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2	PART 1 Setting objectives The culture of disability Benefit basics Common pitfalls in planning Special Needs Trust basics
3	Definition of Estate Planning I want to provide for myself and my loved ones during my lifetime, and upon my incapacity or death give what I have to who I want, the way I want, when I want, and if I can save every last fee, tax or court cost possible. From Loving Trust
4	Ed Roberts The disability community is a group that any of us could join at any time.
5	Our Quest How do you provide for a disabled beneficiary for 70 years when We don’t know what benefits will be available or the eligibility rules We don’t know if the agencies out there will be available over the beneficiary’s lifetime We don’t know who will be the best trustee
6	Facts of Life Persons with disabilities are living longer and public benefits are often necessary There is no guarantee that public benefits will provide adequate resources over their lifetimes There is no guarantee that public agencies will be there to provide acceptable services and advocacy over a disabled person’s lifetime
7	Typical Timeline for a Child With a Disability Birth - 18 Accepting disability Learning the system IEPs, IPPs, ISPs, IHPs Regional Center if child is developmentally disabled Learn the culture of disability Mainstreaming Choice Access Advocacy Support systems
8	Typical Timeline for a Child With a Disability Age 18 Deeming of parents’ assets to the disabled child ends Child becomes eligible for public benefits based upon sufficient evidence of disability and the child’s low income and resources Legal decision making authority of the parents ends regardless of the circumstances
9	PUBLIC BENEFITS BASICS
10	Benefit Basics
11	Supplemental Security Income
12	Supplemental Security Income
13	"Income test determines how much..." Income test determines how much is received. Resource test determines eligibility
14	Types of SSI Income
15	Basics Of SSI Eligibility Resources Anything that can be converted to cash for support is a resource. If resources exceed $2,000 on the first day of a calendar month, the beneficiary's public benefits will be lost until resources are reduced. Assets that the beneficiary does not have the legal right to demand are not counted for SSI purposes.
16	BASICS OF SSI ELIGIBILITY Exempt Resources A home, if the beneficiary has an ownership interest and it serves as his/her principal residence.
17	BASICS OF SSI ELIGIBILITY Exempt Resources Household goods all together worth no more than $2,000 market value furniture, furnishings, household equipment, personal effects such as clothing, jewelry, items of personal care and education, musical instruments
18	BASICS OF SSI ELIGIBILITY Exempt Resources One automobile to the extent current market value does not exceed $4,500, unless modified for operation by or transportation of a handicapped person (such as a wheelchair van), or necessary for employment, medical treatment, or is necessary to perform essential daily activities.
19	BASICS OF SSI ELIGIBILITY Exempt Resources Items related to the disability
20	BASICS OF SSI ELIGIBILITY Exempt Resources Life insurance policies with cash surrender value, if their total face values amount to less than $1,500, and All term life insurance. A burial plot, or other burial space, worth any amount. Up to $1,500 set aside for burial expenses
21	BASICS OF MEDI-CAL ELIGIBILITY If an SSI beneficiary receives at least $1 of SSI, the beneficiary then receives full scope free Medi-Cal automatically.
22	Benefit Basics
23	In-Home Support Services Services in the home to assist persons who receive SSI and/or Medi-Cal who require services in order to remain safely in their own homes. Includes personal care services, domestic services, related services (meal preparation, laundry services, shopping, etc.) and accompaniment services to medical appointments or programs. An include paramedical services and protective supervision, when necessary.
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27	Social Security Upon the disability or retirement of the parent, an eligible disabled child will receive an amount equal to 1/2 of the parent’s benefit Upon the death of the parent, an eligible disabled child will receive an amount equal to 3/4 what the parent’s SSA benefit.
28	Social Security Example Helen has been disabled from birth, and is receiving $790 in SSI monthly Helen’s father, Earl, retires and receives $1,500 a month. Helen begins to receive $750 per month Receipt of the SSA is unearned income which reduces Helen’s SSI by $730. Helen now receives $90 SSI and $750 SSA
29	Social Security Example Earl, dies and Helen begins to receive $1,125 per month Helen’s SSI is eliminated completely. Helen will lose her MediCal unless she files a Pickle Application
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31	Providing for Persons with Disabilities
32	Common Pitfalls Gift to Minor Act Accounts Unstructured Beneficiary Designations Disinheritance No planning at all
33	California Uniform Transfers to Minors Act (CUTMA) Once the child takes control of the account, the child may then use the money for purposes other than education – regardless of the custodian's wishes. If your family is applying for need-based financial aid, having an CUTMA may reduce the size of the benefits package or result in a finding of ineligibility.
34	California Uniform Transfers to Minors Act (CUTMA) CUTMA accounts are considered available resources for purposes of SSI eligibility Custodian could purchase exempt resources such as wheelchairs, wheelchair vans Larger accounts may require a court ordered trust that creates a reimbursement for Medi-Cal benefits received upon the death of the beneficiary
35	Unstructured Beneficiary Designations Designating a retirement plan, insurance policy or annuity directly to an SSI or MediCal recipient will cause a reduction or elimination of public benefits
36	Unstructured Beneficiary Designations Many IRAs or 401K s have as default that the employees children are beneficiaries. Example – Husband designates Wife as beneficiary of his IRA. Mother predeceases Father and no other designation is made. On Father’s death, the IRA makes the children beneficiaries by default. If one of the children is on SSI or MediCal, benefits are lost until all the funds are spent down.
37	No Planning at All Dying intestate (without a will or trust) will usually leave all or a portion of the estate to the decedent's children. Any child on SSI or MediCal will lose eligibility until the inheritance is either spent down, converted to a exempt resource, or placed in a MediCal Payback Special Needs Trust.
38	No Planning at All A MediCal Payback Trust differs from an estate planning Special Needs Trust because the trust must be established by a parent, grandparent, legal guardian or court, there is a lien upon death for any MediCal used by the beneficiary, and if the trust is established by a court, then the courts will often require costly court accounting.
39	Providing for Persons with Disabilities
40	Types of Special Needs Trusts
41	Setting Objectives Proper planning will focus on achieving as much independence as possible for the disabled beneficiary Benefits alone should not the sole planning objective.
42	Elements of a Special Needs Trust A Trust is a contract to control property for the benefit of a beneficiary to meet some objective A special needs trust is drafted specifically so trust assets are considered not to be "available resources" in calculating the disabled person's eligibility for needs based benefits. Always keep in mind that a Special Needs Trust by its nature means a loss of control over the funds by the disabled beneficiary.
43	Elements of a Special Needs Trust The Social Security Administration describes a discretionary trust as “a trust in which the trustee has full discretion as to the time, purpose and amount of all distributions.” If the beneficiary has no discretion over the distributions, the trust is not counted for SSI eligibility.
44	Elements of a Special Needs Trust The funds in the trust may then be used to supplement the beneficiary’s needs not covered by public benefits without a reduction or elimination of SSI, MediCal of IHSS.
45	Examples -Supplemental Trusts No part of the assets of this trust shall be used to supplant or replace public assistance benefits of any county, state, federal, or other governmental agency which has a legal responsibility to serve persons with disabilities which are the same as or similar to Matthew's.
46	Examples - Discretionary Trusts In making any distribution, the Trustee: Shall consider any other known income or resources of the beneficiary and reasonably available; Shall take into consideration all benefits available from any government agency, such as Social Security disability payments, Medicare, Medicaid (Medi-Cal), Supplemental Security Income (SSI), In-Home Support Service (IHSS) and any other special purpose benefits for which the beneficiary is eligible; Shall consider resource and income limitations of any such assistance program; Shall make expenditures so that the beneficiary's standard of living will be comfortable and enjoyable; Shall not be obligated to or compelled to make specific payments; Shall not pay or reimburse any amounts to any government agency or department, unless proper demand is made by such government agency and reimbursement is required by the State; Shall not be liable for any loss of benefits.
47	Supplemental and Discretionary Special Needs Trusts A Supplemental Special Needs Trust only allows distributions that do not in any way reduce needs based benefits A Discretionary Special Needs Trust allows greater flexibility but requires greater skill in administration.
48	SPECIAL NEEDS TRUSTS Can be a testamentary trust as part of the parent's living trust or will Stand alone Special Needs Trust with a pour-over provision in the parent’s living trust Allows other family members or loved ones to contribute to the trust Can be used now to show pattern of usage The management issues in a Special Needs Trust are different than most Living Trusts Allows greater privacy
49	Part 2 – Our Four Step Process Step 1 –clearly expresses your intent Step 2 – select a management system and team that will fulfill your intent Step 3 – develop a funding plan to provide the resources needed to execute your intent. Step 4 – update and review steps 1-3 periodically
50	The Achieving Independence Trust 4 Step Process
51	The Achieving Independence Trust 4 Step Process
52	The Achieving Independence Trust 4 Step Process
53	The Achieving Independence Trust 4 Step Process
54	The Achieving Independence Trust 4 Step Process
55	Why is expressing intent so important? Many of the public benefits that are critical to disabled persons restrict any control over trust assets. A well executed estate plan is going to clearly state your intent so that in the event that a future Trustee who does not know you is administering the trust, it will be clear what is expected. A bare bones trust can only accomplish limited objectives.
56	Setting out your objectives The trust should set out broad instructions that are not likely to change Example – I wish my son to live in a residential program that allows my son to express his choices and to the extent possible live as he chooses, but still provide supervision to ensure his safety and wellbeing. In the selection of the care manager it is essential that the care manager have experience in psychotropic medications and the side effects connected with those medications The memorandum of intent should reflect more timely and detailed instructions Example - I have inspected the Brown Acre Independent Living Center and in the event of my incapacity or death, I believe that this program meets David’s needs. Please make sure that David is monitored regularly by the care manager, especially regarding his medication because he is prone to severe side effects. Specifically – he is not to receive phenothiazines because he has a history of severe extrapyramidal symptoms. The care manager should consult with Dr Thomas…
57	Residential Needs What kind of housing situation is acceptable? What is not acceptable? Should provision be made for a caregiver to live in the residence? Is it desirable that the beneficiary own a home someday? How is home to be maintained?
58	Social Needs You may wish to specify what social activities you encourage the Trustee to support including [ ] Special Olympics [ ] participating in sporting activities [ ] attending sporting events [ ] attending cultural activities [ ] participation in art programs [ ] participate in religious activities [ ] other ____________________
59	Family You might wish to include a provision expressing your desire that maintaining contact with Grantor's family is a priority. Typical expenditures that might be allowed include [ ]Purchase gifts to acknowledge events such as birthdays, holidays, etc? [ ]Pay for beneficiary to travel to to family events [ ]Pay for family members to visit beneficiary
60	The Achieving Independence Trust 4 Step Process
61	THE IDEAL TRUSTEE Must understand public benefits Will use discretion in the best interest of the disabled beneficiary Can wisely invest and conform to all statutory fiduciary requirements Understands taxes Keeps perfect books Carries insurance, is bondable or has deep pockets Can identify second rate services or abuse Is immortal
62	Choose a management system and team to carry out your intent Many Special Needs Trusts fail because of ill equipped Trustees We have found that a system of checks and balances works best in trust administration.
63	Choose a management system and team to carry out your intent Divide the duties into three categories Financial Can wisely invest and conform to all statutory fiduciary requirements Understands taxes Personal including advocacy, care management, benefits Must understand public benefits and keep up with changes in the law Will use discretion in the best interest of the disabled beneficiary Can identify second rate services or abuse Accountability Keeps perfect book Carries insurance, is bondable or has deep pockets Is immortal
64	Model 1 – the Trustee directed by a Trust Advisory Committee. The Trustee can be directed by a Trust Advisory Committee which can direct distributions or replace the Trustee
65	Model 2 – the Trustee directed by a Care Manager. The Trustee can be directed by a Care Manager. The Trustee manages the funds The Care Manager interacts with the beneficiary The Trust Protector oversees the Trustee and Care Manager from a distance and can replace either for any reason
66	Model 3 – Co-Trustees For smaller trusts, or trusts where the beneficiary can advocate for herself, Co-trustees with the power to seek assistance from benefit, tax and financial advisors may be adequate.
67	Which Model Should you Choose? The choice of which model is right for your situation will depend upon The beneficiary’s disability and unique needs The amount of funds in the trust The need for advocacy and care managers The proximity of the Trustees or advisory committee members
68	SELECTION OF MANAGEMENT TEAM MEMEBERS Family or friends, Professional fiduciary, Trust Company, C.P.A., Private Socialworker or Case Manager, Or a combination of the above.
69	Trust Protector A Trust Protector oversees how the trust is managed, without day to day involvement The Trust Protector reviews accountings and assessments from the care manager The Trust Protector may hire and fire the trustee or care manager without cause A Trust Protector can be a professional, family or friends.
70	Potential Members of the Management Team
71	The Achieving Independence Trust 4 Step Process
72	Funding Your Child’s Special Needs Trust Consider a Trust as a vehicle, the Trustee as the driver, and funding is the fuel to help the Special Needs Trust reach its goal.
73	Trust Centered Planning In California, most people use a Revocable Living Trust to direct their assets upon incapacity or death. A Revocable Living Trust Avoids Probate Allows tax planning Avoids the need of a conservatorship in case of your incapacity Allows for continuity in providing for your loved ones in the event of your incapacity or death.
74	Trust Centered Planning Kathy has multiple disabilities and requires round the clock attendant care paid partially by IHSS, and supplemented by her parents with occasional assistance from her grandparents.
75	Trust Centered Planning Kathy’s parents’ desire is that she live as independently as possible in the family home. With the right assistance, it is possible that Kathy could work which has always been her dream.
76	Trust Centered Planning Kathy’s grandparents want to assist her upon their death. The grandparents each have a substantial retirement plans and would consider leaving a portion of their plan to Kathy – if it does not interfere with her public benefits. They would also like to make gifts now to assist Kathy to achieve her dream of a profession some day.
77	Trust Centered Planning
78	Trust Centered Planning Kathy’s parents home is placed in the living trust, and the living trust is made the owner or beneficiary of all of her parents assets.
79	Trust Centered Planning Kathy’s parents home is placed in the living trust, and the living trust is made the owner or beneficiary of all of her parents assets.
80	Trust Centered Planning
81	Trust Centered Planning
82	Other Funding Options Life insurance Real Estate Cash or investments 529 Plans Retirement plans including 401Ks and IRAs. (requires the assistance of an attorney and financial planner or CPA)
83	The Achieving Independence Trust 4 Step Process
84	Periodic Update and Review The Estate Plan should be periodically reviewed to Ensure all assets are either owned by the trust or make the trust the beneficiary. To update trustees and members of advisory committees Changes in the beneficiary’s condition or eligibility for benefits Changes in your economic situation
85	Workshop Fee Schedule Attendees received a preferred rate if: Schedule your first meeting with an associate within 30 days of attending this workshop Come to the initial meeting with the intake filled out Sign the engagement letter and make the initial payment at the first meeting
86	Fee Schedule