Should You Consider a Special Needs Trust?
As life expectancy continues to improve, parents in the twenty-first century may be the first to die before their CF offspring. Over the last forty years, the average age for someone with CF has gone from eleven to thirty-seven years. With improved treatments and
medications, with ongoing research and testing on the clinical side, with better trained CF Centers held to high peer review, some doctors are predicting almost a "full" life expectancy for many CF patients in the twenty-first century.
Most CF adults will thus establish an independent work life. Possible future disability due to the progression of CF will be covered by Social Security Disability Insurance, SSDI benefits after only a few years of paying into the system. Under current law, benefits will include monthly payments for life and Medicaid. There will also be CF adults who may never be able to work and thus may have to be supported through Social Security Income, SSI. It is these CF children that we must be concerned about when considering a SNT and planning our estates so that they can continue to receive benefits.
Attorney Michael Gilfix in Palo Alto specializes in this area and says, "Leaving money in an Estate Plan will not automatically care for a special needs relative." Most disabled individuals who receive, or might receive monies in the future from SSI and Medicaid, are those protected by an SNT.
Why Need It?
Here's what Kevin Urbatsch, Esq., had to say in a recent paper he wrote on this subject: "Both SSI and Medi-Cal are only available to the poor. Persons who are eligible for SSI benefits are automatically eligible for Medi-Cal. Persons not eligible for SSI benefits may be eligible for Medi-Cal through other programs (e.g., if they are "medically needy"). If a person receives SSI or Medi-Cal benefits while ineligible for them, the benefits received must be repaid. In addition, if disqualified, an individual must apply again to reestablish benefits. The process is complex and time consuming."
The primary tool for estate planning to benefit persons with a disability who receives SSI is a specialized SNT. A welldrafted SNT establishes a management team, sets up a system for the beneficiary's lifelong advocacy and care, plans for future modifications in public benefits and trust law, and directs distribution of remaining assets after the death of the disabled beneficiary. Even a well crafted SNT will not work if trustees do not understand all that is required. This is why selection of a management team/trustees is typically the most important decision to be made.
An SNT that is funded with assets and is being used for a disabled beneficiary must be irrevocable. It is, however, possible to have a revocable third party SNT. A common practice among attorneys experienced in this area is to establish a stand-alone revocable SNT, alongside the settler's revocable living trust.
Tying up money in a trust means planning for "what if"? If the parents pass away, who will be the trustee? Should a family member be the trustee? Where would you want money to go if your beneficiary passes away? This is all part of the contingency plan. You may choose supplemental beneficiaries if your primary beneficiary passes away.
Administration of both SSI and Medi-Cal are also subject to agency administrative guidelines which can change frequently. The Social Security Administration's is available: http://policy.ssa.gov/poms.nsf. -- and Medi-Cal is governed by guidelines shown here: http://www.cms. hhs.gov/manuals. Unlike SSI and Medi-Cal, Social Security Disability Insurance and Medicare have no income or resource requirements. Many persons with a disability and their families confuse Social Security disabled child benefits with SSI benefits because the cash payments are almost the same and both checks come from the Social Security Administration.
Reprinted with the permission of Cystic Fibrosis Reserach, Inc. © Cystic Fibrosis Research, Inc., 1999-2008
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