A SPECIAL NEEDS TRUST IS FOR? A disabled person who receives assets - - PDF document
10/7/2012 WHAT ARE THEY AND WHO ARE THEY FOR? A SPECIAL NEEDS TRUST IS FOR? A disabled person who receives assets that would cause A disabled person who receives assets that would cause them to become ineligible for public benefits including
A disabled person who receives assets that would cause
A disabled person whose receives assets which are
A disabled minor A disabled adult
A legally authorized trust created by a disabled person
Allows for assets in the trust to be used to
Pays for the supplemental needs of the disabled
Receipt of assets by a disabled person will result in
The value of the assets received is insufficient to pay
To preserve the right to receive government benefits
DIRECT DISTRIBUTION TO A DISABLED
DISINHERIT DISINHERIT SUPPORT TRUST
THIRD PARTY SPECIAL NEEDS TRUST
ENTITLEMENT
Social Security (Retirement) Social Security Disability (SSDI) Medicare
NEEDS BASED (MEANS TESTED)
Supplemental Security Income (SSI) Medi‐Cal (Medicaid in other states) In Home Support Services (IHSS) In Home Support Services (IHSS) Subsidized Housing (HUD) Temporary Aid to Needy Families (TANF) California Children’s Services (CCS)
WHAT ARE SSI BENEFITS?
Payment: $830.40/month
living including cooking, cleaning, bathing, etc.)
No more than $2,000 in Countable Resources
Countable Resources include:
Bank Accounts Stocks, bonds, mutual funds Promissory Notes Real property other than principal residence
p p y p p
Second car
(20 CFR 416.1210, et.seq.)
Earned: wages Unearned: annuities, pensions, spousal
IF SPECIAL NEEDS TRUST PAYS FOR THE FOLLOWING
ITEMS, DEEMED IN‐KIND SUPPORT & MAINTENANCE & BENEFIT IS REDUCED OR ELIMINATED:
1.
Food
2.
Mortgage
3.
Real Property Taxes
4.
Rent ( )
5.
Heat & Fuel (not auto gasoline)
6.
Electricity
7.
Water
8.
Sewer
9.
Garbage removal
Reduced by actual value of IKSM: ie. $150 in groceries
Maximum reduction is 1/3 of federal benefit rate
benefit reduced by $225 + $20 = $245 = loss of SSI
If reduction is greater than benefit LOSS OF SSI If reduction is greater than benefit, LOSS OF SSI Loss of SSI results in loss of Medi‐Cal and IHSS unless
(20 CFR 416.1131)
What is Medi‐Cal? C lif i ' M di id
California's Medicaid program. Public health insurance program which provides needed health care services Financed equally by the State and federal government. Only government program that pays for extended long term care
Who qualifies for Medi‐Cal?
Low‐income individuals who prove need including:
h d b l
HIV/AIDS
Preservation of public benefits
Resources maintained to meet ongoing supplemental
Professional Management of assets available Court Supervision including regular court accountings
Lack of flexibility in use of the assets Loss of control by beneficiary and/or family Cost of administration Court supervision – invasive & costly Difficulty finding trustee for small estate Loss of privacy Court Accountings: invasive & costly Annual government review for eligibility Payback provisions
1.
FIRST PARTY “SELF‐SETTLED” SPECIAL NEEDS TRUSTS: ESTABLISHED BY:
litigation
MUST BE ESTABLISHED THROUGH
Established by a Third Party within their trust OR Established directly by a Third Party AND Can be initiated during the life of the trust creator
(trustor)
Most commonly effective on death of trustor
DISABLED BENEFICIARY
IRREVOCABLE BY BENEFICIARY BENEFICIARY CANNOT BE THE TRUSTEE FUNDS NOT AVAILABLE FOR SUPPORT &
FUNDS NOT AVAILABLE FOR FOOD & SHELTER
DISTRIBUTIONS AT THE SOLE DISCRETION OF
Beneficiary must be disabled Beneficiary must be under age 65 Trust must include Medi‐Cal payback provision Trust must be established by:
Pursuant to 42 USC 1396p(d)(4)(C): Pooled Trust can be used if
For minors & incompetent adults
p
Must notify the Dept of Health Care Svcs., Dept of Mental
Health & Dept. of Developmental Svcs.
Trust must include payback provision Trust must require regular court accountings & ongoing
court supervision T i ifi i f l i
Trust must require notification of governmental agencies
re: accountings & death of beneficiary
Trust must be court approved
Beneficiary must have disability that substantially
Beneficiary is likely to have special needs that will not
That money to be placed in SNT does not exceed
Requirements found in Probate Code ¶3604
Beneficiary must be competent
Beneficiary must be under age 65 Trust creator must have Power of Attorney for
Requires Notice within 10 days of creation:
Department of Health Services
p
Department of Mental Health Department of Developmental Services
SOURCE OF FUNDS: First Party versus Third Party:
TRUSTEE: Most appropriate: Corporate versus Family
COST: Ongoing Trust Administration: Court
OPTIONS: Availability of other alternatives. NEED FOR PUBLIC BENEFITS: Is the beneficiary
TRUSTEE CAN DISTRIBUTE:
Income only OR Income and Principal
Standard Trust Distribution Language for Income and Principal: “Th l f h b fi f h “The trustee may pay to or apply for the benefit of the beneficiary as much of the trust net income and principal as the trustee, in the trustee’s discretion, considers necessary or advisable from time to time to meet the beneficiary’s special needs”
NO EFFECT ON BENEFITS:
“The trustee shall not make any distributions which would interfere with the
beneficiary’s public benefits or cause a loss or reduction in such benefits” – TRUSTEE CANNOT PROVIDE IN KIND SUPPORT
REDUCTION IN BENEFITS:
“The trustee may make distributions that the trustee deems are in the best
interests of the beneficiary, even if such distributions cause a reduction in the beneficiary’s public benefits…” – TRUSTEE HAS DISCRETION TO PROVIDE IN KIND SUPPORT
LOSS OF BENEFITS:
“The trustee may make distributions that the trustee deems are in the best interests of the beneficiary, even if such distributions cause a reduction in
MAY CAUSE LOSS OF BENEFITS
Automobile/Van A i i
Accounting services
Acupuncture/Acupressure
Appliances (TV, VCR, DVD player, stereo, microwave, stove, refrigerator, washer/dryer).
Bottled water or water service
Bus pass/public transportation costs
Camera, film, recorder and tapes, development of film
Clubs and club dues (record clubs, book clubs, health clubs, service clubs, zoo, advocacy groups, museums) C t h d ft d I t t i
Computer hardware, software, programs, and Internet service
Conferences
Courses or classes (academic or recreational) including books and supplies
Curtains, blinds, drapes, and the like
Dental work not covered by Medicaid, including anesthesia
Down payment on home or security deposit on apartment
Dry cleaning and/or laundry services
Elective surgery
Fitness equipment
Fitness equipment
Funeral expenses
Furniture, home furnishings
Gasoline and/or maintenance for automobile
Haircuts/salon services
Hobby supplies
Holiday decorations, parties, dinner dances, holiday cards
Home alarm and/or monitoring/response system
Home improvements, repairs and maintenance (not covered by Medical), including tools to perform home improvements, repairs and b h maintenance by homeowner
Home purchase (to the extent not covered by benefits)
House cleaning/maid services
Insurance (automobile, home and/or possessions)
Legal fees/advocacy Linens and towels
Magazine and newspaper subscriptions
31 Massage 31. Massage 32. Musical instruments (including lessons and music) 33. Non‐food grocery items (laundry soap, bleach, fabric softener, deodorant, dish soap, hand and body soap, personal hygiene products, paper towels, napkins, Kleenex, toilet paper, and household cleaning products) 34. Over‐the‐counter medications (including vitamins and herbs, etc.) 35. Personal assistance services not covered by Medicaid 36. Pet and pet’s supplies, veterinary services 37. Physician specialists if not covered by Medicaid 38 Private counseling if not covered by Medicaid 38. Private counseling if not covered by Medicaid 39. Repair services (appliance, automobile, bicycle, household, fitness equipment)
Snow removal/landscaping/gardening (lawn) services
41. Sporting goods/equipment/uniforms/team pictures S i d 42. Stationery, stamps, cards, etc. 43. Storage units 44. Taxicab 45. Telephone service and equipment, including cell phone, pager, etc. 46. Therapy (physical, occupational, speech) not covered by Medi‐ Cal 47. Tickets to concerts or sporting events (for beneficiary and an accompanying companion) 48. Transportation (automobile, motorcycle, bicycle, moped, gas, bus passes, insurance, vehicle license fees, gas, car repairs) 49. Utility bills (Direct TV, cable, TV, telephone not gas, water or electric) 50. Vacation (including paying for a personal assistant to accompany the beneficiary)
LAW OFFICE OF CHERYL L. WALSH 27345 ORTEGA HWY., STE. 200 SAN JUAN CAPISTRANO, CA 92675 (949) 496‐8101 EMAIL: Cheryl@walshseniorlaw.com