& Priest LLC
129 Church Street
New Haven, CT
Content on Page updated on January 7, 2015
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.
planning with "special needs trusts," better titled "third party" or
trusts," to benefit the disabled person
without affecting entitlements or depleting family resources for
Assistance in other types of special needs trusts, "payback" trusts, that can be established with an individual's own assets (or under ABLE legislation, that may be more practical than special needs trusts), but which pay the State back at death for medical assistance received during lifetime.
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 insurance -- supplemental insurance or "Obamacare" insurance under the Affordable Care Act.
Planning for disabled
individuals and their families requires a
thorough knowledge of the law of entitlements (Social Security
SSI, and state programs, as well as Medicaid and Medicare) and newly
evolving insurance laws, 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
and/or trust agreement, durable powers of attorney, living will and
documents, and designations of conservator in the event of future
(for the individual) and "standby guardian" (for a developmentally
member). Quite often, the plan will involve a "third party"
supplemental needs trust for
the family member with special needs, and then coordinating the plan to
direct all payments
that individual's benefit through the trust. If the amount is small,
other options might be an "ABLE" account or a pooled trust
account. The plan will generally
evaluating the effect on Title XIX eligibility of planned gifts to
members and rights under Social Security or Medicare. Finally, when
has not been done, and the estate passes directly to an individual with
needs-based entitlements, it may be necessary to establish a so-called
or "payback" special needs trust, ABLE account or pooled trust, in orer
to enhance the quality of life of the disabled
while maintaining eligibility for benefits. Or it may not be necessary
-- it will be important to be sure, since the trust options have
restrictions that should not be undertaken lightly. The disabled
client and his
her family must be sure that his or her attorney is knowledgeable in
of these areas and does not apply a one-size-fits-all solution.
"Blog" of News Items (begun
they invented blogs)
Trusts and IRAs: Just wrote a new article explaining the arcane rules that apply when you want to name a trust as beneficiary of your IRA or retirement plan, "Naming a Special Needs Trust as Beneficiary of your IRA or Retirement Plan" (published in the August, 2014 edition of the Voice, the newsletter of the Special Needs Alliance)
HUSKY D (Connecticut term) is low-income
based only on "tax" income
("MAGI") for those aged 19-64 who aren't on Medicare -- this form of
has no asset test and eff.
1/1/14, no estate recovery -- no
payback at death for benefits received during lifetime.
Husky D covers all the same things as "regular" Medicaid including
vision and dental care. However, a person on Husky D during his or her
first 24 months of
Social Security Disability (before Medicare is available) will face a
rude shock when Medicare kicks in. True, Medicare is not needs-based or income-tested at
all -- that's great. Also true -- Medicare savings plans (QMB,
SLIMB, ALIMB) are based solely on MAGI income as well, with no asset
test; those with higher income can purchase a Medicare supplemental
policy. The PROBLEM is that Medicare and the MSPs are not as
comprehensive as Husky (Medicaid). In order to be eligible for
Husky C (the Medicaid that is available to someone not eligible for the
other Husky programs including Husky D), individuals are limited to
$1,600 of "counted assets" and have a "spend down" or deductible if
income exceeds certain low thresholds. In effect, the newly
disabled will have 24 months to plan what to do with any assets they
have or may receive, or whether they will put up with Medicre and QMB
and pay privately for dental, vision, and any special waiver services
that are only there for those on Husky C.
(REVISED) Will there be "estate recovery"? Under
Medicaid rules, when a
receives Mediciad benefits OVER AGE 55, or at any age for care in a
nursing facility, the State will file a claim for reimbursement against
that person's estate. The State of Connecticut implemented low-income
adult Medicaid as early as 2010. Although recent legislation
prohibits "estate recovery" for those receiving Husky D eff. 1/1/14, if
you benefited from Husky D prior to 2014, and were over 55, remember
that your home and other assets will have to repay the State when you
die. (Unless exceptions apply: no recovery if you are survived by
a spouse or minor or disabled child.) This problem could also
arise for grandparents caring for grandchildren who receive Husky A if
the grandparent also receives benefits.
out NAMI's useful "Special
Needs Estate Planning System"
introduction to special needs trusts, with a host of useful pointers
for those planning to establish a trust for a loved one. Walk
through it (and consider a donation to NAMI).
Tax info in article written for the Special
newsletter,the Voice. I was fortunate to be
asked to join the Special Needs Alliance four years ago, in 2006 - a
national network of attorneys who work with
trusts and help disabled individuals and their families. A couple
of years ago, as a contributor to Exceptional Parent magazine on behalf
of the Special Needs Alliance, I was finally able to summarize my
thoughts on the difficult issues of choosing a trustee for a special
needs trust and taking care that you really understand what you are
signing, in my article Absolute Discretion: Understanding
the Trustee Provisions in Your Child's Special Needs Trust. My partner Shawn
O'Sullivan and I wrote a concise summary on the way these trusts are
Special Needs Trusts." Sign up
to receive the Voice
on the Alliance's website.
A 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.
FOR THOSE ON STATE SUPP: Parkhurst v. Department of Social
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.
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
expenses DIRECTLY without affecting benefits? And that a family
can even pay for FOOD or SHELTER (for example, rent) and the
benefit will only go down by 1/3 of the maximum SSI benefit +
For example, if the maximum were $733, that would be only
Obviously $244.33 is still $244.33, but if the rent is $800, what makes
sense? If the person doesn't get SSI but Social Security
instead, then it won't affect the Social Security Disability payment by
cent, and almost certainly the payment isn't going to affect Medicaid
either. So the $800 paid to the landlord won't change a thing about the
benefits. By contrast, if the family member gives the person $800
cash, (s)he will lose ALL SSI and affect Medicaid too. Moral:
HELP IS BAD. PAYMENTS "IN KIND" ARE GOOD.
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/."
While Disabled" Medicaid
Program. Also known as "SO-5," this sub-category of
the Mediciad program in Connecticut started in 2000 and provides
another alternative (besides QMB, for SSDI recipients) to help avoid
the annoying "spenddown" problem. Under SO-5, individuals with a
"disabling condition" may
to qualify for Medicaid if they are working, even with (a)
up to $75,000 per year and (b) countable assets of up to $10,000.
at higher levels of income they will contribute to the cost of care by
a premium computed as 10% of income (including spousal income)
200% of the federal poverty limit. Even self-employed individuals
may qualify if they earn enough to pay self-employment tax--
For further information on entitlement programs available to the disabled, send email to email@example.com, 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.
Sites and resources of interest
-- click to read more.
list of important cases, many of them relating to Supplemental
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
FINANCIAL ADVISORS BEFORE TAKING ANY ACTION.
can only provide general information, and will
not provide advice about a particular case without a formal engagement.
to me does not create
an attorney-client relationship.
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