Date post: | 02-Jan-2016 |
Category: |
Documents |
Upload: | augustine-jackson |
View: | 213 times |
Download: | 0 times |
Presents
Introduction to Special Needs Planning
With
Harry S. Margolis
Sponsored by:
January 7, 2014
Why Special Needs Planning is a Great Area of Practice
Growing Need:• More individuals with special needs
• Better medical care• Longevity
• Needs recognized
Make a real difference in clients’ lives:• Public benefits• Asset protection
• Structure for care and financial management• Relieving burden on siblings
Effect of Affordable Care Act
• Fewer people will need Medicaid because there is no more pre-existing condition exclusion
• Fewer people will need to maintain SSI eligibility in order to get Medicaid
Public Benefits
Available Programs:• Medicaid• Medicare• Supplemental Security Income (SSI)• Social Security Disability Income
(SSDI)• Housing• Veteran Benefits
Public BenefitsMedicaid
Often vital• Coverage can be more extensive than
Medicare or private insurance• Often provides supplemental benefits,
such as personal care attendants
• Eligibility and benefits differ among states
• In many states tied to SSI
Public BenefitsMedicare
• No financial restrictions
• Eligible after receiving SSDI for 2 years
• Not as comprehensive as Medicaid
• But more doctors accept reimbursement
• Co-payments and deductibles
Public BenefitsSupplemental Security Income
• Restrictive
• $2,000 limit on countable assets
• Federal benefit level ($721 a month in 2014) plus state supplement
• Dollar-for-dollar income offset (after $20 disregard)
• In-kind income
• Upper limit on reduction for housing and food
• In kind support and maintenance (ISM) – 1/3 of $721 plus $20 - $260 (in 2014)
Public BenefitsSocial Security Disability Income
• Not based on financial eligibility
• Benefit based on beneficiary’s work record or that of parent
• If based on parent’s work record, child must have been disabled before age 22, and parent must either be receiving SS benefits or be deceased
• Benefit may be more or less than SSI benefit
• Can change from SSI to SSDI when parent retires
• Easier to manage than SSI
Public BenefitsHousing
• Section 8 most prominent
• Other state and federal programs, so ask
• Section 8 has tough rules on treating recurring payments as income
• But applied differently by different agencies
Veteran Benefits
• Veterans with disabilities may receive benefits for:• Service Connected Disabilities• Non-Service Connected Disabilities
• Income and Resource limitations apply
• SNTs – (d) (4) (A) and (C) – not currently recognized by the Veteran’s Administration, but no transfer penalty (for the moment)
Trusts as Primary Planning Tool
• Management
• Structure
• Asset protection
• Eligibility for benefits
Trusts
Management:
• Trustee or trustees manage trust property for benefit of beneficiary or beneficiaries
• Held to a fiduciary standard
• Trust lays out ground rules for how funds are managed and distributed
Trusts
Structure:• Succession of trustees• Trustee oversight• Care committee• Trust protector• Succession of beneficiaries• Power of appointment
Asset Protection
• Predators
• Creditors
• Poor decision-making
• Alternative of relying on siblings
Public Benefits
• Trust funds not counted (if properly drafted and administered)
• Self-funded vs. third-party trusts
• Self-funded: must fall under a statutory exception
• Third-party: must be discretionary, not support
(d)(4)(A) or Payback Trusts
• Presumption that self-settled trusts are available assets
• Just as they may be reached by creditors
• Exception under 42 USC §1396p(d)(4)(A)
• For both Medicaid and SSI
(d)(4)(A) or Payback Trusts
• Sole beneficiary
• Must be disabled and under age 65 (when the trust is funded)
• Trust created by parent, grandparent, court or guardian
• For SSI, must be “seeded” – $20
• At beneficiary’s death, must provide for reimbursement to state for Medicaid expenditures made
(d)(4)(C) or Pooled Trusts
• Exception under 42 USC §1396p(d)(4)(C)
• For both Medicaid and SSI
• Trust must be managed by not-for-profit organization
• Must be disabled and, depending on the state, under age 65 (when the trust is funded)
• Trust created by parent, grandparent, court, guardian, or beneficiary
• At beneficiary’s death, must provide for reimbursement of state for Medicaid expenditures made, unless remaining in the pooled trust• See www.specialneedsanswers.com for
comprehensive listing of pooled trusts
Third-Party Trusts
• By parents and grandparents
• Discretionary vs. more limited
• Trend towards more discretionary, less limited
• Intent language
• Revocable vs. irrevocable
Third-Party Trust Funding
• Usually at death
• May include contributions from others (grandparents, aunts, uncles)
• Life insurance
• Retirement plans
• How much?
• Revocable or irrevocable?
Letter of Intent
• Guides trustees
• Provides in depth information about beneficiary likes and dislikes, medical information, parents’ hopes for child
• Updating necessary
• Often seems to fall by the wayside
Personal Injury Cases
• Generally self-settled trusts
• Disabled prior to injury?
• To structure or not to structure?
• Still need SNT
• Last minute nature of cases
• Dealing with PI attorneys
Choice of Trustee:The Family
The Bad:• Poor investments• Poor reporting• Difficulty following SSI rules• Education burden
Choice of Trustee:The Family
The Good:• Knows the beneficiary’s needs• Knows service providers• Care• Continuity
Choice of Trustee:Professional Trustees
The Bad:• Don’t know beneficiary• Don’t know benefit rules• Arbitrary• Lack of control• Trust officers changing• Banks changing
Choice of Trustee:Professional Trustee
The Good:• Investment acumen• Ability to say “no”• Proper accounting• Proper tax reporting• No conflict of interest• Ability to set up accounts properly
Traps for the Unwary
• Distributing more than $20 directly to the beneficiary in a calendar month
• Commingling the beneficiary’s funds with the trust funds, with the trustee’s own money or between trusts
• Poor record-keeping
• Leaving disabled individual as beneficiary of IRAs and life insurance policies
• Savings bonds
• Failure to notify state and federal agencies
House Ownership by Trust
• To be avoided, if possible
• Not a countable asset for SSI or Medicaid
• But subject to estate recovery and bad management
• So SNTs often own houses
• What if parents and other siblings live in house?
• Co-ownership? Rent? Ancillary beneficiaries?
Advocacy and Monitoring Care
Who will take over from parents? • Parents are primary advocates and care
providers
• Who will take their place?• Other family members• Professional care managers• Guardian• Attorneys• Trustees
• Coordinating care
Trust Protectors
• May be written into the trust or may be informal• Care provider• Advocate• Family members• Special needs attorney• Financial advisor• Specialist in special need, e.g., social
worker, physical therapist, psychologist, etc.
• Care manager
Introduction to Special Needs Planning
Harry S. Margolis
Margolis & Bloom, LLP
Boston, Dedham, Framingham & Woburn
www.margolis.com