Post on 06-Aug-2020
SPECIAL NEEDS TRUSTS FOR
LEGAL SERVICES ATTORNEYS
DEFINITIONS
Grantor (also sometimes called a Settlor or
Trustor): The person who establishes the trust.
This person often, though not always, is also the
person putting assets into the trust.
Trustee: The person who manages the trust
assets and administers the trust provisions.
Beneficiary: The person for whose benefit the
trust is established.
Revocable Trust: A trust that can be altered or
terminated.
Irrevocable Trust: A trust that cannot be altered
or terminated.
SPECIAL NEEDS TRUSTS
Special Needs Trusts are designed for
beneficiaries with some type of limitation.
Beneficiaries of Special Needs Trusts often
receive some type of disability related public
benefit (e.g., SSI or Medicaid).
Sometimes trusts are established for individuals
who have limitations that do not qualify for
public benefits (e.g., addiction or developmental
disability that does not rise to level of an SSA
listing).
TYPES OF SPECIAL NEEDS TRUST
Self-Settled Special Needs Trust
Established by someone on the beneficiary’s behalf
Funded with the beneficiary’s funds
Often called a “d4A” trust after 42 USC
§1396p(d)(4)(A)
Must contain pay-back provision to State Medicaid
program upon beneficiary’s death for any benefits
paid on beneficiary’s behalf
Settlor can determine remainder beneficiaries if any
assets remain after state is paid
Should contain restrictive distribution language so
that trustee cannot make distributions that would
negatively impact beneficiary’s public benefits
TYPES OF SPECIAL NEEDS TRUST
Pooled Special Needs Trust
Established by the beneficiary or someone on his or her
behalf
Funded with the beneficiary’s funds
Assets are pooled for investment purposes with other
beneficiary’s assets
Trust is established and managed by a non-profit
association
Upon beneficiary’s death, non-profit can retain assets to
benefit other individuals with disabilities
If not retained by non-profit, remainder distributed to
State Medicaid program to repay any benefits paid on
beneficiary’s behalf
Often called a “d4C” trust after 42 USC §1396p(d)(4)(C)
TYPES OF SPECIAL NEEDS TRUST
Third-Party Special Needs Trust
Established by someone other then the beneficiary
Funded with assets than never belonged to the
beneficiary
No Medicaid pay-back provisions are necessary
May contain restrictive distribution language so that
trustee cannot make distributions that would
negatively impact beneficiary’s public benefits,
depending upon the beneficiary’s impairments
Usually used to hold inheritance or gifts, but requires
prior planning
WHEN WILL YOU ENCOUNTER SNTS?
Client’s SSI has been reduced or terminated
Client has been assessed an overpayment for SSI
Client’s has been assessed a spenddown for
assets held in a d4A or d4C trust
AVENUES FOR ADVOCACY
Appeal reduction, termination or overpayment
Obtain a review of d4A trust from DHS attorney
to verify compliance with relevant statutes and
regulations
Obtain the approval letter for a d4C master trust
from trustee and copy of subscription statement
for client
Review distributions made from the trust to
client
Educate trustee of distribution restrictions and
consequences on client’s public benefits
RELEVANT SSA REGULATIONS
Income—Definitions and How We Count Income
General 20 CFR 416.1100-1104
Earned Income 20 CFR 416.1110-1112
Unearned Income 20 CFR 416.1120-1124
In-Kind Support and Maintenance 20 CFR 416.1130-1148
Deeming of Income 20 CFR 416.1160-1169
RELEVANT SSA REGULATIONS
Resources—Definitions and How We Count Resources
General 20 CFR 416.1201
Deeming of resources 20 CFR 416.1202
Deeming of resources of an
essential person 20 CFR 416.1203
Deeming of resources where Medicaid
eligibility is affected 20 CFR 416.1204a
Limitation on resources 20 CFR 416.1205
Resources determinations 20 CFR 416.1207
How funds held in financial institution
accounts are counted 20 CFR 416.1208
RELEVANT SSA REGULATIONS
Resources—Continued
Exclusion from resources; general 20 CFR 416.1210
Exclusion of the home 20 CFR 416.1212
Exclusion of household goods
and personal effects 20 CFR 416.1216
Exclusion of the automobile 20 CFR 416.1218
Exclusion of life insurance 20 CFR 416.1230
Burial spaces and certain funds
set aside for burial expenses 20 CFR 416.1231
RELEVANT SSA POMS
SI 00810.000 General - Income Rules for the
Supplemental Security Income
Program
SI 00815.000 What Is Not Income
SI 00820.000 Earned Income
SI 00830.000 Unearned Income
SI 00832.000 Unearned Income Anderson Case
SI 00835.000 Living Arrangements and In-Kind
Support and Maintenance
RELEVANT MEDICAL ASSISTANCE REGULATIONS
89 IL ADMIN CODE SECT. 120
Subpart C: Financial Eligibility Determination
Section 120.60 Community Cases
Section 120.61 Long Term Care
Section 120.64 MANG(P) Cases
Subpart H: Medical Assistance No Grant (MANG) Eligibility Factors
Section 120.330 Unearned Income
Section 120.332 Budgeting Unearned Income
Section 120.335 Exempt Unearned Income
Section 120.336 Education Benefits
Section 120.338 Incentive Allowance
Section 120.340 Unearned Income In-Kind
Section 120.342 Child Support and Spousal Maintenance Payments
Section 120.345 Earmarked Income
Section 120.346 Medicaid Qualifying Trusts
Section 120.347 Treatment of Trusts and Annuities (EMERGENCY - 36 Ill.Reg. 10253)
Section 120.350 Lump Sum Payments and Income Tax Refunds
Section 120.355 Protected Income
Section 120.360 Earned Income
Section 120.361 Budgeting Earned Income
Section 120.362 Exempt Earned Income
Section 120.363 Earned Income Disregard - MANG(C)
Section 120.364 Earned Income Exemption
Section 120.366 Exclusion from Earned Income Exemption
RELEVANT MEDICAL ASSISTANCE REGULATIONS
89 IL ADMIN CODE SECT. 120
Section 120.370 Recognized
Employment Expenses
Section 120.371 Income From
Work/Study/Training Programs
Section 120.372 Earned Income From
Self-Employment
Section 120.373 Earned Income From
Roomer and Boarder
Section 120.374 Earned Income from
Temporary Employment with the
Census Bureau
Section 120.375 Earned Income In-
Kind
Section 120.376 Payments from the
Illinois Department of Children and
Family Services
Section 120.379 Provisions for the
Prevention of Spousal Impoverishment
(EMERGENCY - 36 Ill.Reg. 10253)
Section 120.380 Resources (EMERGENCY - 36 Ill.Reg. 10253)
Section 120.381 Exempt Resources (EMERGENCY - 36 Ill.Reg. 10253)
Section 120.382 Resource Disregard
Section 120.383 Deferral of Consideration of Assets
Section 120.384 Spenddown of Resources
Section 120.385 Factors Affecting Eligibility for Long Term Care Services (EMERGENCY - 36 Ill.Reg. 10253)
Section 120.386 Property Transfers Occurring On or Before August 10, 1993
Section 120.387 Property Transfers Occurring On or After August 11, 1993 and Before January 1, 2007
Section 120.388 Property Transfers Occurring On or After January 1, 2007
RELEVANT AABD REGULATIONS
89 IL ADMIN CODE SECT. 113, SUBPART C
Section 113.100 Unearned Income
Section 113.101 Budgeting Unearned Income
Section 113.102 Budgeting Unearned Income of Applicants Receiving Income on Date of Application And/Or Date of Decision
Section 113.103 Initial Receipt of Unearned Income
Section 113.104 Termination of Unearned Income
Section 113.105 Unearned Income In-Kind
Section 113.106 Earmarked Income
Section 113.107 Lump-Sum Payments and Income Tax Refunds
Section 113.111 Protected Income
Section 113.112 Earned Income
Section 113.113 Exempt Unearned
Income
Section 113.114 Budgeting Earned
Income of Applicants
Section 113.115 Initial Employment
Section 113.116 Budgeting Earned
Income For Contractual Employees
Section 113.117 Budgeting Earned
Income For Non-contractual School
Employees
Section 113.118 Termination of
Employment
Section 113.120 Exempt Earned
Income
Section 113.125 Recognized
Employment Expenses
RELEVANT AABD REGULATIONS
89 IL ADMIN CODE SECT. 113, SUBPART C
Section 113.130 Income From Work/Study/Training Programs
Section 113.131 Earned Income From Self-Employment
Section 113.132 Earned Income From Roomer and Boarder
Section 113.133 Earned Income From Rental Property
Section 113.134 Earned Income In-Kind
Section 113.139 Payments from the Illinois Department of Children and Family Services
Section 113.140 Assets
Section 113.141 Exempt Assets
Section 113.142 Asset Disregard
Section 113.143 Deferral of Consideration of Assets
Section 113.154 Property Transfers For Applications Filed Prior To October 1, 1989 (Repealed)
Section 113.155 Property Transfers For Applications Filed On Or After October 1, 1989 (Repealed)
Section 113.156 Court Ordered Child Support Payments of Parent/Step-Parent
Section 113.157 Responsibility of Sponsors of Non-citizens Entering the Country Prior to 8/22/96
Section 113.158 Responsibility of Sponsors of Non-citizens Entering the Country On or After 8/22/96
Section 113.160 Assignment of Medical Support Rights
RELEVANT SNAP REGULATIONS
89 IL ADMIN CODE SECT. 121
Subpart C: Financial Factors Of Eligibility
Section 121.30 Unearned Income
Section 121.31 Exempt Unearned Income
Section 121.33 Unearned Income In-Kind
Section 121.34 Lump Sum Payments and Income Tax Refunds
Section 121.40 Earned Income
Section 121.41 Budgeting Earned Income
Section 121.50 Exempt Earned Income
Section 121.51 Income From Work/Study/Training Programs
Section 121.52 Earned Income from Roomers or Boarders
Section 121.53 Income From Rental Property
Section 121.54 Earned Income In-Kind
Section 121.55 Sponsors of Aliens
Section 121.57 Assets
Section 121.58 Exempt Assets
Section 121.59 Asset Disregards
Subpart D: Eligibility Standards
Section 121.60 Net Monthly Income Eligibility Standards
Section 121.61 Gross Monthly Income Eligibility Standards
Section 121.62 Income Which Must Be Annualized
Section 121.63 Deductions from Monthly Income
Section 121.64 Food Stamp Benefit Amount
Subpart E: Household Concept
Section 121.76 Categorically Eligible Households
RELEVANT HOME SERVICES REGULATIONS
89 IL ADMIN CODE SECT. 682
SUBPART C: FINANCIAL ELIGIBILITY CRITERIA
Section 682.200 Assets Limitation
Section 682.210 Transfer of Assets
Section 682.220 Exempt Assets
Section 682.230 Assets Held in Joint Ownership
RELEVANT TANF REGULATIONS
89 IL ADMIN CODE SECT. 112, SUBPART G
Section 112.100 Unearned Income
Section 112.101 Unearned Income of
Parent,
Section 112.105 Budgeting
Unearned Income
Section 112.106 Budgeting
Unearned Income of Applicants
Section 112.107 Initial Receipt of
Unearned Income
Section 112.108 Termination of
Unearned Income
Section 112.110 Exempt Unearned
Income
Section 112.120 Incentive
Allowances
Section 112.125 Unearned Income
In-Kind
Section 112.126 Earmarked Income
Section 112.127 Lump-Sum
Payments
Section 112.130 Earned Income
Section 112.131 Earned Income Tax
Credit
Section 112.132 Budgeting Earned
Income
Section 112.133 Budgeting Earned
Income of Employed Applicants
Section 112.134 Initial Employment
Section 112.135 Budgeting Earned
Income For Contractual Employees
RELEVANT TANF REGULATIONS
89 IL ADMIN CODE SECT. 112, SUBPART G
Section 112.136 Budgeting Earned Income for Non-contractual School Employees
Section 112.137 Termination of Employment
Section 112.140 Exempt Earned Income
Section 112.141 Earned Income Exemption
Section 112.142 Exclusion from Earned Income Exemption
Section 112.143 Recognized Employment Expenses
Section 112.144 Income from Work-Study and Training Programs
Section 112.145 Earned Income From Self-Employment
Section 112.146 Earned Income From Roomer and Boarder
Section 112.147 Income From Rental
Property
Section 112.148 Payments from the
Illinois Department of Children and
Family Services
Section 112.149 Earned Income In-
Kind
Section 112.150 Assets
Section 112.151 Exempt Assets
Section 112.152 Asset Disregards
Section 112.153 Deferral of
Consideration of Assets
Section 112.155 Income Limit
Section 112.156 Assets for
Independence Program
RELEVANT PM AND WAG PROVISIONS
TANF Assets
PM 07-01-00 to PM 07-01-18
WAG 07-01-00 to WAG 07-01-18
TANF Income
PM 08-01-00 to PM 08-01-08-c
WAG 08-01-00 to WAG 08-01-08-c
AABD Cash Assets
PM 07-02-00 to PM 07-02-23-b
WAG 07-02-00 to WAG 07-02-23-b
AABD Cash Income
PM 08-02-00 to PM 08-02-07-c
WAG 08-02-00 to WAG 08-02-07-c
RELEVANT PM AND WAG PROVISIONS
AABD Medical Income and Assets
PM 15-04-00 to PM 15-05-04-a
WAG 15-04-00 to WAG 15-05-04-a
AABD Medical Spenddown
PM 15-08-00 to PM 15-08-15-c
WAG 15-08-00 to WAG 15-08-15-c
SNAP Assets
PM 07-04-00 to PM 07-04-20
WAG 07-04-00 to WAG 07-04-20
SNAP Income
PM 08-04-00 to PM 08-04-05
WAG 08-04-00 to WAG 08-04-05
OTHER BENEFIT PROGRAMS
Illinois Cares Rx
89 IL Admin Code Sect 119.20: Eligibility
Section 8 Subsidy
24 CFR 982.201 - Eligibility and targeting
PHA Administrative Plans available upon request to
the PHA
THE END
Any Questions?
Jennifer A. Johnson
Vice President and Trust Officer
American Bank and Trust Company
2580 Foxfield Road
St. Charles, IL 60174
Tel. 630-444-2944
Fax 630-584-9896
jjohnson@ambankqc.com