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FUNDING SPECIAL NEEDS TRUSTS

Posted by: Begley Law Group

by Thomas D. Begley, Jr., CELA Overview Estate planning attorneys are regularly called upon to draft trusts for their clients’ children with disabilities. Typically, these children are determined to be disabled by the Social Security Administration and are receiving SSI, Medicaid, or other means-tested public benefits. The goal of the parent in establishing the trust is to maintain public benefits for the child with disabilities while providing an inheritance to enrich the child’s life. The inheritance is to supplement, not supplant, public benefits. There is an old adage that there are two ways to screw up a Special Needs Trust: […]

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Depletion Management

Posted by: Begley Law Group

By Thomas D. Begley, Jr., CELA When a personal injury victim settles a case and the plaintiff is receiving certain public benefits such as SSL Medicaid, Medicaid Waiver programs, SNAP (Food Stamps), Section 8 Housing, or any other means-tested program, a Special Needs Trust is required. To qualify for a Special Needs Trust, the plaintiff must be disabled. How Lonn Should the Trust Last? Once the trust is established, the next issue is. How long should the trust last? The answer to that question depends, in part on how large the settlement is. If the settlement is small, the trust […]

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Making Special Needs Trusts Last

Posted by: Begley Law Group

By Thomas D. Begley, Jr., CELA When a personal injury victim receives a settlement, one of the biggest post-settlement problems is making the money last. If the plaintiff is receiving means-tested public benefits, the monies must be put in a Special Needs Trust. How long do the beneficiary and other family members need that money to last? When the size of the settlement is significant, best practices would dictate that a three-step process be followed: Counseling Session. Step 1 is a counseling session with the person with disabilities, the family members, if appropriate, the trustee, the attorney drafting the Special […]

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Filed under Blog, Personal Injury Consulting, PI Special Reports, PIEstate, PIMedAidApp, PIMedAidPlan, Special Needs Planning, Special Needs Planning, Special Needs Trusts, Special Needs Trusts.
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The Impact of Fundraisers on Beneficiaries With Disabilities

Posted by: Begley Law Group

By Thomas D. Begley, Jr. Esquire, CELA CRISIS AND KINDNESS In times of crisis, people often show just how caring humanity can be. Major humanitarian relief efforts respond to large-scale natural and unnatural disasters. Strangers donate time and money to individuals injured in tragic accidents. Often, the first instinct when you learn that someone is hurt is to give money. Unfortunately, unbeknownst to the donor, this kind and selfless act can have devastating ramifications for the injured individual and his or her family. If the injured individual or a family member is receiving means-tested government benefits, such as SSI or […]

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Lien Resolution In Personal Injury Cases

Posted by: Begley Law Group

By Thomas D. Begley, Jr. Esquire, CELA When a personal injury settlement is being finalized, consideration should be given to resolving a number of liens. It is good practice to obtain information on the existence and amount of these liens early in the process, because this information may be helpful in settlement negotiations. The types of liens that often arise in personal injury cases include the following: Medicaid Medicare Medicare Advantage/Medicare Part D ERISA Veterans Administration TRICARE State Worker’s Compensation Federal Employees Compensation Act (FECA) Hospital Federal Employees Health Benefit Act (FEHBA) Federal Medical Care Recovery Act (FMCRA) Welfare Liens […]

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Estate Planning for Parents of Children With Disabilities

Posted by: Begley Law Group

Case Study: Special needs child – public benefits retained   The Situation Harry and Sally have a 21-year-old son, Bill, who has autism and lives at home with them. The couple is concerned about protecting Bill’s welfare after they die. They had always expected Bill to go live with his sister, Joan, who is married and has three children. But recently, they learned that Joan’s husband does not want to take on this responsibility. Harry and Sally now need to make alternate arrangements for their son’s future. Harry and Sally own a home, and they have retirement plans, life insurance, […]

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SETTLEMENT PROTECTION TRUST – WHAT IS IT AND WHEN SHOULD I USE IT?

Posted by: Begley Law Group

By: Thomas D. Begley, Jr., Esquire, CELA CASE STUDY 1 Billy, age 6, was injured at birth. He recovers $1,000,000. Billy is not receiving any means-tested public benefits, such as SSI or Medicaid. One option is to place the $1,000,000 in the Probate Court, i.e., the Surrogate’s Office in New Jersey, or the Orphans’ Court or a restricted savings account in Pennsylvania, and to request distributions either in accordance with a budget or on an “as needed” basis. Another option is to place the money into a Settlement Protection Trust, thus bypassing the deposit into the Probate Court. CASE STUDY […]

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DeCambre Reversed

Posted by: Begley Law Group

By Thomas D. Begley, Jr., CELA Section 8 of the Federal Housing Act of 1937 provides a rental assistance program for low-income families and individuals. HUD pays rental subsidies so eligible families can afford decent, safe and sanitary housing. The programs are generally administered by Public Housing Agencies (PHAs). Generally, the family pays 30% of its adjusted monthly income for rent. Household income must be within the applicable limit established by HUD. The limits are based on family size and locality. Family members must be U.S. citizens or eligible aliens. There are income limits. Income includes Social Security and Disability […]

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Using Self-Settled Special Needs Trusts in Medicaid Planning

Posted by: Begley Law Group

By Thomas D. Begley, Jr., CELA Trusts for disabled individuals who have not reached age 65 and are funded with assets of the disabled person are authorized under OBRA-93.(1)  The trust is for the benefit of disabled persons.  The person much be under 65 at the inception of the trust.  While the trust must be established and funded prior to the beneficiary attaining the age of 65, it may continue after 65.  If the trust is funded with a structured settlement prior to the beneficiary attaining the age of 65, the trust remains viable even though payments from the annuity […]

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Disability Annuity Special Needs Trusts

Posted by: Begley Law Group

By Thomas D. Begley, Jr., CELA One of the trusts used in Medicaid Planning is a Disability Annuity Special Needs Trust (“DASNT”). A previous Straight Word article discussed a Disability Annuity Trust (“DAT”). These trusts are designed so that an individual can establish a trust and transfer assets to the trust for the benefit of a disabled child of any age or a disabled individual under age 65 without incurring a Medicaid transfer of asset penalty. The problem with that trust is that the assets in the trust are considered available for public benefit purposes. Therefore, if  a DAT were […]

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CONSIDERATIONS IN DRAFTING A DISABILITY ANNUITY SPECIAL NEEDS TRUST

Posted by: Begley Law Group

by Thomas D. Begley, Jr., CELA There are four main issues to be considered in drafting any trust involving a potential Medicaid recipient. These include: Availability; Transfer of asset penalty; Payback provision; and Tax considerations, including income, gift and estate taxes. Let’s examine each of these issues in the context of a DASNT. Availability. The assets in the DASNT would not be available, because the trust would be designed to give the trustee complete discretion with respect to distributions. Standard Third-Party Special Needs Trust language would be used in designing the trust. The standard DAT language would also be included. […]

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WHAT DOES “SOLE BENEFIT OF” MEAN WITH RESPECT TO A DISABILITY ANNUITY TRUST

Posted by: Begley Law Group

by Thomas D. Begley, Jr., CELA The key issue concerning trusts “for the sole benefit of” is availability. In a private letter, HCFA, now CMS, has taken the position that a trust established for the sole benefit of a community spouse under HCFA Transmittal 64 is an available resource.[1] HCFA maintained that there is a material difference between a standard annuity and an “annuitized” trust. HCFA states: a standard annuity can protect the funds used to purchase the annuity from being counted as resources in determining eligibility for Medicaid. However, there is a fundamental difference between a standard annuity and […]

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Filed under Estate Planning, Life Care Planning, Special Needs Planning, Special Needs Planning, Special Needs Trusts, Special Needs Trusts.
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DISABILITY ANNUITY TRUSTS

Posted by: Begley Law Group

by Thomas D. Begley, Jr., CELA The Concept. A sole benefit of trust is a creature of HCFA Transmittal 64.[1] These trusts have traditionally been used in crisis planning. They can be established for the benefit of disabled persons—a Disability Annuity Trust (“DAT”).[2] The idea is that assets would be transferred to an irrevocable trust for the sole benefit of the disabled individual. The assets in the trust were then paid out to the beneficiary on an actuarially sound basis using the actuarial tables contained in HCFA Transmittal 64.[3] However, some states, including New Jersey, maintain that despite the clear […]

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DO WE STILL NEED TO WORRY ABOUT MEDICARE SET-ASIDE ARRANGEMENTS?

Posted by: Begley Law Group

by Thomas D. Begley, Jr., CELA For many years a debate has raged as to whether Medicare’s interests must be considered with respect to future medical payments in the context of a third party liability settlement (“TPLS”). The issue is simple. If a plaintiff in a TPLS receives money to pay for future medical care, is he free to pocket that money and send the bill for the future medical care to Medicare? Under the Medicare Secondary Payer Act (“MSPA”), Medicare is prohibited from making a payment for future medicals to the extent that such payment has been made under […]

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Parents Establishing a Self-Settled Special Needs Trust For A Child: What Can Go Wrong?

Posted by: Begley Law Group

[An article originally published in the Straight Word, March 2016.] By Thomas D. Begley, Jr., CELA A Self-Settled Special Needs Trust is funded with the assets of the individual trust beneficiary. These trusts usually involve funds received as a result of a personal injury, inheritance, alimony, or child support. Under federal law, 1 a Self­Settled Special Needs Trust may be established by a parent, grandparent, guardian or court. In cases involving an adult with capacity court involvement is often unnecessary, so it is convenient to have the trust established by a parent or grandparent. In some states, such as New […]

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WHY A WILL?

Posted by: Begley Law Group

by Thomas D. Begley, Jr., Esquire, CELA Wills are designed to transfer property on death. If there is no Will, the State writes a Will for the deceased individual. While those Wills make sense for many people, they do not make sense for everyone. Assuming a client has mental capacity, the first step would be to review any existing Wills and bring them up to date, or, if there are no Wills, then to put them in place. Wills can contain appropriate tax planning techniques. Typically, the beneficiaries of Wills include a spouse, children, and other family member, friends or […]

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MEDICARE SET-ASIDE ARRANGEMENTS IN SPECIAL NEEDS TRUSTS

Posted by: Begley Law Group

by Thomas D. Begley, Jr., CELA   Countable Asset for SSI and Medicaid A question arises as to whether assets held in an MSA are countable for SSI and Medicaid purposes. This has been addressed by CMS in the WC context, but the same line of reasoning should apply to third party liability cases. CMS has stated that:[1] Medicare Set-Aside Arrangements are not subject to any special treatment under Medicaid resource rules. These funds should be evaluated to determine whether they meet the legal definition of a resource for Supplement Security Income (SSI) and, therefore, Medicaid purposes, i.e., ‘cash or […]

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PERSONAL INJURY SETTLEMENTS: HOUSING FOR PLAINTIFFS WITH DISABILITIES

Posted by: Begley Law Group

by Thomas D. Begley, Jr., CELA Introduction Housing for an individual with disabilities is a major concern. The purchase of a residence is a very important decision involving a number of factors. This is particularly true where the individual is receiving means-tested public benefits such as Supplemental Security Income (SSI) and Medicaid. If there is a special needs trust involved, the SSI and State Medicaid Regulations must be carefully considered. Selecting the Right Home Often, a home must be made handicap accessible. In selecting a home, care must be taken to ensure that the home can be adapted for the […]

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WRAPPING A MEDICARE SET-ASIDE ARRANGEMENT INSIDE A SPECIAL NEEDS TRUST

Posted by: Begley Law Group

by Thomas D. Begley, Jr., Esquire, CELA In any recovery involving a personal injury case, the interest of Medicare must be considered.[1] The idea is that because Medicare is a secondary payer, a beneficiary should not be permitted to receive a recovery for future medical care, pocket the money, and then bill Medicare for that future medical care. Are MSAs Appropriate in TPL Cases? A Medicare Set-Aside Arrangement (MSA) is never required. In the context of Workers’ Compensation (WC) settlements it is a safe harbor. It should be a safe harbor in the context of Third Party Liability (TPL) settlements […]

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SPECIAL NEEDS TRUSTS AND MEDICARE SET-ASIDE ARRANGEMENTS

Posted by: Begley Law Group

by Thomas D. Begley, Jr., Esquire, CELA Generally, Medicare Set-Aside Arrangement (MSA) funds are deposited in a custodial account with a professional trustee or given to the client to self-administer. For cases less than $100,000, giving the funds to the client to self-administer makes sense. CMS has issued a letter of instructions to be delivered to the client who would be administering his or her own custodial account. Even if a client misuses the money, the personal injury attorney should be off the hook with respect to a subsequent malpractice claim. If the MSA funds are self-administered by the client […]

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TOP TEN MISTAKES IN DRAFTING SPECIAL NEEDS TRUSTS

Posted by: Begley Law Group

[This article was originally printed in the Straight Word, a publication of the Burlington County Bar Association.] by Thomas D. Begley, Jr., CELA There are a number of mistakes that scriveners make in drafting special needs trusts. This article will discuss those that frequently occur. Including a Payback Provision in a Third-Party Special Needs Trust. Payback provisions are a creature of Omnibus Budget Reconciliation Act of 1993 (OBRA-93).[1] This statute relates solely to first-party special needs trusts. There is no federal statute governing third party special needs trusts. These trusts are governed by the Program Operating Manual System of the […]

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MILLER TRUSTS

Posted by: Begley Law Group

by Thomas D. Begley, Jr., CELA New Jersey is an income cap state for purposes of nursing home level of long-term care services. Nursing home level of services includes nursing homes, assisted living and most home care. The income cap is 300% of the Federal Benefit Rate (FBR). For 2015, 300% of the FBR is $2,199. This figure is indexed for inflation. This means that if an individual’s income exceeds $2,199 in 2015, they would not be eligible for Medicaid long-term care services. Historically, individuals with income in excess of the income cap were eligible for Medicaid in a nursing […]

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Filed under Estate Planning, Medicaid Planning, Medicaid Planning, Special Needs Planning, Special Needs Planning.

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DISTRIBUTIONS FROM SPECIAL NEEDS TRUSTS RELATED TO VACATIONS

Posted by: Begley Law Group

[This article was originally printed in the Straight Word, a publication of the Burlington County Bar Association.] by Thomas D. Begley, Jr., CELA Individuals with disabilities are often able to travel and take vacations. A special needs trust can pay for vacations, but there are different rules that apply to third-party special needs trusts as opposed to first-party special needs trusts with respect to these payments. First-party special needs trusts must adhere to the “sole benefit of” rule with respect to distributions for a trust beneficiary. This means that, generally, distributions can only be made for the benefit of the […]

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The Voice® December 2014 – Official Newsletter of the Special Needs Alliance

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MEDICAID AND MEDICARE 2015 COLA NUMBERS

Posted by: Begley Law Group

CMS has released the Medicare and Medicaid numbers for 2015. They are as follows: Medicaid Income Cap[1] $2,199 Maximum Community Spouse Resource Allowance (CSRA)[2] $119,220 Minimum CSRA[3] $23,844 Maximum Minimum Monthly Maintenance Needs Allowance (MMMNA)[4] $2,980.50 MMMNA (July 1, 2014 until June 30, 2015)[5] $1,966.25 Excess Shelter Allowance (July 1, 2014 until June 30,   2015)[6] $589.88 Maximum Resource Limit (Individual)[7] $2,000 Minimum and Maximum Cap on Equity in the Home[8] $552,000 –  $828,000 Medicare Part A Medicare Co-Payment – Skilled Nursing Facility (SNF)[9] $157.50 Hospital Deductible[10] $1,260 Per day Co-Insurance – Day 61 -90[11] $315 Per day Co Insurance – […]

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DISTRIBUTIONS FROM SPECIAL NEEDS TRUSTS FOR CAREGIVERS – PART 1

Posted by: Begley Law Group

by Thomas D. Begley, Jr., CELA This is the first part of a two-part article on distributions from special needs trusts for caregivers.(The other articles in the series are here: Part 2 and Part 3.)  It is often necessary for a family to hire a caregiver to assist in providing care for a child, even an adult child, with disabilities. The special needs trust can pay for this care, but certain rules must be followed. There are a number of considerations when a trustee hires a caregiver for the beneficiary with disabilities. Certain rules pertain whether the caregiver is a family […]

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THE ALTERNATIVE TO A SPECIAL NEEDS TRUST IN PERSONAL INJURY CASES

Posted by: Begley Law Group

1. Is the Trust Necessary? Are public benefits, such as SSI and Medicaid, important to the client? The attorney must consider the restrictions on distributions. There are three important factors that must e considered before determining to use a self-settled special needs trust: Sole Benefit of Rule. Distributions from self-settled special needs trusts must meet the “sole benefit of” rule. This means that distributions can only be made for the beneficiary of the trust. This is frequently a problem with family members who tend to look at the personal injury settlement as the family bank account. Payback Rules. Under federal […]

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USE OF CREDIT CARDS AND GIFT CARDS IN ADMINISTERING A SPECIAL NEEDS TRUST

Posted by: Begley Law Group

[This article was originally printed in the Straight Word, a publication of the Burlington County Bar Association.] In administering a special needs trust, it is crucial that the trustee not advance cash to the beneficiary. Historically, beneficiaries have sent their bills to the trustee for payment. An easier way to accomplish this objective is to obtain a credit card for the trust beneficiary. If the beneficiary has good credit, the card can be obtained in the beneficiary’s name. If the beneficiary does not have good credit or is a minor or is incapacitated, a credit card could be obtained in […]

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FACT GUIDE FOR NATIONAL TRUST TRAINING: THE IMPACT ON SPECIAL NEEDS TRUSTS

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[This article was originally printed in the Straight Word, a publication of the Burlington County Bar Association.] FACT GUIDE FOR NATIONAL TRUST TRAINING:  THE IMPACT ON SPECIAL NEEDS TRUSTS by Thomas D. Begley, Jr., CELA The Social Security Administration (SSA) has divided the country into ten Regions. Historically, each Region has had one individual primarily in charge of reviewing special need trusts. Trusts in New Jersey are reviewed by the New York Region. Trusts in Pennsylvania are reviewed by the Philadelphia Region. About a year ago, SSA decided to train additional individuals to review these trusts. A team of seven […]

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THE FUTURE OF SPECIAL NEEDS PLANNING

Posted by: Begley Law Group

[This article was originally printed in the Straight Word, a publication of the Burlington County Bar Association.] THE FUTURE OF SPECIAL NEEDS PLANNING by Thomas D. Begley, Jr., CELA Special needs planning is a process of planning for the legal, personal, and financial needs of an individual with disabilities to enhance the quality of life of that person to allow them to reach their full potential.  It is interesting to examine the historical treatment of persons with disabilities.  In the pre-1700s, persons with disabilities were viewed as “possessed by the devil” and they were tortured, burned at the stake, and […]

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