Patti's Blog - Advocate for Elders, People with Disabilities and Their Families

Can a special needs trust or disabled beneficiary own a home?

Excerpt from Aler Stallings: (click for entire article)

Beneficiaries of special needs trusts often have disabilities that make owning their own home preferable because of the need for modifications, retrofitting, and renovating to accommodate a disability. Can a special needs trust, or disabled beneficiary, buy a home without jeopardizing receipt of government benefits?

The short answer is “Yes—with extreme caution.” To be successful, the trustee must examine all factors and make a decision that is best given the specific circumstances.

In general, the following factors should be considered by the trustee when determining if it is prudent for a special needs trust, or beneficiary, to buy a home:

1.     If the beneficiary owns the home, the home will not be subject to Medicaid payback provisions under a 1st party/self-settled special needs trust;
2.     If the beneficiary owns the home, the home will be subject to Medicaid liens and, or, estate recovery;

THE TGB ELDERLAW ATTORNEY: Understanding Trusts

Patti's Comments:  This is a wonderful article that makes trusts understandable for all!

Excerpt from Time Goes By: (click for entire article)

Okay folks, I finally got up the nerve to address trusts and how to use them to avoid probate. I offer this with a warning that applies to a lot of things in life: Just because you can do something does not mean that you should.

Remember my last post where I suggested that when it comes to estate planning you first need a plan. A trust may or may not be part of your plan. If it is, here is how it works.

We all know about contracts. A contract is a legal transaction between two people. At Walmart, I make a contract with the Walmart corporation by offering a dollar for a can of soup. The clerk accepts the offer, Walmart gets my dollar and I walk out with the soup. I have completed a contract. Lawyers study contracts for a year to get a handle on this.

Estate Planning for Special Needs Children: Peace of Mind for Parents

Excerpt from Windels Marx: (click for entire article)

I was recently re-visiting an article about estate planning for families with special needs children that appeared in October 2008 in the Wall Street Journal entitled "An Estate Plan Built for Special Needs." The article, like so many others, highlights the statistics: that more than 41 million Americans, or almost 15% of Americans age 5 or over have some type of disability, according to 2007 census data. With so many disabled children, whether the disability is a learning disability, an autistic spectrum disorder, mental retardation, cerebral palsy or some other disability, what do parents do to be sure their children are taken care of after they are gone? What do parents do to lessen their anxiety about the future of their children? How do parents make sure that their special needs children will not become a financial burden on their other children or relatives?

Fortunately, parents can take some simple steps to make sure that their special needs children have both financial and personal security after their deaths. As a trusts and estates attorney who specializes in this area of the law, I often prepare "Supplemental Needs Trusts" for families with children with special needs. These trusts are designed to provide for "extras" for the special needs child, while still allowing him or her to qualify for available government benefits, such as Medicaid and SSI. For instance, the trust can pay for medical or dental care not covered by Medicaid, entertainment, vacations and so forth. The trusts can be created in the Wills of the parents or grandparents, in which case they come into existence after the parent or grandparent passes away.

Special needs trusts can protect personal injury awards

Excerpt from The Daily Sentinel: (click for entire article)

Television, movies, and the news have generally educated the public to know that if a person is injured in some way, due to the negligence or carelessness of another, that a lawsuit may yield a big money settlement or judgment.  However, the person doesn’t always receive that money. 

For example, a middle-aged man is in a terrible car accident that leaves him unable to care for himself.  His family has no choice but to place him in a nursing home that can provide 24/7 care.  His care is paid for by Medicaid.  If this man receives a money settlement or judgment, he will be disqualified from his Medicaid benefits.  The money settlement or judgment must then be used to pay the nursing home until the money is depleted to the point he is eligible again for Medicaid benefits. 

Generally, when a person is seeking a money settlement or judgment, the person is hoping to use that money to improve his or her quality of life with better medical equipment, staff, treatments, etc.  The person does not want to hand the money over to the nursing home.

Leveraging Special Needs Trusts to Obtain Public Benefits

I am pleased to announce that I will be speaking in an upcoming Strafford live phone/web seminar entitled "Leveraging Special Needs Trusts to Obtain Public Benefits" scheduled for Tuesday, May 15, 1:00pm-2:30pm EDT.

The U.S. Census estimates that 54 million people—19% of the population—suffer disabilities. Many qualify for SSI, SSA, Medicaid and state assistance programs. When establishing the terms of a special needs trust (SNT) for such clients, preserving public benefits eligibility is critical.

After evaluating the most appropriate type of SNT, counsel must address the source of funds. Practitioners should consider whether assets of the SNT could disqualify the disabled person from receiving public benefits, how funds may be used, trust fund disbursements, and spending limits.

Trustee selection, fiduciary issues and trust administration are all integral to SNT planning. Counsel must also understand how disbursements from SNTs play a role in the planning process.

My fellow panelists and I will provide estate planning counsel with a practical guide to selecting the appropriate type of SNT and structuring the SNT to avoid jeopardizing public benefit eligibility. The panel will highlight key issues to consider in the administration of these trusts.

We will offer our perspectives and guidance on these and other critical questions:

•     What are the key considerations in determining whether an SNT is appropriate for a client's circumstances?
•     What clauses should be utilized in structuring an SNT to protect public benefit eligibility?
•     What practices should be considered in trust administration?

After our presentations, we will engage in a live question and answer session with participants — so we can answer your questions about these important issues directly.

I hope you'll join us.

For more information or to register >
or call 1-800-926-7926 ext. 10 for more information

Protecting Assets for a Child With a Disability

Excerpt from ABA Bifocal: (click for entire article)

Estate planning and lifetime planning for parents of a child with a disability present special challenges. The goals of the parents are to utilize their assets in such a way as to enrich their child’s life while, at the same time, preserving the child’s public benefits.

Estate Planning Options

Parents of a child with a disability have four options with respect to estate planning:

• Disinherit the child;
• Distribute the assets directly to the child;
• Distribute the assets to a sibling with the understanding that the sibling will use the assets for the benefit of the child with a disability; or
• Distribute the assets to a trust for the benefit of the child with a disability.

Letters to the editor: May 7

Excerpt from Investment News: (click for entire article)

As a practitioner in the special-needs field, I was glad to see coverage in InvestmentNews (“Advisers have to take lead in special-needs planning,” April 9) on this important yet overlooked area of planning.

The number of families that need to consider the issues of lifetime planning for a relative with special needs is increasing, and there is a need for advice by trained planning professionals.

Having been a practicing attorney before shifting into the financial planning aspects of working with those with special needs, I have a comprehensive understanding both of the legal and financial aspects of special-needs planning.

A Look At The Special Needs Trust

Excerpt from Preserve Your Estate: (click for entire article)

There are many of us who have friends, relatives or colleagues who have some type of incapacitating mental, physical or developmental disability. In older times, the families of disabled people used to keep their circumstances a secret; the disability of a family member was a forbidden subject and was not discussed very openly. To make matters worse, very few competent professional advisers existed to offer their help to plan for the special needs of disabled people.

So, the disheartened families of such people were left on their own and they had limited options to ensure proper care for their disabled relatives after their primary care provider grew too old or died. And since there was a certain stigma attached, the needs of the disabled were not advocated and there were limited resources available.

These days estate planning attorneys can provide solutions, and one of the them is called the “special needs trust.” A special needs trust is a trust which provides for a disabled person’s supplemental needs, other than basic health, shelter and sustenance expenses that the beneficiary may be entitled to receive under government programs such as Medicaid and Supplemental Security Income.

Planning for Your Special Needs Loved One

Excerpt from The Arc Alliance: (click for entire article)

If Congress and the   President do not reach an agreement in 2012 to extend or modify the existing   Federal Estate Tax Threshold of 5 million dollars per person and 10 million   dollars per couple, the threshold will reduce to 1 million dollars per person   on January 1, 2013. In light of recent Washington gridlock and the fact that  most life insurance and retirement plans are included in the Federal Estate   Tax calculations, 2012 is a critical year to review your Estate Plan and to adopt relatively easy strategies to address the potential serious consequences of this situation. A list of the critical documents   to review and consider is set forth below. Will-   The document which directs the disposition of property not held in joint   names or which pass by a beneficiary designation.  The   Will identifies the individuals charged with administering your estate,   provides a financial structure and guardianship for minor children, and seeks   to avoid unnecessary federal and state death taxes. Trusts –   The mechanism by which property is held for the benefit of designated individuals.  Several types of Trusts may be used in typical estate plans.

House Bill Would Allow Military Retirees to Name Special Needs Trusts As Beneficiaries of Survivor Benefit Plans

Excerpt from Special Needs Answers: (click for entire article)

A bill recently introduced in the U.S. House of Representatives would finally allow military retirees to name special needs trusts as beneficiaries of Survivor Benefit Plans, a change that could dramatically improve the lives of military children with disabilities.

Under the current military retirement system, a retired member of the military can elect to fund a Survivor Benefit Plan (SBP) that will pay the retirees survivors a monthly payment to help make up for the loss of retirement income. When the retiree dies, the SBP will pay up to 55 percent of his pension to his wife or children. But if a child with special needs receives the pension payment, she could lose other important government benefits like Supplemental Security Income or Medicaid because the income from the pension is counted as the child's for purposes of calculating her eligibility for those other government benefits. Unfortunately for the child, as the law stands now, SBP payments cannot be assigned to a special needs trust that would protect both the pension payment and the child's other assistance.