(1) The document discusses financial planning strategies for disabled individuals and their beneficiaries to optimize the use of government programs while protecting family assets. (2) It explains the differences between entitlement programs like SSDI and Medicaid, which are based on contributions, versus needs-based programs like SSI that have asset and income limits. (3) The document provides an overview of trusts, such as supplemental needs trusts, Medicaid asset protection trusts, and pooled trusts, that allow beneficiaries to receive government benefits while preserving assets for their care and quality of life.

1. FINANCIAL PLANNING FOR
DISABLED PARENTS AND SPECIAL
NEEDS BENEFICIARIES
DECEMBER 12, 2016
FPANY’s Public Awareness Committee in
Partnership with NYU School of Professional Studies
Ne w Yo rk Public Library
Scie nce , Industry and Busine ss Library

2. 2
 All information contained in these pages is for informational purposes
only. It should not be considered legal advise. Please consult an attorney
before taking any steps based on this information.
 All information contained in this presentation is for informational
purposes. The presenting attorney does not represent the information
contained herein is accurate or appropriate for your personal situation.
 All financial advisors are committed to fiduciary standard. Professionals
are bound to adhere to the Certified Financial Planner Board of
Standards and Ethics and/or the Financial Planning Association
Standards depending upon their designation.
 The information contained in this document was provided on a pro bono
basis. No compensation was obtained in exchange for services provided
either directly or via a third party.
Disclaimer

3. Why Are We Here Today?
1. Discuss differences of NEEDS-BASED
versus ENTITLEMENT programs
2. Understand gov’t. programs regarding
HEALTH and MONEY
3. Determine how to optimize family assets
while using these programs
3

4.  SSDI and MEDICARE:
 “Entitlement Programs” – you paid for it, you get it
 Separately withdrawn from your paycheck: 15.3%
 You pay half, your employer pays half
 SSI and MEDICAID:
 “Needs Based Programs”
 (1) Must have the physical / mental need
 (2) “Means Tested”: must meet asset & income limits
 Comes out of your general tax dollars
Entitlement v. Needs Based
Government Programs

5. Social Security: Disability
 There are 2 types of Social Security Disability
programs:
 SSDI: “Social Security Disability Income”
 SSI: “Supplemental Security Income”
 These programs provide $ MONEY $
 These are NOT Social Security Retirements
 SSDI eventually reverts to SS Retirement
 SSI does NOT (usually)
5

6. SSDI – “Full” Disability
 Paid into SS for 40 fiscal quarters
 Max Benefit: $2,639 in 2016
 Benefit base on income history
 No limit on how much assets you have
 Income
 No limit on “passive” income
 You can still “earn” < $1,129 / month in income
 No government requirements how it must be spent
 TIP: If you are nearing 40 quarters, try to keep working before applying:
SSDI has less limits than SSI (20 of those quarters in past 10 years)
6

7. SSI – “Limited” Disability
 Paid into SS for LESS than 40 quarters
 Max Benefit: $820 / month in 2016
 Fed max is $733, NY max is $87
 Benefit based on living arrangement & other income
 Limitations: Assets of only $2,000
  Excess must be held in Supplemental Needs Trust
 Spending Requirements
 Food & Clothing
  Automatic Medicaid eligibility
7

8. Medicare
 A HEALTH care program:
 40 quarter qualification  you can qualify for Medicare 2 years
after you are declared disabled (which takes 5 months)
 Parts
 PART A: Inpatient Hospital Care
 “Eligible” people pay during working years; pay up to $407 per month if “Ineligible”
 PART B: Supplemental Medical Insurance
 Pay $104.90 - $335.70 per month
 PART C: Managed Care
 Cost varies by plan
 PART D: Prescription Drug Benefits
 $0-$50 per month; cost varies by plan; higher income consumers often pay more
8

9.  ACTIVITIES OF DAILY LIVING (“ADLs”)
 Transferring (Walking)
 Bathing
 Dressing
 Eating
 Continence
 Toileting
MEDICAID:
Activities of Daily Living

10. The type of Medicaid benefit you receive determines “lookback” periods (I.e.
the penalty fortransferring assets)
Home /Community Care
Personal care, physical therapy, home
health care and home health aid
services; clinical orout-patient basis;
includes physicians, dentists,
pharmaceutical, nursery
Institutional Care
Hospitals, medical facilities, nursing
homes
Does NOT usually pay for“Assisted
Living facilities”
Types of Medicaid

11. You have to give away Money (gifting)
AND/OR
You have to give up control of spending
REMEMBER:
This is a “Needs Based” program, NOT an “Entitlement” program;
if you have no financial need you do not qualify
Why Do People Hesitate?

12. ASSETS
$14,850 in the recipient’s name
EXCEPTIONS:
• “Burial Allowance” of $1,500
• Life Insurance: $1,500 cash value
• Personal Property (unlimited)
• Client’s House (ONLY for Home & Community
care) IF UNDER$828,000
• Supplemental Needs Trusts
• Medicaid Trusts
•Retirement Plans (IRAs) are exempted from
assets if they are in “payout status” (Required
Minimum Distributions or Separate and Equal
Periodic Payments if recipient is under age 59 ½),
in which case payments are included in Income
MONTHLY INCOME
HOME CARE: $825 permonth
• Any excess income must go to the
recipient’s “SPENDDOWN”
o Often goes to a “POOLEDTRUST”
INSTITUTIONAL: ALL of the recipient’s
monthly income in excess of $50 must
be paid to the Nursing Home to offset
Medicaid payments
Financial Eligibility Requirements foran Individual

13. Department of Social Services and Medicaid impose a “LookbackPeriod” for
transferring assets outside of the proposed recipient’s name
Home & Community Care
3 MONTHLookback
One Strategy:
Transfer all financial assets (except
$14,850) to a non-spouse, wait one
month for bank statements to be
updated, then apply for Home Care.
DOWNSIDE: If the recipient needs
Nursing Home care… the 5 Year Look
back rule applies
Nursing Home
5 YearLookbackPeriod, and the Homestead can
be attached by Medicaid
EXAMPLE: In January, 2011 Mary transfers her Coop and most
of her assets to her son Joe (total of $280,000), and applies for
Home Care. In March 2015 Mary goes to a Nursing Home. She
failed to make the 5 year Lookback (4 years & 2 months). Nursing
Home Care in Manhattan equals approximately $12,000 per
month.
$280,000 (amount gifted) = 23.3 MONTH
$12,000 (monthly benefit) “Penalty Period”
Medicaid will not pay Mary’s Nursing Home benefits for 23
months. ..and Joe is liable. Joe should have paid for Mary’s care
for 10 more months to get through Mary’s Lookback Period.
TransferPenalties

14.  Healthy Married Couple: When some aging illness
is diagnosed or no earlier than 70s
 Single Person with No Kids: NEVER (Private pay
caregiving is better than Medicaid care)
 Disabled Family Member: Immediately
 Disabled Minor Family Member: Prior to them
attaining age 18
When To Start Medicaid Planning?

15. Now We Know the Programs
(1. Needs v. Entitlement)
And
Now We Know the Which Are Which
(2. Health v. Wealth)
Now We Focus on the Planning
(3. How to Help Family Members)
15

16. Probate v. Non-Probate
“Operation of Law” Transfers Probate /Administration
Anything with a “Beneficiary Designation”
Because we kno w who it g o e s to at de ath
•Jointly Owned Property
•Some Business Agreements
•Retirement Plans
•Life Insurance
•Transfer on Death [“TOD”] accounts
•Trusts
All you need is a Death Certificate to
collect these (if you are the beneficiary)
 This is what transfers through your
WILL or Intestacy
Because we do n’t auto m atically
kno w who it g o e s to at de ath
This includes all property not listed
under “Operation of Law”
(I.e. everything else)
2 Legal Procedures:
• If there is a valid Will = “Probate”
• If NO Will = “Administration”
16

17. YOU HAVE A WILL
WHETHERYOU HAVE
WRITTEN ONE ORNOT
17

18. Intestacy: When there is NOWill
 An Administrator is named and MUST deliver
estate property as follows:
18

19. What You Don’t Do, orDo Wrong,
HURTSYourDisabled Beneficiary
19
- Examples:
- No Will = No choice of who gets what
- Improper Beneficiary Designation = Leaves funds
to beneficiary outright
- Worst: Leave Nothing to Beneficiary out of fear!!!
- The Result:
- Beneficiary’s assets are too high, and get kicked
off of “Needs-Based” programs
- May have to PAY BACK Medicaid, other
programs

20. The GOOD News…
There are solutions for
you and your family!
To save money AND receive benefits
20

21. Trusts: Who is Involved?
Assets owned by Trust pass Outside of Probate
21

22. “InterVivos” v. Testamentary Trusts
 Testamentary Trusts
 Created by your Will
 Only effective once your Will is effective (I.e. death)
 No good for your benefit(you’re dead)
 Inter Vivos Trusts
 Created during your life
 May be used for your benefit
22

23.  For 3rd
Party Money (Ex: Parent’s $)
 Inter Vivos Supplementary Needs Trusts
 Testamentary SNTs (in Will)
 For 1st
Party Money (the Recipient’s $)
 Medicaid Asset Trusts (usually for large assets)
 Pooled Trusts (payback provisions apply)
 Inter Vivos SNTs (payback provisions apply)
 Promissory Notes (protects 40%-45%)
Strategies

24. Supplemental Needs Trusts
 Money in an SNT is EXCLUDED as an asset
for Medicaid and SSI purposes!
 Money held in trust can be used for:
 Food, clothing, education, vacation, television,
charge card, car, home, FUN STUFF
 Cannot be used for:
 Gifts to others, cash to beneficiary, alcohol,
tobacco, firearms
24

25. 1st Party SNTs: Medicaid
Recipient’s Money

26. 3rd
Party SNTs: Non-Medicaid
Recipient’s Money

27. SNTs: 1st
Party v. 3rd
Party
 1st
Party SNT
 The beneficiary’s money
 Any remaining money first goes to pay back govt
 Created with help of a parent, grandparent, guardian
or court order
 3rd
Party SNT
 A 3rd
Party’s money – NEVER the beneficiary’s money
 Remaining money goes where creator decides
 Anyone can create for someone else
27

28. Medicaid Homestead Exemptions
– ForSiblings and Children
The following family arrangements avoid a
Medicaid Lien on the primary residence:
Sibling Caretakers – 1 year exemption
 MUST live in same house
Children Caretakers – 2 year exemption
 MUST live in same house
Disabled Parent & Child both on Medicaid
 MUST live in same house
28

29.  Created by Medicaid recipient and/or spouse
  Meant to protect ASSETS, NOT INCOME
 Illiquid, non income-generating assets placed in the Trust,
such as real estate, or…
 …Income generating assets can be placed in Trust and
income withdrawn
 Income could disqualify recipient for Medicaid due to income limits
 5 Year Look Back applies for Institutional Care
 Child cannot evict parents from house, and cannot take assets
from Trust while parent(s) are alive
Medicaid Asset Protection Trusts

30. MAPT: Medicaid Recipient’s Money

31.  The “Community Spouse” is entitled to some assets and income, but they are
limited
 If spouse is in a Nursing Home:
 $3,022.50 of income per month
 $74,180 - $120,900 of resources
 If s spouses have Home Care:
 Combined income of $1,192 per month
 During the Medicaid Application process the well spouse may exercise a
“Spousal Refusal” to avoid inclusion of his/her assets and income
 Medicaid may accept this (varies county to county), but will have a claim against the
well spouse when he/she dies
 New “Spousal Impoverishment” rules avoid liens
What About the “Well” Spouse?

32. Putting It All Together
32
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is a
trained financial professional
required to meet certain
Experience, Examination,
Education and Ethical standards.
 They are trained in the financial
planning process and bring
together multiple components of
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planning, retirement planning, risk
management, investment
management, etc.)

33. Daniel Timins, Esq.
dan@timinslaw.com
477 Madison Avenue, Suite 240
New York, NY 10022
(212) 683-3560
Questions & Answers33
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