings of conservatees not found incompetent were
enforceable if these dealings were in the conservatee's best
interests.

Limited conservatorship did not exist prior to 1981. The power
of limited conservatees to contract is not inhibited, unless,
and only to the extent that, the court transfers the power to
contract to the limited conservator at the hearing on the
petition.

For adults under guardianships existing prior to January 1,
1981, and for conservatees found to be incompetent, the new law
brought no major change in contractual capacity since, under
both the pre- and post-1981 statutes, such persons' financial
dealings are unenforceable, except for necessities. Conservatees
who were not declared incompetent prior to January 1, 1981, were
automatically deprived of the right to make gifts or to enter
into binding contracts after that date. The result is especially
harsh for elderly persons with substantial assets who possess
both the capacity and desire to make gifts while living but who
are under conservatorship.

The only way a competent conservatee may retain the right to
enter into contracts is to obtain an order from the Superior
Court. The procedure for obtaining such an order is set out in
the 1981 statute.

If you have questions about the applicability of changes in the
conservatorship law to your individual situation, you should
seek the advice of an attorney.

CHAPTER 2

WILLS AND TRUSTS

Should Parents Exclude a Son or Daughter Who Is Developmentally
Disabled from Sharing in Their Estate?

One of the primary goals of estate planning for a family with a
child or family member who is mentally retarded or
developmentally disabled is to ensure that, after the death of
both parents, the person who is handicapped continues to receive
basic support and maintenance from public sources. This interest
in public benefits, of course, is caused by the inability of
most parents to pay the staggering cost of lifetime care for a
family member with handicaps.

The major source of public support for persons unable to
maintain themselves by competitive employment is Supplemental
Security Income (SSI). Existing regulations prohibit an SSI
recipient from having non-exempt resources in excess of $2,000.

To facilitate SSI eligibility, parents might simply exclude a
child or family member who is developmentally disabled from
their will. Complete reliance on public benefits requires
confidence that such funds will continue to be available for the
life of the recipient and will adequately pay for all basic
needs.

Because public assistance programs are exceedingly vulnerable to
changing political currents and may not pay for certain
essential needs, outright exclusion of the child who is
handicapped from the parents' wills is generally not advisable.

Is There a Way Parents Can Leave More than $2,000 to a Child and
Not Make the Child Ineligible for SSI?

Yes. Under the Social Security Program Operations Manual, any
funds held for an individual in a discretionary (special needs)
trust are not an includable resource to the beneficiary and,
therefore, are not included in the $2,000 resource limitation.
To qualify, the beneficiary must not be able to revoke the trust
or to control the amount or frequency of distributions from the
trust. It is also recommended that the trustee's discretion
regarding distributions apply to trust income. If all income
must be distributed periodically, SSI benefits may be either
reduced or terminated.

What Happens to SSI Benefits When Funds from the Trust Are
Distributed to the Beneficiary?

Funds distributed from the trust directly to the beneficiary are
counted as unearned income. The total amount of such
distributions in any month, in excess of the $20 unearned income
exclusion, will reduce the SSI benefit in that month
dollar-for-dollar.

Distributions from the trust to a third person, other than the
beneficiary, are not considered unearned income to the
beneficiary if the payments are made for purposes other than
food, clothing and shelter. This means, for example, that the
trustee of a special needs trust may purchase an airplane ticket
for the beneficiary directly from the airline or travel agent
without affecting the beneficiary's SSI.

Money received by the SSI recipient in one month counts as
income for that month. What is left over as of the beginning of
the next month counts as resources. If the beneficiary's
resources outside the trust exceed SSI limits (currently $2,000
for a single person), SSI will be suspended. SSI will also be
suspended if the unearned income received in any month from the
trust and any other sources (such as Social Security Adult
Disabled Child Benefits) exceeds the SSI benefit amount plus
$20.

Once suspended, SSI will be reinstated as of the month in which
income and resources are within SSI limits. However, if the
suspension lasts 12 months or more, a new application must be
made.

Termination or suspension of SSI may cause Medi-Cal benefits and
In-Home Supportive Services benefits to be terminated as well.

What Happens to Assets in the Trust after the Death of the
Beneficiary?

Trust provisions will control the distribution of trust assets
after the death of the beneficiary. Usually, parents prefer that
the remainder of the trust go to their other children, if
living, or to their grandchildren.

Are the Assets in a Discretionary Trust Subject to the Claims of
the State of California for the Costs of State-supported
Residential Care?

No. It is the author's opinion that a properly drafted
discretionary trust should insulate any funds in the trust from
claims of the state for reimbursement for the costs of
state-supported residential care, except as hereafter noted.

California Probate Code Section 15306 provides that the
principal of a discretionary trust is not subject to state
claims for reimbursement if the trust is established for a
person with a disability which constitutes a substantial
handicap and substantially impairs the individual's ability to
provide for his or her own care or custody.

Section 15306 was amended effective January 1, 1990, to
partially erode this protection. The amendment provides, in
substance, that the Section 15306 protection shall not apply to
trusts which cause the beneficiary to be ineligible for
Medi-Cal.

For persons receiving SSI, the amendment is inconsequential
because such persons are automatically eligible for Medi-Cal.
Individuals residing in any non-Medicaid-funded state- or
county-run developmental centers, skilled nursing facilities, or
intermediate care facilities may not receive any SSI. In order
for their trusts to be protected, those individuals must
establish Medi-Cal eligibility without linking it to the receipt
of any amount of SSI, but rather by satisfying the stricter
Medi-Cal trust rules. Examples of devices which may assist in
accomplishing this objective are:

1. Special Needs Provisions -- In addition to a properly drafted
discretionary distribution provision, it is very helpful to
inform the trustee that the purpose of the trust is to
supplement, not supplant, the beneficiary's public assistance
benefits.

"Special needs" are defined in the trust instrument as those
requisites for maintaining the beneficiary's good health,
safety, and welfare which, in the discretion of the trustee, are
not being provided by any public agency. By limiting the
trustee's authority to make distributions for the "special
needs" of the beneficiary, parents can ensure that public
resources will be fully explored before any distribution is
made. This provision will also assist the trustee in defending
the trust on public policy grounds if challenged by a public
entity.

2. Sprinkling Provisions -- Another modification of the standard
discretionary trust is to include several beneficiaries and
authorize the trustee to "sprinkle" funds of the trust among the
various beneficiaries. If a creditor of the beneficiary who is
developmentally disabled attempts to invade the trust, the
creditor must contend with the interests of the other
beneficiaries who owe the creditor nothing.

3. Charitable Remaindermen -- Directing that a charity serving
persons who are developmentally disabled receive what is left in
the trust after the death of the beneficiary is likely to
discourage a legal challenge, since it is government policy to
assist charities and encourage charitable giving.

4. No Over-Funding -- Funding special needs trusts with more
assets than are necessary to supplement public benefits for the
life of the beneficiary is likely to encourage attempts by
creditors to invade the trust. Appropriate amounts cannot be set
forth in this brochure since they depend on the circumstances of
each individual case. Because of the complexities in this area
of estate planning, knowledgeable legal advice is very
important.

What Is a Precatory Trust and When Should it Be Used?

A precatory trust is not really a trust at all. It is simply a
gift to another person combined with a statement of intention as
to how the assets should be held. For example, if parents are
concerned that the law regarding SSI eligibility may change and
make funds in a discretionary trust a countable resource, they
might bequeath the money they would otherwise have put in trust
to a brother or sister of the child who is developmentally
disabled. The will would include a request that such person keep
and conserve these funds for the benefit of the child who is
handicapped.

Although a precatory trust accomplishes the goal of SSI
eligibility, the request is not legally enforceable. Also, the
keeper of the funds is subject tax on any income produced by the
assets, and the keeper's creditors can make claims against these
funds. Finally, if the holder dies before the precatory
beneficiary, the funds will pass to the holder's heirs in
accordance with his or her will. For these reasons, precatory
trusts are not frequently used.

How Does a Parent Protect Against Possible Future Change in the
Law Regarding SSI Eligibility?

A safety-valve provision should usually be added directing the
trustee to transfer all trust assets to a precatory trustee if
the existence of the legal trust causes the beneficiary to be
ineligible for SSI or other public benefit.

Also, a will may be amended at any time before the death of the
testator. If changes in the law occur during this period, the
necessary trust revisions may be made.

Are the Rules Governing SSI Eligibility the Same for Medi-Cal?

No. Medi-Cal rules are different from SSI rules.

The Medi-Cal rules focus on whether the beneficiary established
the trust. If so, the assets of the trust are considered an
available resource to the beneficiary. If total available
resources exceed $2,000, the beneficiary will be ineligible for
Medi-Cal.

If the trust is not established by the beneficiary or someone
acting on the beneficiary's behalf, whether the trust assets are
available to the beneficiary depends on whether the beneficiary
can revoke the trust or control distributions from the trust. If
so, the trust assets are an available resource.

Federal legislation enacted in 1993 established several
categories of trusts that do not disqualify the beneficiary from
Medi--Cal. These categories include (1) a trust established by
Will and (2) a court-ordered trust for a disabled person who is
under 65 when the trust is established if the state will be
reimbursed on the termination of the trust for the Medi-Cal
benefits paid while the trust was in existence.

Court-ordered trusts are typically trusts established for
disabled persons who receive personal injury awards. California
law permits such proceeds to be placed in a Special Needs Trust
for a disabled plaintiff if certain criteria are satisfied.

If your child is about to receive money from a court case, ask
your attorney about establishing a court-ordered Special Needs
Trust to receive and manage these funds.

When Should the Special Needs Trust Be Established -- During the
Parents' Lifetime or upon Their Death?

It is generally better to wait until both parents are deceased
before putting the special needs trust into effect. If either
parent is alive, the trust is unnecessary since funds to
supplement public assistance may be provided by the parent.
Including the trust in the wills of both parents, to go into
effect only upon the death of the survivor, is the usual
practice.

In certain circumstances, establishing the trust during the life
of the parents may be necessary. For example, if a grandparent
leaves money to the child who is developmentally disabled, a
trust may be warranted. A conservator of the estate would have
to be appointed, who would then transfer such assets to a
trustee to be held in accordance with a written trust agreement.

Frequently, parents are advised to establish a living trust (a
trust created during life) for themselves to avoid probate and
minimize expense. The special needs trust is easily integrated
into this plan and generally becomes effective upon the death of
either the first or second spouse.

Who Should Serve as Trustee of the Special Needs Trust?

Either a private person or a bank may act as a trustee. In
certain circumstances, a non-profit corporation may act as
trustee.(2)

Because a corporate trustee, such as a bank, charges an annual
commission based upon a percentage of the assets in the trust,
it is generally more economical for a member of the family or
close friend to serve as trustee. However, one should note that
an individual may be entitled to a fee for serving in such a
capacity. An individual trustee may also be more closely
involved in the day-to-day activities of the beneficiary.

On the other hand, banks and other corporate trustees generally
offer greater experience in the management of funds and
preparation of accounts and tax reports.

A third alternative is to have both an individual and a bank act
together as co-trustees. The success of co-trusteeship largely
depends on the bank's willingness to act in this capacity and
the division of responsibility among the co-trustees.

What Are the Most Common Errors in Financial Planning for a
Person Who Is Developmentally Disabled?

1. Including a child who is developmentally disabled as primary
or alternate beneficiary on life insurance policies;

2. Naming a conservator of the estate, instead of a trustee, to
manage any assets left by parents to a son or daughter who is
developmentally disabled;

3. Appointing a conservator of the estate for a person who is
developmentally disabled when the only asset of the conservatee
is public assistance.

Can a Trustee Consent to Medical Treatment on Behalf of the
Beneficiary and Manage Other Non-financial Matters?

No. A trustee's authority is limited to financial management. A
conservator of the person should be appointed upon the death of
the surviving parent if personal supervision is necessary.

Should the Trustee and Conservator of the Person Be the Same
Individual?

Preferably, no. Separating financial management from personal
control creates a check-and-balance system. The conservator is
responsible for personally visiting the conservatee. If there
are unmet needs, the conservator must notify the trustee, who is
responsible for making funds available in accordance with the
provisions of the written trust agreement. Any failure of the
trustee to perform properly would come to the attention of the
conservator, just as any failure of the conservator would be
noticed by the trustee.

When parents do not have the luxury of a wide selection, or if
they have absolute confidence in one person, the same individual
may serve in both capacities.

How Do Parents Arrange for the Appointment of a Conservator of
the Person to Be Effective When They Are Gone?

In their wills, parents should nominate a conservator of the
person to be appointed upon the death of the surviving parent.
The procedure for appointment is the same as that for initiating
any conservatorship, even if parents are simply nominating a
conservator to succeed themselves.

A conservator nomination may occur other than by will. Any
written document is legally effective as a nomination if it
reveals this intention and is signed and dated by the parent.

Are There Arrangements Other than a Will Which Parents Should
Consider for a Child with Handicaps?

Yes. When parents are making funeral or burial arrangements for
themselves, they should consider making such arrangements for
their child. Any plans for burial or funeral should be contained
in a document, usually titled "Instructions To My Executor," and
placed in a safe deposit box. Included in the document should be
any directions concerning arrangements for the care of the
individual immediately after the death of the surviving parent.
Instructions relating to medications and residential placement
are common examples.

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NOTE: The following is an example of instructions to estate
representatives used by one California court. Interested persons
are urged to contact their local court and/or investigator for
specifics in their area.

PROBATE COURT

THE SUPERIOR COURT

GENERAL INSTRUCTIONS TO ESTATE REPRESENTATIVES

(Conservator, Guardian, Administrator, or Executor)

(Attorneys are requested to deliver to Representative)

You have been appointed a Representative of an estate by this
court. Upon qualification as such Representative you become an
officer of the court and assume certain duties and obligations.
An attorney is best qualified to advise you regarding these
matters, but you should clearly understand the following:

1. You must keep the money and property of this Estate separate
from your own, and must never commingle them with your own or
other property. When you open a bank account for the funds, it
must be in the name of the Estate, by its fiduciary (yourself).
The securities of the Estate must also be held in the name of
the Estate. In a minor's guardianship, with more than one ward,
you must keep a separate ledger account of all property
belonging to each ward and all receipts for and disbursements
from each such account. The surety who posted your bond
guaranteeing the Estate against loss may require that its
representative, or your attorney, join with you in signing
checks or other orders for withdrawal of money from the bank.

2. A parent is not entitled to use a minor's property for the
support of such minor. The Court may permit you to make certain
payments from the minor's funds after a hearing on a petition
filed by you, but you may not use the money until a court order
is signed. As the Representative, you must not spend the
Estate's money until you have received permission from the
Probate Court to do so. If you do not obtain such permission,
you will be surcharged for the same, i.e., you will have to
reimburse the Estate from your funds. (There are exceptions,
such as approved Creditors' Claims or tax payments. However,
consult your attorney before paying these.)

3. You may reimburse yourself for official court costs paid by
you to the County Clerk and for the premium on your bond. You
may not pay fees to your attorney or to yourself without prior
order of court.

4. Within 3 months after your appointment you must file with the
court an inventory of all money and other property belonging to
the Estate and held by you. You must arrange to have a
court-appointed Referee fix the value of such property, and the
inventory and Appraisement must then be filed with the court.
(The Representative, rather than the Referee, determines the
value of certain "cash items" and your attorney will advise you
as to this procedure.)

5. After you have qualified as an Estate Representative, you
must file an account annually (or as often as the court directs)
which shows all property you have received during the year, and
what you have spent. You must describe in detail what you have
left after the payment of expenses ("balance on hand").

6. You must obtain the court's permission to sell, leave,
mortgage or invest the property of an Estate. Application for
such permission is usually made by your attorney.

It is important that you cooperate with your attorney at all
times so that he or she may assist you in carrying out the
responsibilities entrusted to you. When in doubt, contact your
attorney.

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SUPERVISING PROBATE JUDGE

Courtesy...

LONG BEACH REPORTER

P. O. Box 4278

3010 E. Anaheim St.

Long Beach, CA 90804

(213) 432-5207 or (213) 438-5641

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GLOSSARY OF LEGAL TERMS

Beneficiary. The individual or corporation who receives the
benefit of a transaction, e.g., beneficiary of a life insurance
policy, beneficiary of a trust, beneficiary under a will.

Codicil. An amendment to a will. The codicil is a separate
document. It is signed with the same formalities as a will. The
codicil can be changed or canceled at any time.

Conservatee. The person under a conservatorship for whom a
conservator has been appointed.

Contract. A legally enforceable agreement.

Discretionary trust. A trust that provides a fund for the
maintenance of a beneficiary, which by its terms insulates the
beneficiary's interest from the claims of creditors.

Estate taxes (federal). The death taxes imposed by the federal
government on the transfer of assets on death. The taxes are
generally paid by the executor of the estate.

Heir. The person who inherits property under state law.

Inheritance taxes. Death taxes imposed according to the
relationship to the decedent of the person who receives the
property. California's inheritance tax was repealed by
Initiative Statute in June 1982.

Inter vivos trust. A trust created "between the living," also
called a "living trust." The grantor (trustor) is a living
person. Compare this to a testamentary trust.

Irrevocable trust. A trust whose terms and provisions cannot be
changed or revoked. Under certain limited circumstances, a court
may make limited changes.

Issue. Generally, offspring or lineal descendants; but a
testator can, in a will, define issue to include adopted
children.

Joint tenancy. A form of property ownership by two or more
persons designated as "Joint Tenants with right of
survivorship." When a joint tenant dies, his or her interest in
the property automatically goes to the surviving joint tenant
outside of and beyond the power of the will of the deceased
joint tenant; the property passes outside probate.

Life estate. An interest in property, the length of which is
measured by the life of the person holding the life interest.

Minor. In California, a person who is under the age of 18.

Personal property. Movable property as contrasted with real
property, which is fixed. Personal property includes furniture,
automobiles, and equipment.

Probate. The court proceedings in which the probate court has
supervision over property passing from a deceased person to
beneficiaries under a will or to heirs when there is no will.

Real property. An interest in land, or in property permanently
affixed to land.

Remainder interest. The remaining property left in trust after a
previous owner or life tenant has received all the property
benefits to which he or she was entitled.

Remainderman. The person entitled to receive a remainder
interest.

Revocable trust. A trust whose terms and provisions can be
changed.

Tenancy in common. A form of holding title to real or personal
property by two or more persons. Because there is no right of
survivorship, the legal relationships and results are very
different from joint tenancy.

Testator. The person who signs the will, and in it disposes of
his property. Testatrix is the female term, but it is common as
a convenience to use the term testator for either a man or a
woman.

Trust. A legal entity established either by a written agreement
signed during life or by a will. The trust is governed by the
terms in the document.

Trustee. The individual or corporation who manages the property
in trust.

Trustor. The person who establishes the trust. There can be more
than one trustor.

Trust corpus. The property held in a trust, including both
principal and income.

Will. The document a person signs to provide for the orderly
disposition of assets after death.

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1. "Developmental disability" means a disability which
originates before an individual attains age 18, continues, or
can be expected to continue, indefinitely, and constitutes a
substantial handicap for such individual. This term shall
include mental retardation, cerebral palsy, epilepsy, and
autism. This term shall also include handicapping conditions
found to be closely related to mental retardation or to require
treatment similar to that required for mentally retarded
individuals, but shall not include other handicapping conditions
that are solely physical in nature. (Welfare and Institutions
Code 4512.)

2. Refer to the Inland Counties Master Trust -- information
available from Inland Counties Regional Center, P.O. Box 6127,
San Bernardino, CA 92412.

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Association for Retarded Citizens-California, 120 - I Street,
Second Floor, Sacramento CA 95814-2213, (916) 552-6619

Protection & Advocacy, Inc., 100 Howe Avenue, Suite 185-N,
Sacramento CA 95825, (916) 488-9950 or Toll-free 1-800-776-5746
or legal@pai-ca.org