How does a life care plan differ from a letter of intent?

Key takeaway

The authorities cited here do not establish the distinction between a life care plan and a letter of intent. That comparison requires additional sourcing.

For your planning meeting, bring both documents if you have them. Ask your advisers to explain each document's purpose, identify unanswered care and funding questions, and support any proposed legal conclusions with the applicable authority.

Start with the actual documents

Organize your questions around care needs, costs, personal preferences and responsibility for decisions. Ask which document addresses each concern and what remains to be discussed.

Request jurisdiction specific advice about any proposed legal effect of a letter of intent. Ask separately about any proposed trust amendment, including the amendment method and evidence requirements.

Examine trust control separately

Under Social Security Administration guidance for trusts funded by others, principal is not the individual's SSI resource when the individual cannot revoke or terminate the trust or direct its assets for personal support and maintenance.

Review the trust instrument and applicable state or Tribal law. Separately evaluate any enforceable payment right that can be sold.

Revocability by the person who funded the trust alone does not make it the beneficiary's resource. Spendthrift protection depends on applicable law and is not universally required or effective.

Evaluate cash payments under SSI rules

SSA guidance treats cash paid directly from a trust to an individual as unearned income in the month received, including amounts added to the beneficiary's personal debit card. Applicable statutory income exclusions still apply.

Excluding trust principal as a resource does not resolve the income treatment of distributions. These rules do not establish that every cash payment reduces SSI dollar for dollar or determine treatment under another benefit program.

SSI resources: Generally, owned cash and property the individual or spouse can convert to cash for support and maintenance, based on the right, authority or power to liquidate. Property rights that cannot be liquidated are excluded under this definition, and statutory exclusions, including the home exclusion, apply.

Third party special needs trust: Under SSA guidance, a trust funded with property belonging to someone other than the beneficiary or the beneficiary's spouse. The label does not establish resource exclusion, and the beneficiary's own property does not become someone else's merely because another person establishes the trust.

EstatePlanner.com resources

Special needs and elder law. Open this guide to frame the broader discussion about trust funding, benefit records and family care concerns before comparing individual documents.
Disability, family wealth and elder care checklist. Use this checklist to gather care plans, trust instruments and benefit decisions for the meeting about your life care plan and letter of intent.
Incapacity and health directives. Read this guide next if your document comparison raises questions about health decisions or who should participate in an incapacity planning discussion.
Asset and authority map template. Use the template to organize assets and questions about decision makers alongside the two documents you want reviewed.

A perspective on checking advice

When comparing explanations of these documents, ask advisers to show the basis for their conclusions. This conference perspective offers a reminder about checking even a convincing presentation.

"if you meet someone, no matter how good their story is and how polished and professional and trusted they seem, do your due diligence on everybody for the rest of your life, because you can do the best due diligence in the world and things could still go wrong, and they could just be very good at tricking you."
From an Investor Advantage talk hosted by Richard C. Wilson

Frequently asked questions

Does this page establish which document does what?

No. The cited authorities do not establish that comparison. Ask your advisers for sources addressing the particular documents and jurisdiction before using a general description to make planning decisions.

What should I bring to a document comparison meeting?

Bring the life care plan, letter of intent, trust instrument and benefit records you want discussed. Add a short list of unresolved questions about care, costs, preferences and who will handle each task.

What should I ask about a letter's proposed legal effect?

Ask for the applicable jurisdiction's authority and an explanation tied to your actual letter and trust instrument. Include questions about binding effect, use as evidence and any proposed amendment.

Sources

These sources support the SSI discussion. They do not establish definitions, a comparison or the legal effect of a life care plan or letter of intent.