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Special Needs Trusts For P. I. Lawyers
“What you don’t know, can cost you.”
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James M. O’Reilly Nevada’s First Certified Elder Law Attorney
Las Vegas, Nevada
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So you settled “The Big One”
$ 1 mil settlement $ 5000/mo. + COLA Guaranteed for life 20 year term certain
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“What, me worry?” Look what happened – you blew SSI
Client’s now over resource limit Over income limit Over both resource & income limit
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Why quibble over SSI? Why worry about $567/mo SSI poverty payment?
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Don’t bother to quibble
So long as your client is: Employable Employed Insurable Insured
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What’s the big deal? Most SNT benes are now or likely to be:
Unemployed Unemployable Uninsured Uninsurable
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Blowing SSI can be a big deal!
The magic is $1 of SSI = Medicaid Doctors Rx Treatment Hospital care Nursing home care
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When an injury occurs Examine your client’s core benefits
Medical insurance Social Security Medicare - SSDI Medicaid - SSI Section 8 housing CHIPS/county programs
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Core benefits provide Food Clothing Shelter Basic Medical Care
“Government provides the means to survive, not the means to thrive.”
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To preserve core benefits -
Form of settlement is crucial Outright payment Structured settlement annuity Blocked account Guardianship Special needs trust
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Role of the SNT Preserves core benefits
Integrates with the life care plan Enhances investment potential Protects the disabled client Supplements basic support
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Role of SNT con’t Supplements basic core benefits Education
Custom living/transportation Recreation Companionship Social services New medical techniques
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Role of SNT con’t SNTs are NOT for basic needs NO food NO clothing
NO shelter NO basic health care SNTs are NOT support trusts
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The SNT Players Family - Immediate & Extended Medical team
- Doctors, Psychologists, Rehab Team Asset Managers - Portfolio and Property Professionals – Attorneys, CPAs Trustee
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The Perfect SNT Clearly ID the patient’s needs
- Assess, Plan, Implement & Document One central point of contact Coordinated efforts - Family - Care providers - Trustee
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Typical SNTs No one in charge Multiple accounts Poor case management
No checks & balances Opportunities for abuse Poor integration with public benefits
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Find the perfect trustee
Understands public benefits Discretion used for the beneficiary Can invest wisely Understands taxes Keeps perfect books Carries insurance/bondable Immortal
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SNT’s come in 2 flavors Watermelon 3rd party trusts = safer
Pomegranate Self created trusts = dangerous
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Watermelon Trusts General Rule - 3rd party trusts = Safer
Medical/Social prognosis Family infrastructure & support Current & prospective public benefits Family’s resources
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Trouble in the watermelon patch
Historically safe – changing politics Ohio & NY – any discretion Still safe in Nevada Will the child move later? Problems with trustees – family always mess it up
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Pomegranate Trusts Self-settled trusts = P I awards Dangerous trusts
Must maintain categorical eligibility Must maintain needs based eligibility -Income limits -Resource limits
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3 safe harbors for Pomegranate Trusts
42 USC 1396 (d)(4)(A) (B) & (C) D4(A) – the workhorse - under 65 - parent, grandparent, guardian, court - Medicaid reimbursement - Rule in Shelley’ case Miller Trusts (B)
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3 safe harbors for Pomegranate Trusts - con’t
Pooled income trust (C) - Master trust created by non-profit - Family subscribes with 2 pages - Separate accounts - Parent, grandparent, court or guardian - Funds go to charity at death - None in Nevada
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Special Needs Trusts For P. I. Lawyers
James M. O’Reilly Las Vegas (702)
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