The Connecticut Elder Law Blog

Make Sure You Have the Right Type of Special Needs Trust

Most of my clients who sit down to discuss estate planning for their special needs child are surprised to hear that there are actually two types of special needs trusts, one of them being much more appealing than the other.  Well, there are really three types, but the third type (D4C pooled trusts) rarely comes up. Anyway, the question of which one you need to use is based on the source of the trust funding.

If the trust is funded by assets that belong to the special needs child (usually by way of a personal injury settlement, or possibly an inheritance from a well-meaning relative) then it's called a "self-settled" or "D4A" trust.  This is not an ideal situation because Federal law requires that the trust include a "pay-back" provision.  Such a provision states that upon the death of the special needs child the remaining trust funds must go to the State, up to the amount that the State has contributed towards the care of your child.  It essentially allows the State to get reimbursed and it's possible that you would not be able to have the money go to family members instead.  It depends on how much the State has helped out your child.

If the money going into the trust comes from a source other than the special needs child (presumably the parents and possibly other relatives), then it's called a "third party" special needs trust.  This type of trust does not require a pay-back provision for the State.  Upon the death of your child, the remaining trust funds can go to family members, charities, churches or anywhere else you would like it to go.

So...if you have a special needs trust it's worth taking the time to have your lawyer review it and make sure that it doesn't have that nasty pay-back provision unless it has to.  You'd be surprised by how many special needs trusts I review where the attorney unnecessarily/accidentally included a pay-back provision.

DISCLAIMER: This blog does not offer legal advice, nor does it create an attorney-client relationship.  If you need legal advice, consult with a lawyer instead of a blog.

New CT Law for VA Aid & Attendance Benefits

I'm happy to report that Governor Malloy recently signed a bill into law which mandates that the State ignore any income from the VA's Aid & Attendance pension benefit program when determining eligibility for several government programs.

Fortunately, the list of government programs includes Medicaid, SAGA cash, the Connecticut Home Care Program for Elders and the State Supplement for SSI!

Little-Known SSI Facts

Supplemental Security Income (SSI), not to be confused with Social Security retirement or disability benefits, is a means-tested federal program which many of my clients benefit from.  The program is run by the Social Security Administration (SSA). 

I just wanted to take this opportunity to share several SSI facts that are not well-known by the general population...

*  In order to be "categorically" eligible for SSI, you must be disabled by a medically-determinable physical of mental impairment, but impairment due to drug and/or alcohol addiction no longer counts as a "mental impairment". 

*  SSI benefits are not subject to garnishment, except for child support wether it is court-ordered or voluntary.

*  The amount of your SSI benefit depends on your living arrangements and family status.

* Generaly speaking, an SSI beneficiary must be a U. S. citizen.  However, there are several exceptions (too lengthy for a mere blog post), so check with your local SSA office for all the details. 

*  There are income limitations in regards to SSI eligibility, but the first $20 of monthly income is ignored by SSA.

*  There is a $2,000 asset limitation for the SSI program, but a car used to transport the disabled person is ignored by SSA.

Different Gifting Rules for Medicaid and SSI

At this point, many people are aware that the Federal law for Medicaid was overhauled in 2006, and the changes were not favorable for Medicaid applicants; a longer look-back period of five years, and now the period of ineligibility triggered by the gifting starts when the applicant has just about run out of money.

However, just when you thought this stuff couldn't get any more complicated, keep in mind that these 2006 gifting rules do not apply to Supplemental Security Income, better known as "SSI".

Medicaid is a benefit program that helps you pay for your long term care costs in the nursing home, and in the community under certain circumstances.

SSI is a monthly cash payment that provides minimal income to those over age 65, blind or disabled.

Both programs have very strict financial guidelines before eligibility is established (unlike Medicare and SSDI).

As far as the gifting rules for SSI go, that program uses the "old", more-favorable Medicaid rules.  The look-back period under SSI is three years, not five.  And the period of ineligibility for SSI begins when the gift is made, not when the applicant has otherwise spent his/her assets down below the asset limit ($2,000 for SSI). 

Here's the standard disclaimer (you knew it was coming!): Do not attempt to incorporate planned gifting in regards to government benefits on your own.  Seek help from an experienced professional.