Special Needs Trusts

1. Special Needs Trusts Presented by: Attorney William J. Brisk Law Office of William J. Brisk 1340 Centre Street, Ste 205 Newton Centre, MA 02459 Phone 617 244-4373; Fax: 617 630-1990 www.briskelderlaw.com billbrisk@briskelderlaw.com

2. How do you provide for a disabled person? • Public benefits: • SSI • Food stamps • Housing subsidies • Medicaid

3. Eligibility for public benefits depends on low income/low resources, generally can’t have more than $2,000 of countable assets. NOT counted, however, are: • Residence • Clothing • Personal effects • Certain trusts, i.e. SNT and pooled trust

4. How are such Trusts funded? • By beneficiary him/herself. First Party Trust • From own funds or gifts. • From tort recoveries. Examples. • Created by parent, grandparent, Guardian (??) or by court. • By parents, relatives, or friends. Third Party Trusts. • Can be funded at any time. • Often, however, best funded by “pour over” Will into pre-existing trust (revocable) that can be changed as needs or law change.

5. In order to qualify as a Special Needs Trust must include the following: • Established by a parent, grandparent, guardian, or by order of a court. • Irrevocable • Grants Trustee broad discretion over distributing income and principal to the “sole beneficiary.”

6. Names a beneficiary who is DISABLED (i.e. must meet SSI standard which is” unable to participate in gainful employment” • Must be under the age of 65 when Trust is created! • Must explicitly deny right to use funds to cover the costs of food, shelter or housing or allow for setoffs of federal benefits in certain circumstances. • Grants Medicaid priority to recover what it spent on the primary beneficiary’s health care before disbursements are made to contingent beneficiaries.

7. So what can a SNT cover: • Medical care NOT covered by Medicaid, e.g. most dental work, some therapies, elective surgery. • Education or educational services & related costs • Psychological support services • Recreating • Clothing (exempted in 2005) • Transportation, including a vehicle used for transporting the beneficiary. • Telephone and cable TV • Electric wheelchair and other mobility aids

8. Mechanical beds. • Travel, outings, and entertainment expenses • Caretakers to accompany beneficiary to such travel, outings, and entertainment. • Private rehabilitation services. • Private case management to assist beneficiary or to aid trustees in performing their duties. • Medication, drugs, or treatment prescribed by a physician or other healing art practitioner for which public benefits do not provide as well as for over-the-counter medication or personal care products. • Surgery not covered by Medicaid • A principal residence or part thereof allocable to the beneficiary. Issue: is it better to own it outright or hold it in the trust itself?

9. Caution. Obtain expert guidance in: • Creating the Trust • Funding the Trust • Filing annual tax returns for Trust • For guidance on distributions and management • Expertise has expanded since National Academy of Elder Law Attorneys increased its 5,000+ attorneys’ mission to help the disabled as well as the elderly some five years ago. www.naela.org