1. Presented by Sponsored by Introduction to Special Needs Planning Public Benefits, Trust Drafting & Implementation November 16, 2011 Harry S. Margolis

2. 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 Why Special Needs Planning is a Great Area of Practice

3. Available Programs: ♦ Medicaid ♦ Medicare ♦ Supplemental Security Income (SSI) ♦ Social Security Disability Income (SSDI) ♦ Housing ♦ Veteran Benefits Public Benefits

4. 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 Benefits Medicaid

5. ♦ 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 Benefits Medicare

6. ♦ Restrictive ♦ $2,000 limit on countable assets ♦ Federal benefit level plus state supplement ♦ Dollar-for-dollar income offset (after $20 disregard) ♦ In-kind income ♦ Upper limit on reduction for housing and food Public Benefits Supplemental Security Income

7. ♦ 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 Benefits Social Security Disability Income

8. ♦ 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 Public Benefits Housing

9. Veterans with disabilities may receive benefits for: Service Connected Disabilities Non-Service Connected Disabilities Income and Resource limitations apply SNTs not currently recognized by the Veteran’s Administration Veteran Benefits

10. ♦ Management ♦ Structure ♦ Asset protection ♦ Eligibility for benefits Trusts as Primary Planning Tool

11. 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

12. Structure: ♦ Succession of trustees ♦ Trustee oversight ♦ Care committee ♦ Trust protector ♦ Succession of beneficiaries ♦ Power of appointment ♦ See ASNP Model Trust Trusts

13. ♦ Predators ♦ Creditors ♦ Poor decision-making ♦ Alternative of relying on siblings Asset Protection

14. ♦ 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 Public Benefits

15. ♦ 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

16. ♦ 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 of state for Medicaid expenditures made (d)(4)(A) or Payback Trusts

17. ♦ 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 trustswww.specialneedsanswers.com (d)(4)(C) or Pooled Trusts

18. ♦ By parents and grandparents ♦ Discretionary vs. more limited ♦ Trend towards more discretionary, less limited ♦ Intent language ♦ Revocable vs. irrevocable Third-Party Trusts

19. ♦ Usually at death ♦ May include contributions from others (grandparents, aunts, uncles) ♦ Life insurance ♦ Retirement plans ♦ How much? Third-Party Trust Funding

20. ♦ Guide trustees ♦ Provide in depth information about beneficiary, likes and dislikes, medical information, parents’ hopes for child ♦ Updating necessary ♦ Often seems to fall by the wayside Letter of Intent

21. ♦ 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 Personal Injury Cases

22. The Bad: ♦ Poor investments ♦ Poor reporting ♦ Difficulty following SSI rules ♦ Education burden Choice of Trustee: The Family

23. The Good: ♦ Knows the beneficiary’s needs ♦ Knows service providers ♦ Care ♦ Continuity Choice of Trustee: The Family

24. The Bad: ♦ Don’t know beneficiary ♦ Don’t know benefit rules ♦ Arbitrary ♦ Lack of control ♦ Trust officers changing ♦ Banks changing Choice of Trustee: Professional Trustees

25. The Good: ♦ Investment acumen ♦ Ability to say “no” ♦ Proper accounting ♦ Proper tax reporting ♦ No conflict of interest ♦ Ability to set up accounts properly Choice of Trustee: Professional Trustees

26. Choice of Trustee

27. 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

28. 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?

29. Who will take over from parents? Advocacy and Monitoring Care Parents are primary advocates and care providers Who will take their place? ♦ Other family members ♦ Professional care managers ♦ Guardian ♦ Attorneys ♦ Trustees Coordinating care

30. Who will take over from parents? 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

31. hsm@margolis.com Sponsored by Harry S. Margolis Margolis & Bloom, LLP