SNT in New Jersey


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SNT in New Jersey
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  • {"11":"To qualify for SSI, an individual must meet the Social Security Administration’s definition of “disabled” and have limited assets and income. SSI can be impacted as follows:\nIt is reduced, dollar for dollar, if the individual has more than $____ in unearned monthly income, such as gifts, interest or rent. \nIt is reduced by one dollar for every two dollars earned if the individual has earned income (wages) above $_____ a month.\nIt is reduced by one third if the individual receives in-kind support and maintenance (i.e., food and shelter).\nFor eligible individuals, SSI pays up to $___ a month for food and shelter.\n","39":"As we’ve seen from Nathan’s situation, planning can make the difference between just getting by and enjoying a higher quality of life.\nThe first step is considering how you – and your child – envision the future. \n[Additional point]\nWhat unforeseen challenges could arise, such as medical complications?\n","45":"If there is an SNT in place, anyone wishing to bequest assets from a retirement plan, insurance policy, etc. should be told to name the SNT, rather than the child, as beneficiary.\nParents with more than one child who wish to pass assets equitably can provide for the child with special needs by funding the SNT with life insurance.\nFunding an irrevocable SNT removes the transferred assets from the parent’s taxable estate.\n","12":"A growing number of parents over age 65 are caring for adult children with special needs. As parents retire, become disabled or die, their children become eligible to receive their Social Security benefits as follows:\nIf a parent who is eligible for Social Security is retired or disabled, the child receives an amount equal to ½ of the parent’s benefit.\nIf a parent who was eligible for Social Security dies, the child receives an amount equal to ¾ of what the parent was receiving or would have received at retirement.\nIf a child is receiving SSI, it can be reduced, dollar for dollar, by Social Security. A large Social Security benefit can even disqualify the child for SSI, triggering the loss of Medicaid. The child then must reapply for Medicaid separately. \nA special needs attorney can help you plan ahead for this type of situation.\n","40":"The next step is writing it all down. \nThe Memorandum of Intent should include ample information to help anyone involved in your child’s future care understand the child’s unique personality, strengths, challenges, needs, etc. It also should provide details about all aspects of the child’s lifestyle, including medical and rehabilitation needs, recreational activities, educational expectations and work goals. For example, under “Residential Directions,” the document may state that the child will one day own a home or that a live-in caregiver will be given rent-free accommodations in the home. \nThe Memorandum of Intent is not a legally binding document. But, because it can contain information not appropriate for SNT documentation, it can enhance the trustee’s understanding of the child’s situation and needs.\n","46":"If the individual with special needs is competent, at legal age, he or she should put in place critical estate-planning documents, including a will, advance directive and medical power of attorney.\nIf the individual is not competent, a parent or other individual can be named as guardian or, in extreme cases, conservator of both the individual and the estate.\nParents must be named as guardians to continue making legal decisions for a child who has attained legal age.\nThe role of guardian or conservator can be challenging when an individual is developmentally disabled and/or mentally ill.\n","13":"Government decides amount of in-home support offered to Medicaid recipients.\nIn-home support can include paramedical services.\n","41":"Once you’ve described your child’s desired lifestyle, you’ll need to determine what it will cost and whether he or she will have adequate resources.\nWhen estimating your child’s future income, consider whether you will be receiving Social Security benefits and/or whether your child will qualify for SSI, have earned income from employment, or have unearned income, such as from investment returns.\nWhen considering monthly expenses, list costs for items under such categories as:\nHousing\nCare assistance\nPersonal needs\nEducation\nTransportation\nMedical/dental\nFood\nSocial/recreational\nYour child’s expenses may exceed his or her income. If so, the shortfall represents the minimum amount that should be set aside in an SNT.\n","30":"[Note to speaker: replace “autism” with relevant condition based on audience.]\nOnce families understand the role of public benefits, they can make decisions about their children’s future. Planning ahead is critical to preserving a child’s quality of life. Let’s consider Nathan…. \nWhile Nathan’s mom is alive and able-bodied, Nathan will continue to live at home and mom will make his medical and financial decisions. Nathan receives Social Security because his dad was eligible for benefits before he died. Nathan’s mom is not currently eligible for Social Security.\n","47":"Pooled trusts, established by disability organizations, provide an alternative for families with limited assets.\n","42":"An SNT offers a good way to preserve public benefits while providing the supplemental funds needed for a higher quality of life. Assets in the SNT do not disqualify the beneficiary from public benefits because they are owned by the trust. The trustee distributes assets for the benefit of the beneficiary according to strict guidelines. \nIn Nathan’s case, the parents might have funded the SNT with life insurance and left the assets accumulated over their lifetime to their daughter. This would have allowed them to preserve Nathan’s quality of life by maximizing public and private resources, while still meeting other important estate planning goals and preserving harmony between brother and sister. \nAn SNT also can be tailored to meet individual situations, such as the need for an advocate, care manager or conservator.\n","31":"What will happen to Nathan?\nAfter Nathan’s mom dies, his SSI will increase but his resources will not be sufficient to preserve his quality of life.\nNathan will need someone to make his medical and financial decisions. He also will need a place to live if he is unable to stay in the family home. And he will need a way to pay for medical expenses. \n","43":"Once parents decide to establish an SNT, they should carefully consider who will assume the role of trustee. The trustee’s responsibilities are complex and errors can result in the child losing public benefits.\nWhether the trustee is a family member, attorney or corporation, it is important to name a successor trustee. Some families also set up a Trust Advisory Panel, which allows members (parents and siblings, advocates. others) to weigh in on important decisions regarding the trust. \nAdditionally, the trustee may be directed to or choose to involve others in the execution of duties. For example, the trustee may hire an investment manager or be directed by the trust to retain an advocate or care manager who will oversee the personal needs of the beneficiary. \n","32":"What plan of action could Nathan’s mom make to protect him after her death? \nNo plans: If Nathan inherits assets under mom’s will, he will be disqualified from SSI and be forced to live on the inheritance and income from Social Security and work programs. When the inheritance is gone, Nathan will qualify for SSI again but have no supplemental income to preserve quality of life.\nDisinherited: If mom leaves all assets to Nathan’s sister with the understanding that she will care for Nathan, he will remain eligible for SSI but could become destitute if the sister cannot or will not comply with the mom’s request.\nNon-SNT Trust: If Nathan’s mom creates a trust that is not an SNT, income and principal will be counted as his assets and he will lose SSI.\nThird-Party SNT: If Nathan’s mom establishes a third-party SNT, Nathan will keep SSI and benefit from supplemental funds, which the trustee will distribute. The trust can be structured to help ensure the involvement of people important to Nathan. [optional:] The trust also may require and provide money for periodic monitoring of Nathan’s caregivers. At Nathan’s death, there will be no “payback” to Medicaid.\nFirst-Party SNT: If Nathan has his own assets, his mom can establish a first-party SNT. This works in the same way as the third-party SNT except that, at Nathan’s death, any funds remaining in the trust are subject to a Medicaid payback.\n"}
  • SNT in New Jersey

    1. 1. Planning for a Loved One With Special Needs in Your Trust and Trust Based Planning for Parents and Grandparents of Incapacitated Persons with Mild or Advanced Developmental and Other Chronic Disabilities
    2. 2. Presented by Fredrick P. Niemann, Esq. Elder Law, Asset & Estate Protection Planning, Medicare, Medicaid and Veteran’s Benefit Assistance Lawyers www. Visit me at Hanlon Niemann, PC 3499 Route 9 North, Suite 1F Freehold, NJ 07728 Phone: (888) 800-7442
    3. 3. Fredrick P. Niemann, Esq. Fredrick P. Niemann offers his clients over 30 years of accomplished practice in the law. He is a member of the National Academy of Elder Law Attorneys, the Guardianship and Conservatorship Committee of NAELA, Monmouth County Probate and Estate Committee and the Monmouth County Chancery Practice Committee. Mr. Niemann is one of the few attorneys in New Jersey, accredited by the Veteran’s Administration, to apply for Aid and Attendance benefits for Veterans and/or their spouses.
    4. 4. Legal Wit   What’s wrong with lawyer jokes?  Lawyers don’t think they’re funny, and nobody else thinks they’re jokes. How can you tell when a lawyer is lying?  His lips are moving.
    5. 5. Cont.  What’s the difference between a good lawyer and a great lawyer?  A good lawyer knows the law. A great lawyer knows the judge. The first thing we do, let’s kill all the lawyers. Shakespeare
    6. 6. Facts of Life 1. Persons with disabilities are living longer and public benefits are often necessary. 2. There is no guarantee that public benefits will provide adequate resources over the disabled person’s lifetime. 3. There is no guarantee that public agencies will provide services and advocacy over the disabled person’s lifetime.
    7. 7. What Does Planning Involve? Preserving your loved one’s financial security and quality of life Addressing key issues: Those key issues are: Understanding the role of public benefits today Making assumptions about public benefits in the future Using estate planning/trusts to protect your assets for the financial security of your loved one’s future
    8. 8. Part 1: Understanding Public Benefits
    9. 9. Public Benefits at a Glance Financial Benefits Supplemental Security Income (SSI)  Means tested: Income and asset limitations for eligibility Social Security (SS) & Social Security Disability Insurance (SSDI)  Not means tested but subject to work credits or parents’ eligibility
    10. 10. Public Benefits at a Glance Medical Benefits Medicaid  Automatic with SSI  Must apply for SS/SSDI for first 2 yrs Medicare  After two years of SSDI
    11. 11. Supplemental Security Income (SSI) Must meet SSA’s definition of “disability” and have limited assets/income Provides monthly income for food/shelter Gateway to Medicaid / in-home support services
    12. 12. Social Security (SS) / Social Security Disability Insurance (SSDI) Social Security for individuals:  Disabled before age 22 and  With parents eligible based on their work record if retired, disabled or deceased SSDI for individuals with work record Social Security benefits may reduce or eliminate SSI benefits if greater than monthly SSI benefit
    13. 13. Medical Assistance & Support Medicaid:  SSI recipients automatically receive Medicaid  Covers “medically necessary” services, equipment, hospitalization  In-home services needed to live at home: personal care, housekeeping, cooking, transportation to doctors  SS & SSDI individuals must apply for Medicaid Medicare:  Medical coverage, including doctors, hospital, skilled care  Individuals with SS or SSDI eligible for Medicare after 2 years of eligibility
    14. 14. How Benefits Work Together SSI Medicaid SSDI Medicare
    15. 15. Part 2: Making Decisions About the Future
    16. 16. Typical Timeline for a Child With a Disability Upon Attaining Age 18  Deeming of parents’ income and resources to the disabled child ends.  Child becomes eligible for public benefits based upon evidence of disability and the child’s low income and resources – parents’ resources not considered in determining child’s eligibility.  Parental decision-making authority ends Guardianship may be necessary.
    17. 17. Providing for Persons with Disabilities Pitfalls to commonly used eligibility strategies: ¦ Uniform Gift to Minors Act Accounts (UGMA or POD Accounts) ¦ Unstructured Beneficiary Designations ¦ No planning at all
    18. 18. Uniform Gifts to Minors Act (UGMA) Accounts ¦Once the child takes control of the account ( age 18 or 21), the child may then use the money for purposes other than education -- regardless of the custodian’s wishes. ¦ UGMA accounts are considered available resources for purpose of SSI eligibility.
    19. 19. Unstructured Beneficiary Designations Naming an SSI, beneficiary Medicaid recipient or minor child as the beneficiary of a retirement plan (401k,IRA, etc.), life insurance policy annuity or any other resource, investment, asset (ie. brokerage account, CD’s, money market, etc.) will cause a reduction or elimination of public benefits.
    20. 20. No Planning at All Dying intestate (without a will or trust) will usually leave all or a portion of the estate of a single parent, person to the decedent’s children. ¦ Any child receiving SSI or Medicaid will lose eligibility until the inheritance is either spent down, converted to a exempt resource, or placed in a Special Needs Trust.
    21. 21. Providing for Persons with Disabilities: Special Needs Trust Basics Purpose - To preserve the disabled person’s eligibility for needs-based governmental benefits while providing assets which may be used to supplement public benefits in order to improve the disabled person’s quality of life.
    22. 22. Third Party SNT 1. Established with assets owned by a third party (ie: parents, grandparents, aunts, uncles) for the benefit of the disabled person. 2. Usually established and funded by the parents, relatives or friends of the disabled adult child as part of an estate or gifting plan. 3. Other children can be named as remainder beneficiaries after death of disabled person.
    23. 23. Third Party SNT (cont’d) 4. Third Party SNT may be revocable and inter vivos, or irrevocable and testamentary. 5. No need to pay Medicare or Medicaid liens before funding. 6. No age limit for disabled beneficiary. 7. “Pay-back” to the State of NJ, Medicaid and Medicare provision not required (doesn’t matter if beneficiary is an adult or minor)
    24. 24. The Golden Rule The golden rule in SNT planning - the trustee should make payments on behalf of the beneficiary directly to third party vendors for equipment or services which are not food or shelter. For example, distributions directly to a retailer for a radio or television, to an airline for a plane ticket, or to a companion/aide for services rendered are not income to the beneficiary.
    25. 25. Objectives Should be Expressed in The SNT and Memorandum of Intent The trust should set out broad instructions that are not likely to change. Example - “I wish that my child live as independently as possible in the least restrictive environment”.
    26. 26. Objectives Should be Expressed in the SNT and Memorandum of Intent The memorandum of intent should reflect more timely and detailed instructions. Example - “I have inspected the Monmouth County Independent Living Center and, in the event of my incapacity or death, I believe that this facility meets my son David’s needs. Please make sure that David is monitored regularly by the care manager, especially regarding his medication because he is prone to frequent side effects”.
    27. 27. Follow-Up Steps: (1) Select Resources Select a combination of resources that will guarantee adequate funds for the disabled child’s lifetime, such as insurance, savings, investments, family assistance, etc., and change the ownership of each asset to the trustee of the SNT.
    28. 28. Follow-Up Steps: (2) Remove Child as Beneficiary Remove the disabled child as the beneficiary from all of the parents’, and others relatives’, financial programs, i.e., employer sponsored retirement plans, IRAs, KEOGHSs, life insurance policies, joint accounts of all types, brokerage and financial. A. This is 1 of the 10 Commandments for asset protection planning.
    29. 29. Follow-Up Steps: (3) Meet With Caregivers Hold a meeting with all interested parties, i.e., the Guardian, all Trustees and Successor Trustees and all siblings, to review the estate planning documents, discuss plan and management of trust assets.
    30. 30. Case Study: Nathan Current situation: 18-year-old with autism Lives with mom Income from work programs, SSI, Social Security (from dad who is deceased) Limited personal assets (clothing, tv) Qualifies for Medicaid
    31. 31. Case Study: Nathan Future situation: Who will make health care decisions? Who will make financial decisions? Where will he live? How will his medical expenses be paid?
    32. 32. What Plan Could Nathan’s Mom Make? Possible Options: Make no decisions/plans Leave money to Nathan Disinherit Nathan Leave money to a future caregiver Establish third-party SNT for Nathan Establish first-party SNT for Nathan
    33. 33. Example: Distributions from a Supplemental Needs Trust Directly to an SSI Beneficiary Jill is the trustee of a special needs trust established by her deceased mother, Paula, for the benefit of Paula’s disabled daughter and Jill’s sister, Anne. Anne’s living expenses, including rent, food, transportation and clothing, total approximately $2,000 per month. Jill sends Anne a check on the first of every month for $2,000 so Anne can pay her expenses. Since Anne is receiving cash income in excess of her monthly SSI benefits, she loses her SSI. Since Anne received Medicaid based on her SSI payment, she also loses Medicaid.
    34. 34. Example: Distributions from a Supplemental Needs Ttrust to Third Party Vendors for Food or Shelter Jill is the trustee of a testamentary supplemental needs trust established by Joan under her last will and testament for her adult disabled daughter, Pamela. Pamela receives SSI, Medicaid, food stamps and services from DDD. Pamela lives in an apartment. Jill signed the lease as trustee of the SNT and pays all rent directly to the landlord. The rental payments will result in a reduction, but not the elimination, of Pamela’s SSI benefits.
    35. 35. Example: Distributions from a SNT to Third Party Vendors for Items Which are Not Food or Shelter Jill, a disabled adult, receives SSI. Joan is the trustee of a special needs trust established by Jill’s parents for her benefit. Jill likes to read the National Review not the (New York Times.) Joan arranges with the local newspaper distributor to deliver the National Review not the (New York Times) to Jill on a daily basis, including Sundays, and pays the bill directly to the newspaper distributor. This is not considered income, and will not affect Jill’s SSI benefits.
    36. 36. Follow-Up Steps: (4) New Wills for Parents Prepare Last Will and Testaments for parents excluding the child from receiving any portion of the parents’ estate outright and free of trust which may cause the disabled child to lose government benefits.  Create a Discretionary Supplemental Needs Trust to protect future quality of life for the child. 
    37. 37. Periodic Update and Review The Estate Plan should be periodically reviewed to: • Ensure all assets either are owned by the SNT, or SNT is named as the beneficiary of the assets. A. The importance of beneficiary designations • To update trustees and persons representatives and power of attorney • Changes in the beneficiary’s condition or eligibility for benefits. • Changes in your economic situation.
    38. 38. Part 3: Creating an Effective Plan for Your Child / Loved One
    39. 39. What Steps Should You Take Today? Step 1: Envision Your Child’s Future Planning ahead makes a difference:  Where and with whom will your child live?  What type/level of care will be required?  Will a guardian/conservator be necessary?  Who else will be involved?  What kind of lifestyle is desired?  What unforeseen challenges could arise?
    40. 40. What Steps Should You Take Today? Step 2: Create a Memorandum of Intent Lays out goals/expectations:  Details preferences, needs, wishes, both medical and personal  Lists key people in child’s life Helps guide:  Family members  Trustees  Caregivers  Others
    41. 41. What Steps Should You Take Today? Step 3: Estimate Income & Expenses Monthly income:  SSI, SSDI, Social Security, earned/unearned income Monthly living expenses:  Housing, food, transportation, medical, recreation, etc.  Consider how any shortfall will be met Income - Expenses = Shortfall
    42. 42. What Steps Should You Take Today? Step 4: Utilize a Third-Party SNT Provides supplemental funds for living expenses not covered by other income sources May be established by parents:  Through will  Through living trust “Living” SNT lets others contribute Trustee has discretion over distributions
    43. 43. The SNT Trustee Responsibilities What are the trustee’s responsibilities? Invests/manages assets Distributes funds Keeps books Files tax returns Hires advocates and care managers, etc., as needed
    44. 44. Selecting an SNT Trustee Who should be the trustee?  Parent with professional co-trustee  Corporate or other professional trustee  Successor trustee
    45. 45. What Parents Should Do Create Memorandum of Intent Calculate future financial need Establish SNT through will or living trust Fund SNT with life insurance Name SNT as beneficiary of accounts, plans, etc. Reduce taxable estate
    46. 46. What Your Child Should Do Sign Advance Directives, if legal capacity Have a legal guardian appointed:  When child without mental capacity becomes an adult and parents want to maintain legal responsibility  Court appoints legal guardian
    47. 47. What If Your Child Has Assets? Establish a First-Party SNT: Provides funds for living expenses not covered by other income sources Maintains eligibility for public benefits Must be established by parent, grandparent, legal guardian or the court State must be reimbursed from the trust for all Medicaid expenses
    48. 48. Get Started Today Understand your child’s eligibility for public benefits. Make plans for the future to maximize public and private resources for your child’s benefit. Make the SNT a key part of your estate plan. Contact a special needs attorney for the assistance you need. Fredrick P. Niemann, Esq. NJ Elder Law and NJ Special Needs Trust Attorney Hanlon Niemann, PC 3499 Route 9 North, Suite 1F Freehold, NJ 07728 Phone: (888) 800-7442