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Special Needs Trust Planning Provides Guaranteed Supplemental Relief for Individuals Receiving Government Needs-Based Assistance by STEPHANIE HARTMAN ROJO, ESQ

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Special Needs Trust Planning Provides Guaranteed Supplemental Relief for Individuals Receiving Government Needs-Based Assistance by STEPHANIE HARTMAN ROJO, ESQ De Castroverde Law Group is proud to bring you a criminal defense team with unparalleled knowledge and experience. The team is led by two former prosecutors who are universally well-liked and exceptionally respected. ALSO HELPING ATTORNEYS WITH ANY DISCIPLINARY MATTERS. Special Needs Trust Planning Provides Guaranteed Supplemental Relief for Individuals Receiving Government Needs-Based Assistance BY STEPHANIE HARTMAN ROJO, ESQ. Individuals receiving government needs-based The three categories of SNTs are assistance (benefits recipients), such as Medicaid or summarized below. Supplemental Security Income, must delicately manage their exempt First Party or d(4)(A) assets and personal asset limits (resource exclusions)1 in order to Special Needs Trust4 maintain their ongoing public benefits eligibility. A creation of federal law, a First Party CRAIG HENDRICKS FRANK JOHAN COUMOU A relatively small amount ($2,000 or less)2 can disqualify a benefits SNT is an irrevocable, self-funded trust Craig’s vast experience and wealth of knowledge comes from his Frank joins the Dream Team after serving in the United States recipient. With this in mind, even a small settlement, damages award, established by a benefits recipient (aged decades with the Clark County District Attorney’s Offi ce, culminating in Attorney’s Violent Crimes and Strike Force Unit. Prior to that, he spent inheritance or outright gift, despite the best of intentions, if not planned for 65 and younger), their legal guardian or his tenure as Chief of the Special Victims Unit. He supervised attorneys 25 years as a prosecutor in the Clark County District Attorney’s Offi ce properly can be detrimental, resulting in disqualification and lapse in benefits. even by court order, using the benefits on the general litigation team, and specialized in cases such as rape, where he rose to Chief of the Homicide Unit. He has prosecuted more Lack of information in this regard may cause a benefits recipient recipient’s personal assets. Assets child abuse, and molestation. As one of the most respected trial than 120 felony jury trials, and has extensive experience in handling to: 1) receive an unstructured inheritance, disqualifying them from their contributed into a First Party SNT may attorneys in the community, he has spent several years volunteering high-profi le cases. Frank is also fl uent in Spanish. come from any funds directly owned or to assist with mock trial programs at UNLV’s William S. Boyd School benefits or 2) be unnecessarily disinherited. In the first scenario, the public benefits program’s purpose is undermined entirely. In the second scenario, distributable to the benefits recipient as of Law and at local high schools throughout Las Vegas. 3 disinheritance effectively eliminates the opportunity for supplemental an inheritance, a personal injury award, a support. This is why proper planning is essential. judgment or settlement award or even a Attorneys are uniquely situated to navigate clients, specifically those wrongful death award after the loss of a concerned with maintaining their own or someone else’s ongoing needs-based loved one. benefits eligibility, toward sound and valuable resources available to help the There are strict requirements Nevada Lawyer Lawyer Nevada surrounding the creation of a First Party benefits recipient. This article highlights one particularly helpful estate planning technique: SNT as well as the use and management • the Special Needs Trust (SNT). SNTs are used to provide financial support for a of trust-owned assets. For example, a 702.222.9999 benefits recipient cannot serve as their benefits recipient, without jeopardizing their public benefits eligibility. An SNT own trustee. If the benefits recipient has can meet a benefits recipient’s needs where their current assistance programs April 2021 3 are lacking, drastically improving the benefits recipient’s quality of life. CONTINUED ON PAGE 22 21 TRUST COMPARISON CHART CONTINUED FROM PAGE 21 already provided by existing benefits). Special Needs Trust Planning Such funds are not considered a resource of the benefits recipient and Provides Guaranteed Supplemental therefore will not affect their ongoing eligibility requirements. Relief for Individuals Receiving Unlike First Party SNTs, there is no age limit with respect to the benefits Government Needs-Based Assistance recipient. A payback provision is not required and should not be included any control over their SNT, its assets The benefits recipient or their in the terms of the trust. Instead, will be considered a resource to the legal guardian must disclose and upon the benefits recipient’s death, if benefits recipient and will therefore be provide a copy of their First Party SNT assets remain in trust, property may counted against their eligibility asset directly to the Division of Welfare be distributed to any combination of limit. Further, direct cash distributions and Supportive Services (DWSS) for beneficiaries as determined by the or cash equivalents (like gift cards) review and approval. If not approved, grantor, without Medicaid Estate larger than $20 are never allowed. There the assets will be a countable resource Recovery. are also specific restrictions regarding to the benefits recipient, causing Depending on the grantor’s how and in what manner SNT funds disqualification and a lapse in benefits. wishes, Third Party SNTs can either may be used. Primarily, no one else may Therefore, it is critical that a party be revocable or irrevocable during the directly benefit from the trust. Funds to the trust, whether trustee or trust grantor’s lifetime. If the Third Party may be used for a variety of expenses, protector, have authority to amend the SNT is revocable, there is flexibility to including the benefits recipient’s travel, trust for limited compliance purposes. modify the Third Party SNT provisions hobbies, education and other needs that Once the SNT is established, in the event that the grantor or benefits current benefits do not cover. funded and approved, the trustee recipient’s finances change, needs has ongoing change, other opportunities arise, or responsibilities that the benefits recipient dies. heT trust must be strictly terms may also include a provision followed to avoid allowing for the trust to convert to disruption to the a general discretionary trust if the benefits recipient’s benefits recipient’s condition improves, eligibility. For eliminating their need for benefits. instance, the trustee must notify DWSS of 6 expenditures larger Pooled or d(4)(C) Trust than $5,000, prepare A Pooled Trust, another creation of and provide an annual federal law, is an option when neither accounting, and notify a First Party nor a Third Party SNT DWSS in the event of is practical, as in situations where a the benefits recipient’s benefits recipient inherits an amount death. exceeding the exemption limit but that is too small to warrant the cost of creation and administration of the other The terms of the First Party SNT Third Party Special Needs SNT options. must also include a payback provision Trust or Discretionary Trust Pooled Trusts are irrevocable whereby, upon the benefits recipient’s trusts established and administered by a death, any assets remaining in the Third Party SNTs are established non-profit organization. With a Pooled SNT are payable first to the state, via with funds belonging to someone other Trust, the benefits recipient or a third Medicaid Estate Recovery (with some than the benefits recipient, although party enters into an agreement with the exceptions) up to the total amount of typically by family member(s), such as non-profit that administers the Pooled the lifetime assistance received by a parent or grandparent. Trust, detailing what funds are to be Nevada Lawyer Nevada 5 the benefits recipient. If, after full Just as with First Party SNTs, contributed and then earmarking their • repayment to the state, additional trust the benefits recipient may not be the use for the specific benefits recipient. assets remain, then such assets are trustee or have control or direct access Pooled Trusts are unique in that distributable to the other beneficiaries to the trust funds, and funds may only assets of various benefits recipients are April 2021 named in the trust. be used for supplemental purposes (not combined or pooled for investment and 22 management efficiency, and decision- trust assets for their general charitable disinherited by a naïve family making optimization. The non-profit purposes.7 member or from faulty planning maintains an accounting of funds Keep an eye and ear open to your that could reduce or eliminate their contributed and allocated for each clients’ needs and concerns when it current needs-based assistance. benefits recipient in the pooled group. comes to special needs trust planning. By directing your clients to Just as with the First Party SNT, If your clients are at all concerned appropriate resources, you can the Pooled Trust formalities require about maintaining their public- help a benefits recipient keep their the inclusion of a payback provision, benefits eligibility or special-needs benefits intact while increasing meaning, once again, Medicaid planning, you can steer them toward their comfort and quality of life. Estate Recovery has priority for an appropriate trust and/or practicing reimbursement. After the payback, attorney. In the process you may help the charity may keep the remaining save a benefits recipient from being FIRST PARTY SNT THIRD PARTY SNT POOLED TRUST Whose assets are used to Asset(s) owned by or vested in Asset(s) owned by someone Asset(s) owned by the fund the trust? the benefits recipient other than the benefits benefits recipient or recipient someone else Who establishes the trust? The benefits recipient, Someone other than the A non-profit organization guardian of the benefits benefits recipient establishes the general recipient, or by court order Pooled Trust. An agreement with the non-profit organization may be made by the benefits recipient, parent, grandparent, legal guardian or by court order.
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