3/14/2012 Financial & Estate Planning For APPROACH TO ESTATE - PDF document

3/14/2012 Financial & Estate Planning For APPROACH TO ESTATE PLANNING Those With Special Needs Special Needs Trusts  Analyze Your Assets  Analyze Your Family Situation Northern Kentucky Traumatic Brain Injury Conference March 23, 2012 Presented by:  Discuss Your Goals Jefferey M. Yussman Wyatt, Tarrant & Combs, LLP 502.562.7544  Consider Any Tax Planning Needs jyussman@wyattfirm.com 6 th Annual Northern Kentucky TBI Conference March 23, 2012 www.bridgesnky.org COMMON DOCUMENTS OTHER THINGS TO CONSIDER IN ESTATE PLANNING  Beneficiary Designations  Wills  Life Insurance  Retirement Accounts  Trusts  Transfers on Death  Powers of Attorney  Guardianship as Alternative  Title on Assets  Living Will/Health Care Surrogate  Special Planning for those with a Traumatic Brain Injury  Special Needs Trusts  HIPAA (Health Care Privacy) Release Government Benefits Why Consider a Special Needs Trust?  SSDI  Unable to do any substantial gainful activity due to disability  Failure to do so may cause loved one to lose  Medicare  SSI  Means tested  Medicaid  Medicaid  Other Government Assistance or Grants  SSI 1

3/14/2012 Medicaid Covered Services Medicaid Overview  Long-term care  Physician services  Federally based  Hospital  Limited state resources  Adult day care  Administered through state or county agency  Federal minimum standards, but states allowed flexibility  Home health care Estate Planning Options/ Third Party Special Needs Trust 3rd Party SNTs  Protects resources without sacrificing government  Disinherit benefits  Gift to child with disabilities  Wholly discretionary trust  Distribute to sibling  Individual with disabilities must be sole beneficiary of  Supplemental Needs Trust trust during his lifetime  Payback provision Trustee’s Discretion Supplemental Needs Trust  Sole, absolute and unfettered discretion  Income and principal  No payback requirement  No support standard  Can direct corpus at death of  Beneficiary – no right to compel beneficiary to any individual  Express intent  No age limit  Emergency clause 2

3/14/2012 First Party Special Needs Trusts For: Funding Third Party SNT  Life Care Plan  Unplanned Inheritance  Life Insurance  Personal Injuries  ILIT  Matrimonial Action  Crummey Powers  Etc.  Beneficiary Designations 42 USC 1396p First Party Special Needs Trusts Options:  First Party Special Needs Trust  (d)(4)(A) trust  Accept the money  Payback trust  First-party trust  Transfer  Pooled Special Needs Trust  Spend down  (d)(4)(C) trust  Pooled trust  Self settled SNT First Party and Pooled Special Needs (d (4)(A) Trusts Special Needs Trusts  Established by the individual’s parent, grandparent, legal  Disregarded as available income and resources guardian or court  Created with the assets or income of the individual with  No SSI or Medicaid penalty period disabilities when under age 65  Contributions after age 65 are subject to transfer penalty  Inheritance provisions  PI lawsuit  Matrimonial action 3

3/14/2012 Pooled Trust Why Create a d(4)(A) Trust?  Non-profit 501(C)(3) organization as trustee  Reimbursement is only for Medicaid, not all public  Must be irrevocable benefits  Beneficiary may be any age  Reimbursement is based on actual Medicaid  Medicaid asset transfer issue after expenditures, not prevailing market costs age 65  No interest  Some services not readily available in the private market Moral of Our Story Pooled Trust  If you FAIL to PLAN …  Created and managed by non-profit association  May be established by the individual  Separate accounts maintained for the benefit of individuals with disabilities You are PLANNING to FAIL  Modified payback provision Solution  PLAN to SUCCEED by considering a special needs trust for your child or other loved one with special needs 4