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Medicaid/Medicare Planning

Most of us, when we decide to plan our estates, are looking to minimize estate taxes, to pass our assets to our heirs, usually children, and to avoid litigation. However, when a disabled relative is involved (i.e. spouse, parent, child, grandchild, sibling) for whom you wish to provide, other planning aspects must also be considered. In particular, trusts may take on special significance when dealing with a disabled beneficiary. In fact, there are several specific considerations which the estate planner must consider when dealing with a disabled client or a client's disabled family member, that will enable your assets to be used to their maximum efficiency, while still allowing your loved one to retain all of their government benefits. We advise clients in anticipation of their establishing eligibility for Medicare or Medicaid benefits, and prepare for them, appropriate powers of attorney, deeds and trust agreements, including supplemental needs trusts. In addition, and where appropriate, we also advise clients on asset transfers and/or gift giving strategies to assist them in accelerating the date on which Medicaid benefits might otherwise first be available to them. The planning also includes the preparation of Medicaid Applications for both home care and nursing home care, and includes the preparation of applications for the recertification for Medicaid benefits, which generally must be completed and approved each year.

One of the most powerful tools in protecting your loved ones is the “supplemental needs trust.” It allows the continuation of governmental benefits, while using trust assets to supplement those benefits provided to the disabled person by the government. New York has enacted a comprehensive statute to protect disabled trust beneficiaries' financial eligibility for such programs, and such considerations should be part of a person’s estate planning considerations when there is a person with special needs in the picture.

We prepare first party supplemental needs trusts, which are funded with the disabled individual’s own assets. These types of trusts are typically used in those cases in which a disabled individual has received a personal injury or medical malpractice award, and are looking to have those assets largely sheltered during the remainder of their lifetime, so that they can still receive their government benefits, usually Medicaid and SSI. We also prepare third party supplemental needs trusts, which are trusts established for the benefit of a disabled individual with the assets from another person, usually their parents, children or siblings. This second type of supplemental needs trust is typically used to shelter an inheritance which an individual might otherwise receive from their parents, siblings or children, so as to not disqualify the disabled individual from those same types of government benefits. We also assist clients in adopting third party pooled institutional supplemental needs trusts. These latter types of trusts are sponsored by certain charitable organizations, and provide the benefit of professional management of the funds contributed into the trust for the benefit of the disabled individual. In certain instances, membership in the pooled institutional supplemental needs trust requires the charitable organization to provide perpetual lifetime social worker services for the disabled individual, at no additional cost to the individual or their family.

Questions you should be asking:

The attorneys at Cullen and Dykman can answer these questions and more.

A case in point

Sam and Beth Stevens have two children. Their son, Evan is a successful businessman with a family of his own. However their daughter, Joan, who is age 25, is developmentally disabled, and is currently on Medicaid and SSI. She lives with Sam and Beth. She has never worked, except for part-time package assembly work arranged for by Nassau County. Joan has never married, and has no children. Sam and Beth have both been caring for Joan, but as they have gotten older (Sam is now age 68, and Beth is now age 65), it has become harder and harder for them to care for Joan, who seems to be becoming more unruly each day. Sam and Beth worry about what will happen to Joan, once they both have passed away. They worry about who will support Joan financially when they are gone, and who will be ensuring that Joan will be living in a safe and secure home, with her government entitlements continued uninterrupted during the remainder of her life. Evan, who lives in California, has not volunteered to help with Joan’s care, once Sam and Beth are gone, and is not likely to be of much assistance at that time.

After consulting with an attorney at Cullen and Dykman, Sam and Beth are pleased to learn the following:

There are social service organizations that they can hire at this time, which can be used to assist them in transitioning Joan into a group home for developmentally disabled individuals, where Joan will be safe and secure.

The social service organization will also periodically check up on Joan, to ensure that all of her housing and other personal care needs are being met, that she is taking all of her prescribed medication, and with the costs of her care still being largely paid for by Medicaid and SSI. Since Sam and Beth speak with Joan every day, and visit with her at least once a week, and it is not necessary for the social worker to check up on Joan more often than once every month. However when Sam and Beth were traveling in Europe for two weeks last summer, they learned that a crisis had occurred with Joan, which necessitated the social worker speaking with Joan every day, and visiting with her four times during their absence. The fact that the social worker was able to resolve the problem without their personal involvement, was of great comfort to Sam and Beth, who now feel confident that following their death, Joan will be well taken care of.

Their wills will be structured in such a way that Evan, their son, can receive his share of their estate outright, but with the share allocable to Joan paid into a trust for Joan’s benefit, with Beth’s brother Alan, serving as the initial trustee. That trust will be structured as a third party supplemental needs trust, which will pay that small portion of Joan’s monthly expenses, if any, which is not fully paid for by either Medicaid or SSI, or by the pooled supplemental needs trust, with the payment made in each case, directly to the provider of goods or services to Joan, so that Joan is not disqualified from continuing to receive Medicaid and SSI benefits. One of the additional benefits of the supplemental needs trust in Sam and Beth’s wills, is that on Joan’s subsequent death, any amounts remaining in the trust can be paid to Evan, or to Evan’s children, should Evan have predeceased Joan. With a pooled third party supplemental needs trust, typically up to one-half of the remaining assets in the trust allocable to the share of the disabled individual, must be paid to the social service agency, before any amounts can be paid to any of the family members of the deceased disabled individual.