Special Needs Trusts – Formation and Structure (Frequently Used For Disability Planning)

Use Third Party Limit Control; Trust (Supplemental Will the Trust be must have Needs Trust if funded with assets No no legal right to use Other Trust Provisions: disabled or of the beneficiary? assets for support or if maintenance not disabled) No right to revoke or terminate trust Statement of Purpose Yes and Goals for Trust; provides direction to rules do not apply; Is the beneficiary No consider other trust options such as disabled? Distribution Standard spendthrift trust

Administrative Powers Yes

Spendthrift clause Must be established by Parent Trust must comply one of following: with (d)(4)(A) Rules Grandparent Identification of potential residuary beneficiaries Disabled individual Legal Guardian must be sole beneficiary of the Trust Provisions for replacing Court Trustee

Beneficiary must be Note: In addition, the POMS under 65 indicate the Trust will be invalid Decanting provisions unless the person funding the Trust must include Trust has legal authority to medical assistance pay- transfer assets into the Trust back clause

David L. McGuffey, www.mcguffey.net Special Needs Trusts Distributions

Trustee Decision- Making Process

Is proposed distribution for the Proposed distribution is probably No “sole benefit” of the prohibited beneficiary?

Yes

No “means-tested” public Is the Beneficiary on No benefits; distribution makes no SSI, Medicaid or HUD? impact

Yes

Distribution must be evaluated for impact on public benefits

Is the distribution for The distribution should not No food or sheter? impact Medicaid or SSI

The following usually do not impact eligibility: Yes 1. Medical, psychological and other health treatment not covered by Medicaid 2. Experimental, holistic or other treatments not covered by Distribution is likely Medicaid treated as income 3. Education under Medicaid and 4. Assistive/adaptive devices and equipment 5. Transportation SSI Rules 6. Caregivers/companion services Following are deemed to be a shelter expense: 7. Communications/phone 1. Mortgage payments 8. Recreation and entertainment 2. Real property taxes 9. Respite services 3. Rent 4. Heating Fuel 5. Gas (for home) 6. Electricity 7. Water 8. Sewer 9. Garbage removal

David L. McGuffey, www.mcguffey.net Georgia Special Needs Trust Accounting

Annual Trust Review

Date Receipts must be Each expense must be Purpose provided upon documented by: request Amount

Recipient

Was the expenditure for the primary benefit of After documentation the Trust beneficiary? is provided, DCH applies a 4 part test Was the expenditure appropriate given the beneficiary’s age, physical condition, lifestyle and needs?

Was the expenditure consistent with the terms of the Trust, and published federal and State guidelines?

Was the expenditure consistent with the fair market value of similar goods and services?

Expenditures not clearly for sole benefit of Expenditures not clearly for sole benefit of beneficiary beneficiary Special review of certain expenditures Caregiver wages

Housing expenses

Vehicle expenses

Egregious expenses

David L. McGuffey, www.mcguffey.net