FLORIDA ESTATE PLANNING AND PROBATE LAW BLOG

The Florida Estate Planning and Probate Law Blog is focused on recent federal and state case law and planning ideas.

Showing posts with label special needs adult. Show all posts
Showing posts with label special needs adult. Show all posts

SPECIAL NEEDS TRUST FAIRNESS ACT

♠ Posted by Marc J. Soss in ,,,,,,
The Special Needs Trust Fairness Act (the “Act”) was signed into law on December 14, 2016. The Act amends federal law to enable disabled individuals to establish their own first-party payback Special Needs Trusts under 42 U.S.C. § 1396p(d)(4)(A). A first-party funded Special Needs Trust will enable a disabled individual, who receive assets outright, including through a gift, inheritance, personal injury settlement or child support, to protect such assets for their future use while remaining eligible for essential means-tested government benefits (Supplemental Security Income and Medicaid). The Act will amend Section 1396p(d)(4)(A) of the Social Security Act to exclude first-party funded Special Needs Trust as a transfer for less than fair consideration and countable asset. This amendment will only apply to trusts established on or after the date of the enactment of the Act. Prior to the passage of the Act, federal law required disabled adults who were capable of handling their own affairs (and thus without legal guardians) to rely upon their parents, their grandparents or the courts to establish a first-party funded non-pooled payback Special Needs Trusts for their benefit. This requirement contradicted the fact that such Trusts were being funded by the disabled individuals with assets legally belonging to them (i.e. not third-party funds). This requirement was also inconsistent with the law governing the creation of Pooled Special Needs Trust which allows disabled individuals to create their own first-party funded Pooled Special Needs Trust with non-profits.
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SPECIAL NEEDS TRUST PLANNING

♠ Posted by Marc J. Soss in ,,,,,,,
Families with a special needs child/adult need more estate planning than families without. A Special Needs Trust (SNT) can play an important role in helping families plan. Issues to consider: Preserve public benefits while enhancing your child/adult's lifestyle. Many individuals with special needs obtain basic support from Supplemental Security Income (SSI) - a gateway to Medicaid and other critical programs. Since SSI covers only essential expenses, it is important to create a supplement for their lifestyle. But because SSI imposes limits on income and assets, gifts or an inheritance could adversely impact benefits eligibility. The Social Security Administration (SSA) does not count assets in an SNT as income for determining benefits eligibility because the assets are owned by the trust rather than the special needs beneficiary. Ensure assets will be used as intended. With an SNT, distribution of assets is directed by trust documents as well as SSA and IRS guidelines. By comparison, if you leave assets to an "able-bodied" child and ask that some of the funds be used for the sibling with special needs, the child may fail to honor your request, lose the assets to creditors or die prematurely and leave the funds to his or her own children. Allow others to contribute. If you establish the trust now, family members and friends can make gifts to the SNT. Anyone interested in leaving an inheritance or making a gift should be advised to direct bequests to the SNT. Maximize the benefits of a personal injury settlement. If the child/adult is the recipient of a sizable settlement, having the payout (often a lump sum plus a structured settlement) directed to a self-settled SNT offers several benefits. They will still qualify for public benefits, can use settlement funds for nonessential expenses and may enjoy the financial security of receiving regular payments for life.
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