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the website of
Lisa Nachmias Davis,
Attorney at Law

PLANNING FOR THOSE WITH SPECIAL NEEDS
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A family member's special needs may place an enormous financial and emotional strain on the individual and his or her family. 

A person whose needs arise out of a disability occurring during adulthood needs access to all available entitlement benefits--whether Social Security disability or Supplemental Security Income, state supplemental assistance programs, Medicare and Medicaid (Title XIX), property tax exemptions or income tax deductions--and must plan for his or her family at the same time.  A person with a mental illness arising during young adulthood may face special financial hardship, as government benefits do not adequately meet these needs.  The parents of a child whose needs arise out of a developmental disability may be especially concerned that after they are gone their child will still be protected as they have protected the child during their lifetimes.  In each case, the family will want to balance the desire to meet the special needs of one family member while still treating the rest of the family fairly. 

What are the answers to these problems?

Assistance in obtaining all available entitlement benefits. 

Estate planning with "special needs trusts" to benefit the disabled person without affecting entitlements or depleting family resources for non-disabled family members. 

Involvement in settlement negotiations or damage litigation of lawsuits arising from a disabling injury, to ensure that entitlements are preserved and taxes saved before the ink has dried. 

Guidance through court procedures such as the Connecticut probate court proceedings for conservatorships  and for appointment of guardians of mentally retarded persons. 

Help locating private and non-profit sources of assistance including determining appropriate Medicare supplemental insurance. 

Planning for disabled individuals and their families requires a thorough knowledge of the law of entitlements (Social Security Disability, SSI, and state programs, as well as Medicaid and Medicare), as well as more traditional familiarity with tax law, the law of trusts, estates and probate, conservatorships and guardianships, and real estate law. A typical plan for an individual with a disabled family member might require drafting a Will and/or trust agreement, durable powers of attorney, living will and related documents, and designations of conservator in the event of future incapacity (for the individual) and "standby guardian" (for a mentally retarded family member). Quite often, the plan will involve a special needs trust for the disabled family member and coordinating the plan to direct all payments for that individual's benefit through the trust. The plan will generally require evaluating the effect on Title XIX eligibility of planned gifts to family members and rights under Social Security or Medicare. Finally, when planning has not been done, it may be necessary to establish a so-called "OBRA '93" or "payback" trust to enhance the quality of life of the disabled person, while maintaining eligibility for benefits. The disabled client and his or her family must be sure that his or her attorney is knowledgeable in all of these areas. 

A NEW COURT DECISION, Corcoran, explains how trust language can cause the trust beneficiary to lose government benefits.  This decision relies in part on a STATE LAW that has now been in effect for a few years.  The short summary:  if a trust is for someone's "support" then no matter what else the trust says, the trust will be treated as available and affect benefits.  If it doesn't say "support"and the beneficiary has no right to require the Trustee to use the funds for support or medical expenses, and the trust is not established by the beneficiary or spouse, it should not affect benefits, and can remain in place to improve the beneficiary's quality of life as discussed in my article,"How Should the Family of a Disabled Individual Design an Estate Plan?  Part I.

BAD NEWS FOR THOSE ON STATE SUPP:  Parkhurst v. Department of Social Services is a BAD CASE for someone living in a group home or "residential care home" or otherwise receiving State Supplement benefits.  The decision says that if someone sets up an "OBRA '93" payback trust -- described in my article Part II. -- funding of the trust is a TRANSFER under the state supp. program and will cause a potential loss of benefits if you are already a recipient or apply within 2 years; and at the same time the trust is an AVAILABLE ASSET that may cause loss of benefits if the trust assets still remain.  This means that if you have an accident and bring a lawsuit, you may not get much benefit out of the proceeds unless the proceeds are substantial. 

DANGER:  STATE LAWS VARY WIDELY.  Before planning for a family member who lives outside Connecticut, you MUST consult a local attorney familiar with the intricacies of benefits law and trust law in that state.  What is perfect for a trust in Connecticut can be deadly in New Jersey, or Ohio.  Do not try this at home.  You can find an attorney familiar with this are of law on the website for the National Academy of Elder Law Attorneys, naela.com.  Many elder law attorneys also practice in the area of special needs trusts.

How To Help Someone on SSI.  Did you know that when someone is receiving SSI or Medicaid, a family member can often pay for items and expenses DIRECTLY without affecting benefits?  And that a family member can even pay for FOOD, CLOTHING or SHELTER (for example, rent) and the SSI benefit will only go down by 1/3 of the maximum SSI benefit + $20?  For example, if the maximum were $600, that would be only $220.  Obviously $220 is still $220, but if the rent is $800, what makes more sense?  If the person doesn't get SSI but Social Security Disability instead, then it won't affect the Social Security Disability payment by one cent, and almost certainly the payment isn't going to affect Medicaid eligibility either. So the $800 paid to the landlord won't change a thing about the individual's benefits.  By contrast, if the family member gives the person $800 in cash, (s)he will lose ALL SSI and affect Medicaid too. Moral:  CASH HELP IS BAD.  PAYMENTS "IN KIND" ARE GOOD.
 --->  CAUTION:  These statements are generally true but may not be true in any given state; payments may also affect eligibility for benefits other than SSI or Medicaid, so when in doubt, TALK TO THE CASEWORKER. 

Announcement from the Social Security Administration:  "New Tool Helps People Complete Disability Form:  When an adult applies for disability benefits, we complete a Disability Report (SSA-3368).  The form helps us obtain information about an applicant's condition, and is the key to obtaining medical records.  Now you can get tips right over the Internet on how to best complete the 3368.  Just click on any section of the form and you'll get a "plain language" explanation of what we're looking for, why we need the information, and how your answers help us decide if you can get disability benefits.  This new tool is your key to having the Disability Report completed before your appointment.  To take a look, visit http://www.ssa.gov/disabilityformhelp/." 

Review Trusts for the Disabled.  Recent legislation makes clear that any trust using the word "support" may be counted as "available" to the beneficiary when applying for benefits.  Specifically, the State will consider "available" trust assets if the beneficiary has the legal right to compel payment for support or medical care.  This was already the state's interpretation of the case law, but the statute makes it far more difficult, if not impossible, to argue to the contrary. 

Connecticut's "Working While Disabled" Medicaid Program.  Public Act No. 00-213 began a revolutionary new Medicaid program in Connecticut.  Individuals with a "disabling condition" may continue to qualify for Medicaid if they are working, even with (a) income up to $75,000 per year and (b) countable assets of up to $10,000.  However, at higher levels of income they will contribute to the cost of care by paying a premium computed as 10% of income (including spousal income) exceeding 200% of the federal poverty limit.  This program is new, and policy guidance has only recently been issued.  The program is operated by the Connecticut Department of Social Services, which explains the program in more detail on its website.  The information also explains the Department's "Personal Care Assistance" program. 

For further information on entitlement programs available to the disabled, send email to davis@sharinglaw.net, or write to me at the address shown.  I can only provide general information, and will not provide advice about a particular case without a formal engagement. Writing to me does not create an attorney-client relationship.

Please click on the link for my article 'Planning with transfers for the disabled' previously published in the newsletter of PLAN of Connecticut, Inc.   Other articles on this topic include "How Should the Family of a Disabled Individual Design an Estate Plan?  Part I and Part II.

Sites and resources of interest

  A list of important cases, many of them relating to Supplemental Needs Trusts.

List of articles referred to on this page:

DISCLAIMER:  THIS INFORMATION IS NOT PROVIDED AS  LEGAL ADVICE AND CREATES NO ATTORNEY-CLIENT RELATIONSHIP.  NO ENDORSEMENT IS INTENDED BY ANY REFERENCES HEREIN.  PLEASE CONSULT YOUR OWN LEGAL AND FINANCIAL ADVISORS BEFORE TAKING ANY ACTION. 

I can only provide general information, and will not provide advice about a particular case without a formal engagement. Writing to me does not create an attorney-client relationship.
 

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Lisa Nachmias Davis
Attorney at Law
205 Church Street, Third Floor
New Haven, CT 06510
Phone: 203-776-4400
Fax: 203-774-1060 or 776-4411
davis@sharinglaw.net