1. Presented by www.ober.com Estate Planning, Special Needs Trusts a.k.a. Supplemental Care Trusts and Making Decisions for Loved Ones Victoria Z. Sulerzyski, Esquire 100 Light Street Baltimore, MD 21202 410.347.7304 | vzsulerzyski@ober.com www.ober.com

2. Presented by www.ober.com ESTATE PLANNING 2

3. What is an Estate? Bank accounts Broker accounts Personal residence Vacation home Automobiles Personal belongings 3

4. What Else is an Estate? Mortgages and notes receivable Insurance on the decedent’s life, in certain circumstances IRAs, company retirement accounts and annuities Powers of appointment, if held on date of death Transfers during decedent’s life 4

5. Probate Process of changing title to property Assets subject to probate include all the decedent’s assets except those passing by operation of law or via beneficiary designation 5

6. Non-Probate Property Annuities with beneficiary designation IRAs and retirement plan accounts with beneficiary designation Assets in trust Jointly titled property with right of survivorship 6

7. Probate Basics Appointment of a Personal Representative Identification and collection of decedent’s assets Payment of decedent’s debt and administration Distribution of assets to heirs in accordance with will or with state direction for decedent without a will 7

8. Probate Disadvantages Public exposure to asset holdings Court process Legal and accounting fees for court accountings and other legal filings Can cause disagreements among family members Title transfers –wrong results 8

9. What is Estate Planning? A good estate plan will -- Control my property while I am alive and able Take care of myself and my loved ones if I become disabled, 9

10. What is Estate Planning? And Then – After My Death… Gives what I have To whom I want, The way I want, and When I want, While saving every tax dollar, professional fee and court cost possible! 10

11. The Estate Planning Toolbox Durable Power of Attorney Wills Different types Trusts Revocable Irrevocable Charitable Special Needs Health Care Documents Living Will HIPAA Release HCPOA 11

12. Durable Power of Attorney Allows others to manage your assets or financial affairs Durable = even if you are incapacitated Power terminates on your death 12

13. What Does a Will Do? And Do I Need One? 13 A Will: At a minimum, everyone needs one, – even if they also have a trust Effective only upon death Must go through probate Does not provide for disability or incapacity Public Document

14. Last Will & Testament 14 Simple Wills Wills and Springing Trusts Pour over Wills At death, your will goes through probate before your assets are distributed

15. What is a Revocable Living Trust? Created by a document signed by YOU Contains your instructions for your assets at your death The trustee you choose can manage your assets if you become incapacitated Assets titled in the name of the trust do not go through probate 15

16. How Does a Revocable Living Trust Work? You transfer your assets from your name to the name of your trust You keep control of the assets You can buy/sell them as before No separate tax return for trust You can change or cancel your trust 16

17. Example Bob and Sue Smith, as Tenants by Entireties, would change to: Bob and Sue Smith, trustees under the Trust dated January 1, 2012. 17 Bob and Sue Smith Bob and Sue Smith, trustees under trust dated January 1, 2012

18. With a Revocable Living Trust You maintain control Privacy Disability – Incapacity planning Estate taxes may be reduced in certain cases Avoids some/most probate fees 18

19. What Else Do I Need? Health Care Documents: Living Will Health Care Power of Attorney HIPAA Release Why do you want to worry about these? 19

20. Maryland Inheritance Tax For persons that pass on after 7/1/2000: 10 percent on property passing to certain individuals. 20

21. Presented by www.ober.com SPECIAL NEEDS TRUSTS A.K.A. SUPPLEMENTAL CARE TRUSTS 21

22. Special Needs Trust ("SNT") Planning is a Part of Estate Planning For Multiple Generations For Multiple Branches of a Family For Different Types of Disabilities 22

23. What is a Trust? All Trusts have three (3) parties: Grantor: Person making the Gift to the Trust Trustee: Person managing the Gift(s) in the Trust Beneficiary: Person receiving the benefits from the Trust 23

24. The Need for Special Needs Trusts Special Needs Population is Growing More "conditions" considered disabled Advances in medical treatment Financial Pressures on SSI, Medicaid and Medicare Aging population, increasing health care costs Anticipate reduction or limitations on benefits 24

25. Special Needs Trusts Intent: To SUPPLEMENT the benefits provided to a beneficiary by any government program. NOT to supplant the government benefits. Improve the quality of the beneficiary’s life! 25

26. Examples of How an SNT is Used… For therapy not covered by Medicaid or SSI For vehicle purchase or modification to accommodate a disability Recreational activities and equipment Travel Quality of Life Trusts 26

27. Self-Settled SNTs D(4)(a) Trusts: Funded by Beneficiary Assets Often from lawsuit award Payback Provision Highly regulated – many rules to comply 27

28. Pooled SNTs – D(4)(c) Self-Settled SNT – from beneficiary’s funds Managed by Non-Profit, in a Separate Account for Beneficiary Any remainder can stay in Non-Profit, instead of being used to pay back the State 28

29. Third Party SNTs Family Created SNTs Funded by Parent, Grandparent, Guardian Created during lifetime Created at death through Will or Living Trust Can be funded by life insurance Cannot use the disabled individual’s assets No Payback Provision 29

30. Forms of Third Party SNTs State Approved Maryland Discretionary Trust Act Limits on what types of benefits can be paid Common Law Private, Discretionary Trust Only limitation is to ensure that benefits paid do not disqualify federal or state benefits 30

31. SNT Issues & Concerns: II Need sophisticated Trustees that understand federal and state programs for disabled children and adults Need sophisticated Trustees that understand investing – all Trustees have fiduciary duty of care to the beneficiary For Self-Settled SNTs, Trustee must be diligent about expenditures and paybacks SNTs do not allow a parent to forego support obligations (for a minor) 31

32. Types of Government Programs for Disabled Children Model Waiver for Medically Fragile Children: Child Needs Hospital or Nursing Facility Level of Care Must be Chronically Ill or Severely Impaired Child Requiring 24-hour Inpatient Care, but Without Home Care Services, Child will Require Hospital, Nursing Facility Parent’s Income and Assets are Waived for Eligibility Maximum Amount of Children Permitted on Waiver = 200 32

33. Government Programs (Continued) Medical Assistance for Families: Eligibility Income Limitations Provides Child with Services Such as Low Cost or Free Prescriptions, Doctor Visits, Emergency Room Visits, Hospital Stays or X-RAY and Lab Services 33

34. Government Programs (Continued) Autism Waiver Serves Children with Autism Who Have IFSP and/or IEP Child Must Meet Institutional Level of Care and Be Served in Community Through Waiver Programs Services to Support Child in Community include Respite Care, Family Training, Service Coordination, Intensive Individual Support Services Eligibility Based on Child’s Income; Not Parents Child Must Meet Autism Waiver Medical and Technical Criteria Current Wait List 34

35. Government Programs (Continued) SSI – Social Security Income Income and Asset Limitations – Family and Child – Less Than $2,000 Asset Limitation Child Must Have Physical and/or Mental Condition that Results in "Marked and Severe Functional Limitations" Condition must have Lasted or be Expected to Last at least 12 Months or Must be Expected to Result in Death When Child Turns 18 – May Qualify for SSI Based on Child’s Income and Assets 35

36. Government Programs (Continued) SSDI – Social Security Disability Income Available to a Disabled Adult Child who has a Disability that Began Prior to Child Attaining Age 22 Parents Must Be Receiving Social Security Retirement of Disability Benefits or Must Have Died Eligible for Social Security Benefits 36

37. Presented by www.ober.com MAKING DECISIONS FOR LOVED ONES 37

38. Making Decisions for Loved Adults Surrogate Decision – Making if no Advance Directive in Place Guardian, if one has been appointed Spouse Adult Child Parent Adult Sibling Friend or Relative Requires Two Physician Certificates Guardian of the Person Guardian of the Property 38

39. Questions 39