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

Preserve Government Benefit Eligibility with IDEAL Settlement Planning

Excerpt from: Shapiro Settlement Solution (click for full article)

 

Chances are you have been asked the question, “if I accept this settlement, will I lose my benefits?”  When a client relies on Medicaid, Medicare, SSDI, SSI, HUD, SNAP (or any combination of federal and state government benefits) for income and healthcare coverage, there is much at stake.  If proceeds are distributed without careful analysis and planning, the client may lose valuable benefits that are not easily replaced.

While there are several planning tools out there: spend down, special needs trusts, and structured settlements, none of them can be applied as a one-sized fits all solution.  In creating the best plan many factors must be taken into consideration, including exact benefits received, future eligibility, injury/disability care plan, financial needs and individual family circumstances.  Each benefit program comes with its own rules and each client situation comes with its own complications.  With so many moving parts, creating a successful and practical settlement plan can often feel like assembling a puzzle.

If a client receives or has the potential of receiving government benefits, it is imperative to explore settlement planning options that protect benefit eligibility.  Not only is it an attorney’s ethical obligation to present his or her client with the information necessary to make informed settlement planning decisions,[1] it is also the only way to protect the client from inadvertently losing his or her government benefits.

Can a Special Needs Trust Pay Credit Card Bills? Security Deposit?

Excerpt from: Legal Issues Newsletter (click for full article)

 

Administering a “special needs” trust can be a challenge. The rules often seem vague, and they occasionally shift. What may seem like a simple question might actually involve layers of complexity. Sometimes an expenditure might be permissible under the rules of, say, the Social Security Administration, but not acceptable to AHCCCS, the Arizona Medicaid agency — or vice versa. Trustees work in an environment of many constantly-moving parts.

Common mistakes parents make with their special needs trusts

Excerpt from: Autism Support Network (click for full article)

 

We meet a number of families each year that have already met with a planner in an attempt to design a special needs plan. The plans are put together with the best of intentions in hopes of providing ongoing care for their loved one with special needs. Unfortunately, many of these plans are incorrectly designed and fall short of providing the desired outcome.

The most common errors we see are often related to the drafting of a special needs trust. We'll outline below three of the most common mistakes we encounter when working with reviewing these trusts.

Each week we review a number of special needs trusts given to us by parents simply looking to confirm that what they have works. The family has done exactly what they thought they needed in that they have created a trust in order to provide ongoing care for their loved one with special needs should they no longer able to provide it. The problem is that many of these documents are put into place without the parents truly understanding what they are signing.

USING TESTAMENTARY SPECIAL NEEDS TRUSTS IN MEDICAID PLANNING

Excerpt from: Elder Law and Estate Planning (click for full article)

 

Creating a Testamentary Special Needs Trust (TSNT) is often a good tool to utilize when planning for Medicaid for a spouse or other loved one.  A TSNT is a trust created under your Last Will and Testament.  Under current rules, funds contained in a properly drafted testamentary trust generally do not count as assets of a person receiving public benefits. Funds held in a TSNT are treated as available to a Medicaid applicant only to the extent that the Trustee has an obligation to pay for the applicant’s support.  If payments are solely at the Trustee’s discretion, the assets are considered unavailable.  This rule does not apply to revocable living trusts.  Assets held in a revocable living trust are considered countable to the Medicaid applicant.  Thus, a TSNT can provide an important mechanism for community spouses to leave funds for their surviving institutionalized spouse that can be used to pay for services that are not covered by Medicaid without jeopardizing that spouse’s eligibility for benefits.

 

Special Needs Trusts

Excerpt from: Brook Clay Attorneys at Law (click for full article)

 

Proper planning is especially critical for clients who have children or other loved ones with disabilities. Attempts to set aside funds for a disabled beneficiary may render the beneficiary ineligible for public assistance to which he or she would otherwise be entitled (such as Medicaid and Supplemental Security Income). Most often, it will require a combination of family funds and public assistance to provide adequately for the lifelong comfort and care of a disabled beneficiary. Our attorneys assist clients in achieving a positive outcome in this regard through Special Needs Planning,including:

•  Special Needs Trusts - trusts which allow the trustee to expend funds for the supplemental needs of disabled beneficiaries in a manner which does not cause the loss or interruption of government benefits.
• Self-Settled Special Needs Trusts - established with the disabled beneficiary’s own funds.
• Third-Party Settled Special Needs Trusts - established with gifts or bequests from family members for the benefit of the disabled beneficiary.
• Guardianship and Conservatorship for Incapacitated Adults - grants parents or other individuals legal authority to handle the affairs of a disabled person.

About SSNPT

Excerpt from: Settlement Solutions (click for full article)

 

The SSNPT is a pooled special needs trust created pursuant to federal law [42 U.S.C. 1396p(d)(4)(C)].  Under federal law, a pooled special needs trust must be managed by a non-profit trustee.  The SSNPT is managed by the National Non-Profit for Americans with Disabilities (“NNAD”) who acts as the trustee.  The SSNPT employs Anthony F. Prieto, CFP as the money manager.  To learn more about NNAD and Mr. Prieto, click on the links to the right.

The founders of the Settlement Solutions National Pooled Trust are among the nation’s foremost leading experts on public benefit preservation techniques.  The staff at the Settlement Solutions National Pooled trust are made up of compassionate and dedicated individuals who want to genuinely help people such as yourself.

Third Circuit Court Decision Affirms Medicaid Recipients of Any Age Are Allowed Use of Pooled Special Needs Trusts

Excerpt from: Digital Journal (click for full article)

 

The National Academy of Elder Law Attorneys (NAELA), along with the Special Needs Alliance and the Pennsylvania Association of Elder Law Attorneys (PAELA), filed a brief of amicus curiae in support of appellees, Zackery D. Lewis, et al., against the Pennsylvania Department of Public Welfare in Lewis v. Alexander, involving pooled special needs trusts (Case no. 2:06-cv-03963-JD, U.S. Court of Appeals for the Third Circuit).

“Pooled special needs trusts let people with disabilities who have modest savings — as little as $5,000 — hold onto them without losing their Medicaid benefits,” said NAELA board member Ron M. Landsman, CAP, the principal author of the NAELA amicus curiae.

A person with disabilities receiving Medicaid benefits can use funds from a special needs trust to purchase items not covered by Medicaid, such as:

• Going to the movies or theater;
• Clothing;
• Personal care items, such as haircuts, shampoo, and sunscreen;
• Computers and other electronics; and
• Vacations and travel expenses.

Special Needs Trusts

Excerpt from: Medicaid Answers (click for full article)

 

There are three main types of special needs trusts a person can use to protect assets:

1) The Special Needs Trust (known as a “(d)(4)(A) trust” based on its designation under federal law) is a common trust used to protect lawsuit or insurance proceeds or inheritances for someone who is disabled and needs or may need long-term care.  This trust must include a Medicaid payback provision at the death of the disabled beneficiary.

2) The Pooled Trust (authorized under (d)(4)(C)) also works similar to a (d)(4)(A) trust in that it is set up for individuals who are under 65 and disabled.  The same types of assets can be protected in them, but the pooled trust is established by a charity which runs and administers the trust for a number of disabled beneficiaries.  Some portion of the reminder is paid back to Medicaid when the disabled beneficiary dies and the rest is retained by the charity.

3) The Third-Party Special Needs Trust (often referred to as an “Amenities Trust”) is often established by parent or grandparent to leave assets in trust for the benefit of a disabled child or grandchild.  The money or assets can stay in trust and does not qualify towards what has to be spent down to achieve Medicaid or SSI eligibility.  The trust funds can be used to cover those things not covered by government assistance — referred to as amenities.  Because it is set up by a third-party, the remainder in the trust fund can pass through to other heirs or beneficiaries at the death of the disabled beneficiary.

Finding and Choosing a Pooled Special Needs Trust

Excerpt from: NOLO: Law for All (click for full article)

 

Joining a pooled special needs trust might be a good option for your family if you don’t have much money to leave for your loved one, or if you don’t know a suitable person to name as trustee of your trust.  Learn more about how pooled trusts work and why you might want to join one in the article Pooled Special Needs Trusts onNolo.com. Here’s how to find and choose a quality pooled trust. 

Searching for a Pooled Trust

Pooled trusts must adhere to strict state rules, so to keep things manageable, most pooled trusts only take residents that reside in the same state. To find a special needs pooled trust in your state, try contacting one of these organizations:

• Academy of Special Needs Planners: www.specialneedsanswers.com
• The Arc: www.thearc.org
• The Center for Special Needs Trust Administration, Inc.: www.sntcenter.org
• The National PLAN Alliance: www.nationalplanalliance.org

If you find a pooled trust that you’re interested in, it’s time to ask some detailed questions about how the trust will provide for your loved one.

Special Needs Require Careful Planning

Excerpt from: Krasa Law (click for full article)

 

The concern is that an inheritance will suddenly increase the special needs beneficiary’s asset level, thereby abruptly eliminating the public benefits. After the beneficiary spends through the inheritance and is once again eligible for public benefits, it might be very difficult or even impossible for the beneficiary to successfully reapply for such benefits. Furthermore, the beneficiary might not be capable of managing the inheritance and might make poor financial decisions.

The solution is to set up a “special needs trust” (also known as a “supplemental needs trust”) for the benefit of the special needs beneficiary. The special needs trust names a third party as the trustee or “manager” of the trust. The special needs trust would not allow the beneficiary to have any right to force a distribution, which makes the assets of the special needs trust exempt from being considered an “available resource” to the beneficiary. The special needs trust will typically give the trustee full discretion on whether or not to make a distribution on behalf of the beneficiary. As long as the trustee makes sure to avoid distributions for “impermissible purposes” which the public benefits are designed to cover such as food, shelter, and clothing, the distributions will also not count as a resource to the beneficiary and will not affect the receipt of public benefits. The trustee may make distributions for purposes that are not covered by public benefits, such as entertainment and travel, which will not affect the receipt of public benefits. In this regard, the inheritance can still be available to the beneficiary without eliminating public benefits.