An Overview of Special Needs Trusts - louisville.edu · Training Center: An Overview of Special...
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Hosted by the Kentucky Autism
Training Center:
An Overview of
Special Needs Trusts
Richard N. Bush,
Attorney at Law
March 22, 2011
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Topic Areas
• Federal and Kentucky statutory
framework
• The “nuts and bolts” of an SNT
• Planning Considerations
• Additional Documents
• Summary
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Federal and Kentucky Statutory
Framework
42 USC 1396 Subsection D (4)(A)
[exempts SNT assets as a Medicaid resource]
42 USC 1382c (a)(3) [defines disability]
POMS [Program Operations Manual]
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Kentucky
907 KAR 1:650
[Treatment of trusts and Medicaid]
Kentucky Cabinet For Health and Family
services:
http://chfs.ky.gov/dms/incorporated.ht
m
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What are the requirements for
establishing an Special Needs Trust
(SNT)?
When is an SNT is appropriate?
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First Party versus Third Party
SNTs
Identical in operation
Medicaid Recovery
Source of funding
Sometimes both are needed
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B. The “Nuts and Bolts” of an
SNT
How does a SNT work in the real world?
Legal Document
Sole Benefit
Who can set up a SNT?
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Typical SNT Provisions
Declaration of Trust; appointment of Trustee and Successor Trustee(s)
Definitions; Purpose and Intent
of Trust; Assets of the Trust
Amendments Medicaid reimbursement
Provisions tailored to beneficiary;
Spendthrift clause
Family/Home Living
Arrangements
Ultimate distributionPowers and duties of Trustee;
Removal of Trustee
Tax provisions; generation skippingAdvisory Committee/Trust
Protector
Misc; signatures and attachments
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Planning Considerations
Who’s in charge?
Frequently parents or a sibling;
Parent issues, age, divorce, sibling rivalry
Sole Benefit Trust…Other siblings?
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Planning Considerations
Medicaid Reimbursement
Financial Planning
Checks and balances
Planning for the next generation
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Who should be the Trustee?
Consider…
• Fiduciary Responsibility
• Control within family
• Aging
• Co-trustees
• Distinguish: guardian and/or Social
Security Payee
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Planning for the Next
Generation
The “pool” of future Trustees
Corporate Trustees
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Checks and Balances
SNTs are Private documents
Potential for error
Advisory Committee
Trust Protector
Guardian/advocate
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Financial Planning
Critically important topic!
Long term view
Financial Planner (vs CPA?)
Taxation of trust
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Additional Documents
Last Will and Testament
Power of Attorney
Healthcare/Medical POA
Living Wills (Kentucky)
Living Trusts for Parents/siblings
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Summary
Consequences of doing nothing
SNT “only game in town”
Unique to each individual and family
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Summary
Plan “crystal ball gazing”
Get the best advice possible in all
areas:
living arrangements, financial, legal, and
others areas
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Questions?
Richard N. Bush
Attorney at Law
235 South Fifth Street
Fourth Floor
Louisville KY 40202
(502)584-7255