1. Estate Planning and Decision Making
Presented by:
Joshua L. Brothers
Dussault Law Group
(206)

2. Public Benefits Eligibility
SSI/Medicaid
Disabled, blind, >65
Disabled = no SGA ($1,040/month)
“Means tested”
Income
Earned ($2:$1)
Unearned ($1:$1)
ISM (up to 1/3)
Assets < $2000 (individual)
Exemptions include primary home (<$500k), vehicle, personal property, SNT
SSDI/Medicare
Disabled, blind, >65
Disabled = no SGA ($1,040/month)
Work History
Available to individuals who have paid FICA taxes in the last 20 of 40 quarters prior to disability
Not “means tested”
Medicare available when: over 65 or meets SSA disability definition, 29 months post injury

3. SSI/SSA Benefit Coverage
Cash benefit of up to $710 to be utilized for food and shelter expenses (as of 1/13).
Some States provide cash supplements to base SSI limit
“Gatekeeper” to Medicaid and other public benefit programs
SSA
Cash benefit depending on amount paid into Social Security system
Received through earned credits of self, spouse, or parent

4. Medicaid/ Medicare Coverage
Medical Assistance
No premiums, co-pays or deductibles
Long-Term Care
Personal care hours
Assisted living, nursing homes, etc.
Medicare
Hospital, doctor visits, prescription drugs
Premiums, co-pays and deductibles
Minimal rehabilitation care, but no long-term care

5. Last Will and Testament (aka the “Will”) vs. Revocable Living Trusts
No will/living trust = “intestate succession”
Most common estate planning documents
Decision based on state probate process
Estate tax considerations ($5,000,000 exemption in 2013)
Living trusts and estate taxes
Estate Taxes
Should I leave assets to an individual with disabilities?
Outright distribution
Disinherit the individual
“Testamentary” special needs trust

6. Probate vs. Non-Probate Assets
Probate assets are assets held in the decedent’s name without a beneficiary designation
Non-probate assets are those that pass by a written instrument or arrangement other than a will
Jointly owned property with right of survivorship (bank accounts and real property)
Pay on Death (POD) Account
Trust
Community Property
Individual Retirement Accounts (IRA)
401(k) Plans
Life Insurance
Review non-probate assets on a regular basis

7. Roles of Individuals in a Will
Executor:
Duties
Who to name?
Guardian:
Should be consistent with any Court files
Trustee:
Advantages & disadvantages of using professionals

8. What is a Trust? Separate legal entity
Barrier between beneficiary and Trust assets
Roles
Trustor or Settlor
Trustee
Beneficiary
Basic Functions of a Trust
Safeguard assets
Financial Management
Distributions
“Types” of Trusts are just restrictions on basic functions
Can serve as an alternative to guardianship

9. What is a Special Needs Trust (SNT)?
Purposes:
Financial management
Continued eligibility for “means” sensitive benefits (primarily SSI and Medicaid)
Restriction on expenditures – “extra and supplemental needs” of the beneficiary
Needs not covered by SSI and Medicaid
Cannot pay for basic food (groceries) and shelter (rent and basic utilities) or primary medical services otherwise covered by benefits
Can be used to pay for vacations, clothes, entertainment, education, etc.
Trust restrictions must be observed.
Must be “irrevocable”
Sole benefit

10. Source of Funding Matters
Own Assets or Legal Right to Assets
Assets from 3rd Party
Self-Settled or (d)(4)(A) SNT
3rd Party SNT

11. Self-Settled (d)(4)(A) SNT
Beneficiary’s own assets
Restrictions
Beneficiary must be disabled
Established by parents, grandparents, guardian, or court
Beneficiary must be under 65 years of age
Medicaid Reimbursement
Court-ordered (d)(4)(A) SNT
Court reporting requirements
Bond or blocked accounts
Possible need for a professional Trustee (bifurcated duties?)
“Grantor” Trust if drafted appropriately
Alternative: (d)(4)(C) SNT
Pooled Trust
Retained Trust assets replaces Medicaid Reimbursement

12. Third Party SNT Assets of anyone other than the beneficiary
No (d)(4)(A) SNT restrictions
Anyone can establish
Beneficiary can be any age
No Medicaid reimbursement
Complex Trusts
Can be a Living or Testamentary Trust
Common situations in which a Third Party SNT is created
Will and Estate Planning documents
Family or friends want to assist the beneficiary
Avoidance of multiple SNTs in wills
Lack of judicial oversight
Use of non-professional Trustees
Control of assets after the beneficiary has passed away

13. SNT Administration Who is the Trustee? Beneficiaries with Guardians
Professional
Non-Professional
Bifurcated duties (investment/disbursement)
Trust Protector?
Beneficiaries with Guardians
Person vs. Estate
Court appointed legal representative
Guardian stands in the shoes of the beneficiary

14. SNT Administration (Continued)
Fiduciary Duties
Can be highly intensive trusts
Understanding specific disabilities
Understanding public benefit programs
Family interactions
Court supervision
Annual Reports
Bond or Blocked accounts
Court accountings & duty to keep informed.

15. SNT Administration (Continued)
Direct payments to vendors/service providers
Cash to Beneficiary?
Impact on SSI/Medicaid
Use of credit cards and gift cards
Trust Owned Home
Charge rent?
Sources of rent (SSI, SSA and HUD)

16. SNT Administration (Continued)
Taxes
Trust vs. Individual Taxes
3rd Party SNT = Complex Trust
Retained income taxed to the Trust
Distributed income taxed to the Beneficiary
Self-Settled SNT = Grantor Trust
All income taxed to Beneficiary
Payment of taxes by Trust
WA’s flexible laws on Trust issues (“TEDRA”)

17. Presumed Capacity
When an individual turns 18, she is an adult in the eyes of the law.
Adults presumed to be capable of making decisions on their own behalf.
Parents lose the right to speak & act for their child, including…
Health Care
Driving
Marriage
Schools & Other Government Agencies
Financial

18. Conferred Authority
To make decisions on behalf of another adult, a person must be granted that authority by the adult, by the courts, or by operation of law.
Ways to retain decision making authority
Guardianship
Power of Attorney
Trust
Representative Payee

19. Guardianship/ Conservatorship
A “guardian” appointed by Superior Court upon a finding of incapacity.
Types of Guardianship:
Estate/Conservatorship (financial)
Person (everything else!)
Can be all rights or something less in most states

20. √ √ √ √ Scope of Guardianship Person Estate Full Limited

21. Establishing A Guardianship
Court determines
Incapacity
Scope of the guardianship
Who should be appointed as guardian
Process varies from state to sate

22. Potential Rights Objection to Guardianship. Representation by counsel
Jury trial
Presumed to have capacity until found incapacitated.

23. Who Should Serve As Guardian?
Parents, siblings, other close family members, family friends, certified professional guardian, public guardian
Minimum qualifications
Over 18 years of age
Of unsound mind
No conviction of a felony or of a misdemeanor involving moral turpitude
A person whom the Court finds unsuitable
Stand-by Guardian
Transition

24. Guardian’s Ongoing Rights and Responsibilities
Manage the Incapacitated Person’s assets
Manage the Incapacitated Person’s financial affairs
Court Reports & Accounting
Is the Guardian responsible for the Incapacitated Person’s Debts?

25. Power of Attorney (POA)
A legal instrument in which a person (the “Principal”) grants another person (the “Attorney-in-Fact” or “AIF”) the right to make decisions on his or her behalf
“Capacity” to sign the Power of Attorney required
The Principal does not lose the ability to make decisions
Substituted judgment rule
Decisions of Principal “trump”
POA is revocable
Date of Effectiveness
Immediately (terminates on disability unless otherwise indicated)
Upon disability of the Principal
Beware of the form!

26. POA Authority
Scope of the AIF’s authority determined by language in the POA
Financial
Health Care
Broad language granting "all powers that the principal has" allows the AIF to make most decisions regarding the Principal's financial affairs and health care, including
Consent to most medical treatment
Buy or sell things
Enter contracts
Language can be very specific and limited

27. POA vs. Guardianship Guardianship No retained rights
Difficult to revoke
Invasiveness
Establishment
On-Going Reports
Psychological effect on AIP
Can be expensive
POA
Retained Rights
Easily revocable
Privacy
Does not protect against bad decisions
Relatively inexpensive
May be a “temporary fix”

28. Representative Payee
An individual designated by the Social Security Administration (“SSA”) to act on behalf of a disabled person in dealing with the SSA
Acts as a substitute to receive and handle a recipient’s benefits including SSI and SSDI
Agrees to use the government benefits on behalf of the beneficiary for the beneficiary's personal care or well-being

29. Who may serve as Representative Payee?
Anyone concerned with the recipient’s welfare
Individuals
Parent
Spouse
Close relative
Guardian
Friend
Organizations
Institution such as a nursing home or health care provider;
Public or nonprofit agency or financial organization
Cannot be a convicted felon

30. Role of Representative Payee
Uses benefits for the recipient’s basic needs for food and shelter
Provides an accounting, usually on an annual basis to the agency showing how the benefits were used.
Communicates with the agency, including completion of agency requests and reports
Advocates for the best interests of the disabled recipient to the agency including appeals
Authority is limited to matters between the recipient and the agency.

31. Disclaimer/Notice
This training and written materials are designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the presenter is not engaged in rendering legal, financial or other professional services. If legal advice or other expert assistance is required, the services of a competent professional should be sought.
Please keep in mind all written materials and power point slides are the intellectual property of the Dussault Law Group. These materials may not be distributed without the express written consent of the authors.

32. Thank You!
Joshua L. Brothers Dussault Law Group (206)