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Special Needs Trusts: Protect Your Child's Financial Future
Ações de livro
Comece a lerDuração: 412 páginas3 horas
- Editora:
- NOLO
- Lançado em:
- May 3, 2019
- ISBN:
- 9781413326246
- Formato:
- Livro
Descrição
Leave money to a loved one with a disability—without losing benefits
Use a special needs trust to provide financial security for your child (or anyone) with a disability, without jeopardizing important government benefits. Funds in a special needs trust do not count against eligibility for benefits and can be used to improve the quality of your child’s life.
This book provides everything you need to know about special needs trusts—whether you make one yourself with this book or have an attorney draft one for you. The authors explain:
how special needs trusts work the trustee’s role ways to pass important information to successor trustees the pros and cons of joining a pooled trust.With Downloadable Forms -Trust forms and sample letters are provided in the book and are available for download at nolo.com (details inside).
Ações de livro
Comece a lerDados do livro
Special Needs Trusts: Protect Your Child's Financial Future
Duração: 412 páginas3 horas
Descrição
Leave money to a loved one with a disability—without losing benefits
Use a special needs trust to provide financial security for your child (or anyone) with a disability, without jeopardizing important government benefits. Funds in a special needs trust do not count against eligibility for benefits and can be used to improve the quality of your child’s life.
This book provides everything you need to know about special needs trusts—whether you make one yourself with this book or have an attorney draft one for you. The authors explain:
how special needs trusts work the trustee’s role ways to pass important information to successor trustees the pros and cons of joining a pooled trust.With Downloadable Forms -Trust forms and sample letters are provided in the book and are available for download at nolo.com (details inside).
- Editora:
- NOLO
- Lançado em:
- May 3, 2019
- ISBN:
- 9781413326246
- Formato:
- Livro
Sobre o autor
Kevin Urbatsch is a principal of the special needs and settlement planning firm, Urbatsch Law Firm P.C. in Walnut Creek, California. He is a nationally recognized expert in the unique planning needs of individuals with disabilities and their families. Mr. Urbatsch is a charter member of the national organization, the Academy of Special Needs Planners. He writes and is a frequent lecturer both locally and nationally on planning for persons with disabilities, primarily concerning special needs trust drafting and administration.
Relacionado a Special Needs Trusts
Amostra do livro
Special Needs Trusts - Kevin Urbatsch
8th Edition
Special Needs Trusts
Protect Your Child’s Financial Future
Kevin Urbatsch & Michele Fuller-Urbatsch
ISSN: 2167-5716 (print)
ISSN: 2325-4920 (online)
ISBN: 978-1-4133-2623-9 (pbk)
ISBN: 978-1-4133-2624-6 (ebook)
This book covers only United States law, unless it specifically states otherwise.
Copyright © 2007, 2009, 2011, 2013, 2015, 2017, and 2019 by Nolo.
All rights reserved. The NOLO trademark is registered in the U.S. Patent and Trademark Office. Printed in the U.S.A.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without prior written permission. Reproduction prohibitions do not apply to the forms contained in this product when reproduced for personal use. For information on bulk purchases or corporate premium sales, please contact the Special Sales Department. Call 800-955-4775 or write to Nolo, 950 Parker Street, Berkeley, California 94710.
Please note
We believe accurate, plain-English legal information should help you solve many of your own legal problems. But this text is not a substitute for personalized advice from a knowledgeable lawyer. If you want the help of a trained professional—and we’ll always point out situations in which we think that’s a good idea—consult an attorney licensed to practice in your state.
About the Authors
Kevin Urbatsch is a principal of the boutique estate planning firm, the Urbatsch Law Firm, P.C. in Pleasant Hill, California. He is a nationally recognized expert in the unique planning needs of individuals with disabilities and their families. Mr. Urbatsch is the National Director of the Academy of Special Needs Planners. He writes and is a frequent lecturer both locally and nationally on planning for persons with disabilities, primarily concerning special needs trust drafting and administration.
Michele Fuller-Urbatsch is the owner of the Michigan Law Center, PLLC. The firm focuses solely on planning that preserves and protects the assets of persons with disabilities. Ms. Fuller-Urbatsch currently serves as Chair of the Elder Law and Disability Rights Section of the State Bar of Michigan, as an Advisory Board Member of the Academy of Special Needs Planners, and as a board member of the Michigan chapter of the National Academy of Elder Law Attorneys. She frequently publishes and speaks for national, state, and local organizations that address planning issues for people with disabilities.
Table of Contents
Your Legal Companion for Special Needs Trusts
1 People Who Can Benefit From a Special Needs Trust
People With a Permanent or Severe Disability Who Are Unable to Earn a Living
Someone Who May Get Better
Someone Who May Need a Special Needs Trust Later
Someone Who Is Eligible for Medicare or SSDI
Someone Who Needs Assistance Managing an Inheritance
Alternatives to a Special Needs Trust
2 How Trustees Can (and Cannot) Use Trust Funds
SSI Income and Resource Limits: An Overview
Assets in the Special Needs Trust
How Trustees Use Special Needs Trust Funds
Exempt Resources
Gifts of Cash
Payments for Food or Shelter
Valuing Gifts of Food or Shelter from Other Sources
3 Getting Money Into a Special Needs Trust
Who Can Set Up a Special Needs Trust
Assets You Can Put in a Special Needs Trust
How Much Money Will Your Loved One Need?
How to Leave Money to a Special Needs Trust
Try to Head Off Mixing the Beneficiary’s Property With Trust Property
4 The Trustee’s Job
The Trustee’s Basic Duties
Working With a Guardian or Conservator
Investing Trust Property
Spending Trust Money for the Beneficiary
Managing a Remainder Beneficiary’s Property
Preserving Eligibility for SSI and Medicaid
Paying Taxes
Going to Court
Letter to Trustee
5 Choosing Trustees
An Overview of Your Options
Picking the Ideal Trustee
Naming the Initial Trustee
Naming Successor Trustees
Naming Cotrustees
Naming a Professional or Corporate Trustee
Using a Trust Protector or Trust Advisory Committee
Signing Up for a Pooled Trust
6 Joining a Pooled Trust
An Overview of Pooled Trusts
Anticipating Your Use of a Pooled Trust
Can You Use a Pooled Trust?
How Pooled Trusts Work
Joining a Pooled Trust
What Happens When the Trust Ends
7 ABLE Accounts
Qualifying for and Opening an ABLE Account
Funding an ABLE Account
Spending ABLE Account Funds
Medicaid Payback
Is an ABLE Account Right for You or Your Loved One?
8 Creating Your Special Needs Trust
Drafting the Trust Document
Making the Trust Legal and Effective
Keeping the Special Needs Trust Up to Date
Sample Special Needs Trust
9 Finalizing and Funding Your Special Needs Trust
Making Your Trust Legal
Taxes
Opening the Trust’s Deposit Account
Incorporating the Trust Into Your Estate Plan
10 Preparing a Letter of Intent
How a Letter of Intent Helps
Before You Write Your Letter
What to Include in Your Letter
After You Write Your Letter
11 Where to Get More Help
Lawyers
Paralegals
Certified Financial Planners
SSA and Medicaid Personnel
Keeping Up to Date
Books
Glossary
Appendixes
ALetter to Trustee
Letter to Trustee
Managing a Special Needs Trust
Documenting the Authority of Successor Trustees
BSample Letter of Intent
Sample Letter of Intent
CUsing the eForms
Using the RTFs
List of Forms
Index
Your Legal Companion for Special Needs Trusts
If you have been providing care for a child or another loved one with special needs, you’ve no doubt thought about what will happen when you’re no longer able to give that care. Of course, you can leave property to your loved one, but—as you are probably aware—doing so without some careful planning will almost certainly jeopardize his or her ability to receive benefits under the Supplemental Security Income (SSI) and Medicaid programs. Unless you make the right legal arrangements, benefits simply won’t be available until the inheritance is used up.
A special needs trust allows you to protect your loved one’s government benefits while continuing to supplement his or her special needs. This book explains how special needs trusts work and how you can set one up yourself. We give you the documents you need with plenty of explanations, examples, and easy-to-understand instructions. It will take a little time and concentration, but you can do it. When you’re done, you will know that your loved one’s benefits will be protected when you’re gone.
Step by step, this book:
• explains how special needs trusts protect the government benefits of your loved one (the trust’s beneficiary)
• describes the role of the trustee (the person who disburses the funds in the trust) and helps you figure out who should serve as trustee (during your lifetime) and successor trustees (after your lifetime)
• shows you how to draft a special needs trust and make it legally valid
• tells you how to set up a trust bank account and how to modify your estate plan to leave money to the trust at your death
• shows you how to leave a detailed letter or diary about the beneficiary’s needs
• explains how to keep up on SSI and Medicaid rules, file taxes, keep track of successor trustees, and make sure that the trust continues to meet your loved one’s needs
• details the duties of the trustees who will serve when you’re gone, and
• suggests that you consider using a pooled trust
(a trust for many beneficiaries, managed by a professional) if you don’t want to set up your own special needs trust.
This book also shows you how to work with experts to make the most of your trust. For example, at times you may want to consult a lawyer, an accountant, or a financial planner. We suggest when that might be a good idea, and help you find the support you need. And because you’ll have a solid understanding of the important issues, you’ll be able to work confidently with professionals.
Before proceeding, understand that the trust we discuss here cannot be set up in the following circumstances:
• by the special needs person him- or herself. For example, someone with special needs, who receives an inheritance or other money, cannot use our trust to hold the money and protect that person’s eligibility for government benefits.
• by readers who have or will have an estate plan of their own, such as a will or living trust. These readers should work with an estate planning attorney (perhaps the one who drafted their documents) to set up a special needs trust within that framework.
Chapter 1 gives you more information on the limitations of who can use the trust in this book, and options for these readers.
Finally, even if you don’t make the trust provided in our book, you’ll find that simply reading it will give you a wealth of information. You’ll be prepared for an informed discussion with a lawyer whom you consult to set up a special needs trust.
This Book’s Special Needs Trust Will Not Protect Assets Owned by a Person With a Disability
This book will not help to protect assets that belong to a person with a disability. Rather, it helps you protect that person’s eligibility for government benefits when you give that person assets as a gift or an inheritance.
When a person with a disability already owns assets—perhaps from a personal injury award, retirement plan, life insurance policy, or an unplanned-for inheritance—the owner can take steps to protect those assets, but not through the type of trust described in this book. Trusts that can help protect the assets that already belong to a person with a disability are first-party
trusts that go by a variety of names, such as first-party special needs trust,
payback special needs trust,
litigation special needs trust,
Miller Trust,
pooled SNT,
(d)(4)(A) SNT,
and (d)(4)(C) SNT.
All of these first-party trusts must meet federal and state rules designed to keep applicants from sheltering their property in a trust in order to meet program eligibility requirements. These trusts are also generally subject to payback
rules that require that the state be reimbursed for medical expenses after the trust beneficiary dies. Because each state has very specific rules that constantly change, if you want to establish one of these trusts, you’ll need the help of an experienced special needs planning lawyer in your state. See Chapter 11 for information about finding and working with such a lawyer.
This book is designed to help families leave money to a loved one with a disability in a third-party
special needs trust. The rules are a lot easier to follow in third-party planning than in first-party planning, simply because the government wants to encourage people to leave money for the benefit of their loved ones with disabilities. By contrast, it does not want people to stash their own money in a trust in order to stay eligible for public benefits. To discourage this, the rules for first-party trust planning are more restrictive than those for third-party planning.
Get Updates and Forms at This Book’s Companion Page on Nolo.com
You can download the special needs trust document, the letter to trustee, the sample letter of intent, and the form, the Florida witness statement, and the worksheet, Questions to Ask a Potential Private Professional Trustee, at:
www.nolo.com/back-of-book/SPNT.html
When we have important changes to the information in this book, we’ll post updates on this dedicated web page (we call it the book’s companion page).
Be sure to check out the Wills, Trusts, and Probate section on Nolo.com for a wide variety of articles on estate planning.
RESOURCE
Consult the glossary for help with legalese. In Nolo’s usual plain-English style, we explain a complicated legal topic with a minimum of legalese. However, when you interact with lawyers, banks, accountants, and other professionals in the course of establishing and running your trust, you’ll find that these folks use legal terms frequently. So that you’re not left scratching your head, you’ll need to be familiar with the lingo. In addition to defining legal terms as they come up in the text, we provide a glossary of legal terms for your reference. You’ll find the Glossary after Chapter 11.
CAUTION
Do not use the trust document in this book in Louisiana. While Louisiana residents will find the discussions in this book useful for understanding how special needs trusts work, the trust provided by this book was not designed to be used in Louisiana. If you are a Louisiana resident and want to make a special needs trust, see an experienced attorney.
We hope that this book will give you not only the legal documents you need, but also peace of mind from knowing that you’ve taken steps to protect your loved one after you’re gone.
CHAPTER
People Who Can Benefit From a Special Needs Trust
People With a Permanent or Severe Disability Who Are Unable to Earn a Living
Someone Who May Get Better
How the Definition of Disabled
Is Changing
Planning With Recovery in Mind
Someone Who May Need a Special Needs Trust Later
Someone Who Is Eligible for Medicare or SSDI
Someone Who Needs Assistance Managing an Inheritance
Alternatives to a Special Needs Trust
Leaving Money to a Friend or Relative
Leaving Money Directly to Your Loved One
Using a Pooled Trust
Private Health Care and the Affordable Care Act (ACA)
Medicare
Medicaid
Special needs trusts enhance the quality of life for people with a disability, by maximizing the resources available to them. It preserves their eligibility for Supplementary Security Income (SSI) and Medicaid (which together pay for food, shelter, and medical care, but little else). The special needs trust can pay for additional things that make life better.
The following sections explain in detail which groups of people will benefit from a special needs trust. If you’re unfamiliar with how Medicare and Medicaid work, or need a refresher, take a look at our brief summary of these programs, which includes the Affordable Care Act (Obamacare), at the end of this chapter.
People With a Permanent or Severe Disability Who Are Unable to Earn a Living
Special needs trusts are most commonly used for people who have permanent or severe disabling conditions. These people likely will qualify for government assistance from the SSI and Medicaid programs their entire lives.
It’s important to understand that a person with a disability, as that term is commonly understood, won’t necessarily qualify for SSI or Medicaid. For purposes of these assistance programs, the government defines disability
as the inability to do any substantial gainful activity by reason of any medically determinable physical or mental impairment. This condition must be expected to result in death or has lasted or can be expected to last for a continuous period of not less than 12 months.
So, in order to qualify for SSI or Medicaid, the two qualifications are: The person has a disability that will last at least a year or is expected to result in death; and the person must be unable to engage in SGA.
But we aren’t done yet. How, exactly, does the government measure substantial gainful activity?
SGA is a dollar amount, a maximum amount that a person with a disability may earn each month while maintaining eligibility for benefits. In 2019, the SGA figure is $1,220 per month ($2,040 if blind). The Social Security Administration reasons that an individual who is able to earn at least this amount per month is able to engage in competitive employment in the national economy. (Of course, this is contrary to what many people would view as a reasonable figure.)
Keep in mind that the Social Security Administration’s definition of disability
for benefit purposes is not the same as you will encounter in other contexts. For example, the federal Fair Housing and Amendments Act forbids discrimination against tenants who have a disability, but the definition of disabled has nothing to do with the tenant’s earning capacity. (Instead, it focuses on being substantially impaired with respect to major life activities, being regarded as such, or having a history of this condition.)
Only United States citizens automatically qualify for SSI benefits when they meet these qualifications. Noncitizens can qualify for SSI if they are legally in the country and meet some additional qualifications.
Low-income people 65 or older are also eligible for SSI (this group must meet asset and income requirements, but not the disability test). When someone under the age of 65 applies for SSI or Medicaid benefits, the Social Security Administration makes a determination as to whether the person is disabled. (Chapter 11 lists references to the rules and other sources of law regarding SSI and Medicaid rules that affect special needs trusts.)
People with blindness, developmental disabilities, Down syndrome, organic brain damage, chronic mental illness, physical paralysis (paraplegia), or congenital disabling afflictions, such as cerebral palsy or cystic fibrosis, have been the most common automatic beneficiaries of government benefits for persons with disabilities. But many other physical and mental conditions meet the Social Security Administration’s definition of a disability that is likely to last a lifetime. Some of them are listed below.
Conditions That Can Cause Permanent Disability: A Partial List
agoraphobia
Alzheimer’s disease
amputations
bipolar disorder
cancer (many types)
congenital heart disease
diabetes mellitus (Type 2)
emphysema
fetal alcohol syndrome
fragile X syndrome
hemophilia
HIV
Huntington’s chorea
kidney malfunction
leukemia
lupus
multiple chemical sensitivity
multiple sclerosis
muscular dystrophy
obsessive-compulsive disorder
organic brain syndrome (OBS)
Parkinson’s disease
phenylketonuria (PKU)
severe autistic disorder
sickle cell anemia
spina bifida
Tay-Sachs disease
thalassemia
traumatic spine damage
Turner’s syndrome
Someone Who May Get Better
Many disabling conditions are not permanent. For example, many combat veterans suffer from posttraumatic stress disorder, which produces a combination of mental, emotional, and physical symptoms, making it impossible to work for years, but not necessarily for a lifetime. Even then, however, it may make a lot of sense to create a special needs trust because it’s impossible to tell just how long the disability will last.
How the Definition of Disabled
Is Changing
Many factors make it hard to predict whether someone who currently has a disability will always need to rely on SSI and Medicaid.
Changes in the workplace. For SSI eligibility purposes, someone who can’t work is disabled. But, as the workplace changes, so does the definition of disabled. For instance, when most people worked on farms, someone with a developmental disorder might not have been considered disabled for the purposes of an SSI-type program, because formal learning wasn’t necessary to heft a pitchfork, milk cows, plant corn, or do housework. In 21st-century high-tech America, however, a pronounced difficulty in learning makes it difficult to find a job. On the other hand, technological advances in the medical field have made it possible for people with paraplegia or severe visual impairment to perform a large range of productive work. People with disabilities who are able to work and earn a certain amount of money will not meet the SSA definition of disabled.
New treatments for old disabilities. Modern medical techniques and discoveries in areas such as gene therapy, stem cells, and neurotransmitters (molecules that facilitate nerve impulse transmissions) offer the possibility of cures for a broad range of conditions that currently are incurable. Parkinson’s and Alzheimer’s disease are two devastating conditions that may be amenable to treatment in ten or 20 years. Similarly, techniques to regenerate damaged or severed nerve cells may someday offer relief to people who cannot move their limbs because of a spinal injury. Mentally disabling conditions also are reaping the benefits of modern medical technology. The pharmaceutical industry has developed drugs that let people with a large range of formerly incapacitating mental conditions engage in productive activity.
Technological advances. Profound changes in technology have ameliorated some physically disabling conditions. For example, hearing aids or surgery largely eliminates the disability of deafness for many Americans. More change is on the way in fields such as robotics and nanotechnology. For example, research is underway to help people whose arms or legs have been amputated to regain near-full functionality with the help of intelligent
prostheses and to develop a computerized interface that helps blind people experience visual feedback from the environment.
Planning With Recovery in Mind
The SSI and Medicaid programs have not, by and large, taken medical and technological advances into account when determining disability. A condition that prevented employment in 1950 is often assumed to do so today. However, this could change at any time. Your loved one may not always be eligible for SSI and Medicaid, either because disabilities are defined differently or because he or she enjoys a dramatic recovery.
There’s no way to know whether someone’s disability will improve with time, either naturally or through medical and technological intervention. But even so, you can create a special needs trust without worrying that you will needlessly tie up your loved one’s inheritance. The trust document takes into account the possibility that the trust, for whatever reason, may not always be necessary, and allows the trustee to terminate the trust.
EXAMPLE: Jeanne leaves $100,000 in her will to a special needs trust she created for the benefit of her daughter Cassie, who is ten and has been diagnosed with schizophrenia. Jeanne named Joanne, Cassie’s aunt, to take over as trustee when Jeanne dies. The trust gives the trustee complete discretion as to how the funds may be spent for Cassie’s benefit, provided that disbursements do not disqualify Cassie for SSI and Medicaid.
The trust document also states that if someday Cassie does not need or does not qualify for SSI or Medicaid, the person serving as trustee may terminate the trust and distribute the remaining trust money to Cassie outright.
Twenty years later, when Jeanne dies, the $100,000 passes to the trust. Cassie is now 30 years old and the Social Security Administration’s guidelines no longer consider her disabled for purposes of SSI and Medicaid. Joanne, the person serving as trustee, terminates the trust and distributes the property to Cassie outright.
If you are certain that a loved one with a disability is likely to get better, another option is to leave the funds to that person outright, with the expectation that the recipient will create a first-party special needs trust if needed. (A first-party special needs trust is
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