Presenting a live 90-minute webinar with interactive Q&A Special Needs Trusts and Guardianships: Protecting Government Benefits for the Disabled Crafting and Administering First- and Third-Party Trusts and Addressing the Interplay Between SNTs and Guardianships THURSDAY, DECEMBER 20, 2012 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Michael J. Keenan, Attorney, Keenan Law , Glastonbury, Conn. Beth C. Manes, Counsel, Wacks & Hartmann , Morristown, N.J. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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SPECIAL NEEDS TRUSTS & GUARDIANSHIPS: PROTECTING GOVERNMENT BENEFITS OR THE DISABLED Michael J. Keenan, Esq. Keenan Law, LLC Glastonbury, CT michael@keenan-law.com www.keenan-law.com 5
PRESERVATION OF GOVERNMENT BENEFITS 1 . General support trusts not appropriate 2 . Informal approach not appropriate 3 . Update beneficiary designations 4 . Inter vivos trust preferred 6 www.keenan-law.com
DISTINGUISHING CHARACTERISTICS OF A SPECIAL NEEDS TRUST 1 . Beneficiary has no control over trust 2 . Trust will supplement, but not replace government benefits 7 www.keenan-law.com
TWO TYPES OF SPECIAL NEEDS TRUSTS 1 . Third-party trust 2 . Self-settled trust ("D4A" Trust) 8 www.keenan-law.com
TRUSTEE CONSIDERATIONS 1 . Financial management experience 2 . Good bookkeeping 3 . Understands trust provisions 4 . Has sound judgment & discretion 5 . Genuinely interested in beneficiary's well- being 6 . Discuss conflicts of interest 7 . Provide a “Letter of instruction” 8 . Consider a trust protector 9 . Consider a professional trustee 9 www.keenan-law.com
PUBLIC BENEFITS CONSIDERATIONS 10 www.keenan-law.com
DEFINITION OF "DISABILITY" 1 . Substantial gainful activity is not possible 2 . Physical or mental impairment 3 . Condition will result in death or last for at least 12 months 11 www.keenan-law.com
PROGRAMS THAT DO NOT HAVE ASSET/INCOME LIMITATIONS 1 . Medicare 2 . Social Security Disability Insurance (SSDI) 12 www.keenan-law.com
MEDICAID 1 . Categorical eligibility 2 . Asset limitation 3 . Exempt assets 4 . Spend-down 5 . Gifting not allowed 13 www.keenan-law.com
SUPPLEMENTAL SECURITY INCOME (SSI) 1 . Monthly cash payments 2 . Eligibility requirements similar to Medicaid (except gifting) 3 . Effect of income 14 www.keenan-law.com
TAX ISSUES 15 www.keenan-law.com
INCOME TAX 1 . Third-party special needs trust 2 . Self-settled special needs trust 16 www.keenan-law.com
GIFT TAX 1 . Irrevocable third-party special needs trusts 2 . Revocable third-party special needs trusts 17 www.keenan-law.com
ESTATE TAX 1 . Third-party special needs trust 2 . Self-settled special needs trust 18 www.keenan-law.com
Guardianship and Special Needs Trusts Beth C. Manes, Esq. www.maneslaw.com beth@maneslaw.com 19
Guardianship Varies from state to state Guardianship v. Conservatorship Some states have adopted the Uniform Guardianship and Protective Proceedings Act (UGA) 20
Guardianship Who needs a guardian? UGA definition of incapacity: “unable to receive and evaluate information or make or communicate decisions to such an extent that the individual lacks the ability to meet the essential requirements for physical health, safety, or self-care, even with appropriate technological assistance.” UGA §102(5). 21
Guardianship Who should be the guardian? Things to consider: Is the ward a minor? Location of ward and proposed guardian. Physical and emotional needs of the ward. Age of the proposed guardian. 22
Guardianship How broad should guardianship be? Person Property Limited 23
Guardianship Procedure under the UGA 1. Petition 2. Personal Service 3. Visitor 4. Evaluation a) Guardianship b) Conservatorship 5. Hearing 24
Guardianship Burden of Proof To establish guardianship or conservatorship: clear and convincing evidence To remove guardianship or conservatorship: prima facie evidence If possible, ward can give consent 25
Guardianship Monitoring under the UGA Guardians: 30 days then annually Conservators: must file a plan and an inventory within 60 days then annual reports Both guardian and conservator must make recommendations as to whether the guardianship or conservatorship should be continued or modified Bond may be required 26
Guardianship Duties of Guardian Decisions regarding health, education, maintenance and support Ward shall participate in decisions to the extent possible Guardian shall consider values and desires of ward 27
Guardianship Duties pursuant UGA §314(a)-(b) To become or remain personally acquainted with the ward and maintain sufficient contact with the ward to know of the ward’s capacities, limitations, needs, opportunities and physical and mental health. To take reasonable care of the ward’s personal effects and bring protective proceedings if necessary to protect the property of the ward. 28
Guardianship Duties pursuant UGA §314(a)-(b) To expend money of the ward that has been received by the guardian for the ward’s current needs for support, care education, health and welfare. To conserve any excess money of the ward for the ward’s future needs, but if a conservator has been appointed for the estate of the ward, the guardian shall pay the money to the conservator, at least quarterly, to be conserved for the ward’s future needs. 29
Guardianship Duties pursuant UGA §314(a)-(b) To immediately notify the court if the ward’s condition has changed so that the ward is capable of exercising rights previously removed. To inform the court of any change in the ward’s custodial dwelling or address. 30
Guardianship Powers pursuant UGA §315(a) Apply for benefits, both public and private Take custody of and establish residency for ward If conservator has not been appointed, Guardian may initiate action to compel a person to support the ward Consent to medical care, with some limitations 31
Guardianship Powers pursuant UGA §315(a) Consent to marriage or divorce Delegate certain responsibilities to the ward Consent to adoption of the ward. 32
Guardianship Rights pursuant UGA §316(a)(b) Reasonable compensation Reimbursement Not liable for acts of ward 33
Guardianship Reports pursuant UGA §317(a)-(b) Ward’s participation in decisions and the need for continuing guardianship; Living arrangements; Services provided to the ward (including but not limited to medical educational); Activities of guardian (including visits with ward); If ward is institutionalized, guardian’s opinion as to appropriateness; Plans for future care; Opinion as to need for, or recommended changes to scope of, guardianship. 34
Conservatorship Difference between guardianship and conservatorship Responsible for financial decisions Must maintain fiduciary accounts (separate from other wards) Inventory of assets Annual accountings 35
Conservatorship Be wary of ward who wants to maintain some control Small allowance Bank card Gifting Estate planning Medicaid planning 36
Special Needs Trusts Self-settled – person must be disabled Third-party – can be in anticipation of disability Pooled/Community 37
Self-settled Trusts To qualify for exclusion from being counted as asset of beneficiary (pursuant to U.S.C. §1396(d)(4)(A): Trust must be for the benefit of one individual who is: • Disabled • Under the age of 65 38
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