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Veteran Pension Benefits Lawyers! Have You Seen What The Federal Trade Commision Is Saying?

March 7, 2013

by Lawyers With Purpose with No Comment VA

"The Federal Trade Commission warns veterans and their families: Be wary of dishonest advisers offering “free” help with paperwork for pension claims. Unscrupulous lawyers, financial planners and insurance agents advise veterans over 65 to transfer their assets to a trust, or to invest in insurance products, so they can qualify for Aid and Attendance benefits. By following their advice, you could lose your eligibility for Medicaid services and the use of your money for a long time, plus get billed for fees that range from hundreds to thousands of dollars. Whether it’s through an ad or a website, these offers usually involve a free seminar, often at assisted living facilities, senior centers, or other places in your community. They may claim to be veterans themselves, and appeal to your emotions to get you to act. Consider any pressure to act fast as your cue to say no. Your best bet is to take your time, do some research, and consider all your options, including doing nothing."

http://www.ftc.gov/opa/2013/02/vetspension.shtm

As an elder care attorney, I have been helping middle class, wartime veterans since 2003 obtain VA pension with Aid and Attendance. Since 2005 I have been training lawyers on the eligibility rules and how they, too, could assist wartime veterans and their widows obtain tax free income to help offset the high cost of home health care, assisted living care, and nursing home care. Since 2009, I have personally observed the unscrupulous behaviors of financial advisors, insurance agents, and attorneys who are not accredited by the VA and are only interested in their own short term gain.

In 2012 I co-founded Lawyers With Purpose, LLC, a member organization that is creating a world where people can protect what’s important to them and where client-centered lawyers can be valued for the peace of mind they help provide. The lawyers who are members of Lawyers With Purpose, LLC uphold the highest ethical standards and work within the VA benefits and Medicaid benefits laws to partner with a client in creating a personalized long-term care plan.

My clients tell me that what is important to them is:

(1) living as independently as possible, in their own home when possible;
(2) preserving their quality of life as they age and become disabled; and
(3) protecting their family members who depend on them for support.

This is often accomplished by legally preserving assets and qualifying for assistance from other sources like VA pension with aid and attendance or Medicaid.

As an ethical estate planning and elder care planning attorney, you should not be offended by what the FTC has said, you should make your community aware that these practices are, in fact, happening. You can educate your community on how to protect themselves from the bad actors and distinguish yourself as one of the good guys.

The FTC points out some really good tips for consumers as to how to ensure they are using an advisor who has the client’s best interest in mind, not the advisor’s best interest.

(1) Make sure the advisor is accredited by the Veterans Administration
(2) If you have your own financial advisor but attend a seminar by a different financial advisor or insurance sales person, discuss the information with your personal financial advisor before switching advisors
(3) If you are using a financial advisor to assist with planning, make sure you have an accredited lawyer review the plan (a lawyer that you personally meet with)
(4) Check the state bar for any complaints against the lawyer
(5) Understand that lawyers can charge for creating and implementing an estate plan, to include long-term care planning, but no one can charge to assist you in completing and filing a VA application.

For more tips, go to http://www.consumer.ftc.gov/articles/0349-poaching-veterans-pensions

To learn more about Veteran Benefits and Medicaid Planning register to attend our Lawyers With Purpose program in Atlanta April 30th – May 1st. Click here to register.

Victoria L. Collier, Certified Elder Law Attorney, Fellow of the National Academy of Elder Law Attorneys, Co-Founder, Lawyers with Purpose, LLC, and author of 47 Secret Veterans’ Benefits for Seniors…Benefits You Have Earned but Don’t Know About.

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What To Do With “Excess” SSI Benefits

March 6, 2013

by Lawyers With Purpose with No Comment Medicaid SNT

Every once in awhile, a client who receives monthly Supplemental Security Income (“SSI”) cash benefits (in 2013, a maximum of $710/month) may find that he cannot spend the full amount on his needs (and wants). This failure to fully expend the SSI benefits may, in due time, result in the client accumulating more than $2,000 in his bank account, thus jeopardizing his ongoing eligibility for SSI and, in a majority of states, Medicaid as well.

We all know that SSI benefits are not assignable in advance of receipt to a first-party Special Needs Trust. See POMS Section GN 02410.001 and Sections SI 01120.200G.1.c and 01120.201J.1.c. However, is it permissible for an SSI recipient or his Representative Payee to transfer unused SSI benefits to a first-party SNT? The answer is “yes.”

POMS Section GN 00602.075 (“Transfer of Benefits to a Trust”) provides that a Representative Payee (or, presumably, the benefits recipient himself) is permitted to transfer Title XVI benefits (i.e. SSI) to establish and fund a trust, or to fund an existing trust, if the following prerequisites are met:

(i) establishing the trust is in the beneficiary’s best interest;
(ii) the trust is established exclusively for the use and benefit of the beneficiary to meet the beneficiary’s current and reasonably foreseeable needs; and
(iii) the SSI recipient is the sole trust beneficiary during his lifetime. See POMS Section GN 00602.075C.1. The POMS then incorporate by reference the familiar SNT requirements set forth in POMS Sections SI 01120.201, 01120.202 and 01120.203 for “guidance on trusts and how trusts established with an individual’s assets affect SSI eligibility.” See POMS GN 00602.075C.4.

POMS Section GN 00602.075D.3 then enumerates examples of trust provisions that “meet use of benefits policies,” including expenditures for “food, clothing, housing, medical care, recreation and education,” as well as reasonable compensation for trustee and other professional services. Also permissible are trust provisions which limit disbursements to “the beneficiary’s current maintenance needs that are not covered by public assistance.”

An example of impermissible trust provisions include prohibitions on disbursements for “the beneficiary’s current needs for food, clothing, housing and medical care,” while allowing disbursements only “to enhance the quality of life for the trust beneficiary in the broadest sense, including but not limited to vacation travel and transportation expenses.” Caveat: many early versions of first-party SNTs utilize just this type of impermissibly limiting language!

Thus, a first-party SNT that otherwise complies with the relevant provisions of POMS Sections SI 01120.201, 01120.202 and 01120.203 would be a permissible receptacle of excess SSI benefits paid to the (recipient or his Representative Payee) but not currently expended.

Kristen Lewis

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Why Clients Actively Choose Not To Hire

March 4, 2013

by Lawyers With Purpose with No Comment Uncategorized

The average enrollment cycle in the Estate Planning arena is 9-18 months. Now, that might sound horrifically long, but it’s the absolute raw truth. And it’s no phenomenon that Estate Planning and Elder Law Attorneys that I talk to across the county are experiencing the same thing in their own practices.

The irony, the coincidence. There’s a saying my initial mentor taught me: “So go the coach, so go the coachee.” The very reason most attorneys struggle with how to guide clients to a decision is because they are unwilling to do so themselves. Which radiates an essence of the following decision making process Over explain … Process …. Deflect … Confuse … Repeat

As an industry, attorneys are incapable of active choice without a tremendous amount of internal (possibly financial) suffering. Call it a tribe of high “Fact Finders™” or law school conditioning to research and analysis until there is no law review, case study or white paper unturned. In my humble opinion, the core of the matter is none of the above. It boils down to 1 word. Permission.

Permission, is letting go of your beliefs or a structure that no longer serves you. It’s walking away from the all or nothing thinking and no longer buying into “the way things are supposed to be.” It’s a willingness to be in a place of uncertainty and move into a place of possibility.

It’s also about honoring ourselves, what we desire from life, and letting go of worry, guilt, and blame. Sometimes permission is about how you are being, and other times permission is about what you are doing. Sometimes permission is so that we can grow, other times it’s so we can let go. Permission is a conscious decision and conversation that takes place in your head — and likely your heart

Permission shows up in our life daily as we are bombarded with choices, decisions, dilemmas and change that require us decide and declare (or not). Most often, we recognize the need for permission when we have a deep need for certainty (evidence) or when we are going against what others are wanting from us. Permission is an internal battle.

We see the need for permission to show up in our life in situations as diverse as deciding on whether or not to attend an event, terminate an employee, leave a marriage, spend your savings and retirement on a new adventure or if you should join a new organization (again), parenting, whether to go home at night, take time off of work. The list goes on and on.

Once you recognize the role permission plays in your life, you’ll see how almost every decision and choice is being driven by this silent control freak. When we can bring awareness to this internal meter of “right, wrong, good, bad, yes or no,” we can move into a place of being able to make the choices that are best for us at the time — without endless research (fear), guilt, shame and the need for certainty.

Well, maybe there will still be a little fear, but fear is a motivator and adaptable: especially when you are operating from a place of permission instead of resistance. At the end of the day giving you permission boils down to putting the oxygen mask on yourself first. And that’s a hard nut for most of us to crack.

The client really wants to make certain they protect their daughter from that good for nothing son in law. But without permission the selfish, judgmental voice speaks in stereo. Many attorneys have been asked by their clients at the end of the vision meeting, “Tell me what to do?” And likewise from attorneys that are about to make an investment in joining LWP.

But I can’t tell them what to do, and even if I did, it wouldn’t relieve them of any pain or uncertainty because they haven’t given themselves permission to decide and declare. They can take my advice but it won’t work because they didn’t come to it on their own. However, if I own my role as a shepherd, guide, coach and unwavering stand to lead them to a place of permission, to allow decision, decision is made. With confidence, peace and maybe even a bit of excitement.

What makes our LWP community unique is we hold our members accountable to their path and plan while providing the infrastructure to achieve it. Our members tell us they are accomplishing their goals, can finally delegate , trust their team to lead, while making more money and feel confident it won’t all break. This isn’t all our members, only the ones whom have given themselves permission. And I feel strongly that is the value proposition you bring to your clients, to declare and commit to a path and plan they believe in.

Molly Hall

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Four Basic Principles – Medicaid Made Simple

February 28, 2013

by Lawyers With Purpose with No Comment Asset Protection Medicaid

Many people are confounded by the complexity of Medicaid. The truth is, Medicaid is quite simple. It’s a set of rules, exceptions and exceptions to the exceptions, but all are founded on four basic principles. First, understanding the rules, second, determining if the client meets the eligibility requirements, or if there’s an excess amount to “spend down”, third, determining the spend down method and fourth, implementing the funding plan.

Understanding the rules really comes down to these basic concepts. The difference between the institutional spouse and the community spouse, the income allowances (minimum monthly maintenance needs allowance a/k/a MMMNA), the community spouse resource allowance (CSRA), the look-back period, the monthly divisor, spend down, the penalty period, compensated transfers, uncompensated transfers and all the allowances and exemptions. The exemptions include protections of your principle residence, for a spouse or disabled or minor child, an automobile, a prepaid funeral and life insurance up to $1,500. All Medicaid determinations are based on these concepts. Once you have a clear understanding of the application of the rules regarding these key terms it will determine whether an individual is Medicaid eligible.

The second principle determining whether the client meets qualifying conditions (That is, are they citizens and a resident of the state?), are broken down into three parts; legal, health and financial. Do they need care that is covered by Medicaid, and do they meet the income and asset limitations? If the client does not meet the legal or health criteria they will not qualify. If they exceed the financial limitation, they must “spend down” their income or assets to the qualifying levels.

The third principle, the method of spending down can have two results: One leads to a penalty and ineligibility for Medicaid (“uncompensated transfer”) and the other type of spend down does not (“compensated transfer”). Qualified (“compensated”) spend downs will not penalize the applicant as they are deemed to be exempted transfers under the law. Such an example of a qualified spend down would be the Medicaid applicant making an improvement on their principle residence, or purchasing a car, a prepaid funeral or paying off debts. Uncompensated transfers are when an individual gives assets away and receives nothing, or less than what was given, in return. In these circumstances, the individual will be penalized and made ineligible for Medicaid depending upon the uncompensated amount given away and the monthly divisor in the community in which they live. What’s critically important to understand is a penalty assessed for an uncompensated transfer can far exceed 60 months and doing an uncompensated transfer does not disqualify your for 60 months. Other methodologies to spend down include the use of annuities, Special Needs Trust, Personal Services Contracts, trusts “solely for the benefit of your spouse, or disabled or minor child, or promissory notes. A combination of these spend down methods may be utilized in qualifying a client.

Finally, once you have applied the rules, utilized the exemptions and completed your spend down strategy, none of it is effective without a funding plan. Unlike traditional estate planning where funding could get “cleaned up” after death by a pour over will, in Medicaid planning, none of the penalties or planning is effective until the funding has been completed. It is absolutely critical that you have a complete funding strategy in place once you create the plan to ensure the plan you create is actually going to work.

Did you even think Medicaid could be explained in less than 350 words? You just read it and it’s not as complicated when you have a structure, such as outlined here, to apply to each case. I will be rolling out such a structure with National Veterans Benefits Expert, Victoria Collier, on April 30th and May 1st in Atlanta, Georgia. For information click here. Hope to see you there!

Dave Zumpano

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VA Pension With Aid & Attendance, IRAs and SPIAs

February 27, 2013

by Lawyers With Purpose with No Comment VA

Wartime veterans (or their widows) may receive tax free income to help offset the cost of long term care. The benefit, Improved Pension, commonly referred to as Aid and Attendance, is a means tested benefit wherein the claimant must meet both income and asset limitations.

The asset limitation is not a bright line figure, however, a standard guide is that if the claimant has more than $80,000 of countable assets (the home, cars, and personal property are exempt), the claim will be denied. Thus, often the veteran will seek counsel from a qualified attorney to assist with asset preservation and qualification for benefits.

A problem with reduction of assets may arise when the veteran has a large retirement account. Unlike other investments or cash account, retirement accounts cannot be liquidated without incurring a sizable income tax consequence.

Can the IRA be converted to a SPIA?

Historically, in this situation, the recommendation was to roll either a portion of or the entire retirement account into a single premium immediate annuity (SPIA). SPIAs create an income stream based on the insured’s life expectancy, thereby eliminating the cash value of the investment. Given there was no cash value, then that automatically reduced the net worth of the claimant, bringing the assets below the permissible limits.

The Veterans Administration has begun denying claims where a SPIA has been used, asserting that the SPIA has not reduced the net worth. Although no laws have changed, the VA has changed its procedure of how it treats annuities when calculating net worth. Until the law does change, my recommendation is that:

(1) if you have pending claims with SPIAs that ultimately become denied, then appeal.
(2) if you have a large retirement account, either
(a) don’t apply for VA benefits, or
(b) use a SPIA but caution your client of the probability of a denial and the likelihood of an appeal.

The VA Reaches Out To Funeral Directors – Shouldn’t You?

February 22, 2013

by Lawyers With Purpose with No Comment Legal Marketing VA

Would you like to enrich your relationship with funeral directors?

As estate planning and elder care attorneys, we are often called upon to provide our clients with guidance around planning for death. Veterans may have more options available to them than non-veterans. In addition to being buried with honors or placed into a national cemetery, there may be monetary benefits available to surviving family members.

The VA recognizes “Veterans and their families need compassion when they approach funeral directors for help.” (quote from Secretary of the VA Eric K. Shinseki). Thus, the VA has developed an entire website providing resources to funeral directors. The site, http://www.cem.va.gov/cem/funeraldirector.asp, can be very useful for the estate planning and elder care attorney as well.

Moreover, many funeral homes and their directors may not be aware of this new site. This is your opportunity to create or further develop your relationship with funeral directors. By bringing this information and the website to their attention, you are providing value to their business. It can also be used as an introduction to you and the services your firm provides.

What would be a simple process to develop this relationship and market to funeral directors?

First, draft a letter of introduction to the funeral director. Attach to your letter a screenshot of the website above. Inform the director that you will be calling in a week or two to schedule a face-to-face meeting to discuss how you may work together to help veterans in need of pre-planning or immediate funeral services.

Then, follow up with the phone call to schedule the appointment. At the end of the appointment, create a relationship action plan – where will you go from here? After thfe appointment, send a handwritten thank you note within three days of the meeting, noting something personal you learned about them. Most importantly, approximately 45-60 days later, review the relationship to determine if it is going anywhere.

Relationship marketing requires continued communication and contact, like any other successful relationship. Lawyers with Purpose has an entire Relationship Marketing System to make this process easy and natural for its members. The Veterans Administration has now provided you with a way to kick start the introduction!

Victoria L. Collier, CELA, Co-Founder Lawyers with Purpose, LLC, Author, 47 Secret Veterans’ Benefits For Seniors.

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Tips to Remove Overwhelm From The Air

February 21, 2013

by Lawyers With Purpose with No Comment Uncategorized

Seems most of my business coaching clients are creating/experiencing some form of overwhelm lately. I want to start with stating that overwhelm is a state of mind and a way of being. It is NOT a set of circumstances. It is resistance to what is. It is NOT loving what is going on. The DISTINCT difference of how to STOP overwhelm is what you are willing to do about it and taking responsibility in it.

Don’t Ask… Present!

Think about it… if you are asking your boss, the business owner, for a raise, you want to speak his language, right? You want to put it in terms that make sense to him. Well, let’s consider how he gets paid. Ultimately, he puts dollars in his pocket from getting clients to hire him.

Now, to obtain this money, he doesn’t ask clients to hire him… he has to make a presentation of your company’s services and conclude it with the price it will cost the client to have these services.

So often we forget that we, as employees, should treat our bosses as we treat our clients. We would never show our worst side to our clients. We make the extra effort to make sure things are presented and prepared well for them. We should do the same for our bosses. Often, when working in a small business, things are casual and you work closely with your boss, which is great, but it can allow us to get too comfortable, or even sloppy, in our presentation to our boss. It’s not that you can’t be comfortable or even have a friendship with your boss, but you should always make sure you are presenting yourself as a valuable resource. Make sure they have facts about the results you produce–tracking reports, sales numbers, clients billed, and so forth. This is never more important than when you are making a presentation for a raise.

So, when you feel it’s time to discuss a raise, schedule a meeting and prepare a presentation. Never bring personal issues into the conversation (i.e., personal financial struggles, the cost of childcare or tuition, your divorce, etc.) Again, working in a small office can lend an aura of intimacy that sometimes just isn’t appropriate in certain conversations, like asking for a raise. It’s often hard to draw a line between “what goes” and “what doesn’t,” but you should be able to tell by instinct and by reading your boss’s personality. So, discussing personal issues with your boss depends on your relationship.

However, even if you do talk about these things, they don’t belong in this discussion about a raise. You should never request or receive a raise based on personal need. You should request and receive a raise based on your value to the company. Use the formula in this chapter to present your value and get your raise.

There’s a Time and a Place

Nothing can hijack a conversation more than the wrong time or place. In an already potentially awkward conversation, eliminate distractions and disruptions that can make you lose control of the setting. Carving out quality time to present your proposal is a slippery slope. This doesn’t have to be a desperate thing. Don’t grab any 10 free minutes your boss might have. That would result in bad timing, lack of his attention, and usually a “let me think about it and get back to you” answer because there isn’t enough time to work it through together.

Getting Down to It

So, now you’re here for the meeting. Your boss is paying attention, and it’s Showtime! First, always thank your boss: “Thank you for taking time out of your busy schedule to meet with me today. I appreciate it.” Next, acknowledge him. “I know you have a lot to do, so I’ll keep our time commitment and make sure we stay on track.” Then, get to it. “I’d like to go over with you where I’ve grown over the past and share the value I have produced and talk about where I would like to grow over the next year. I want to make sure it’s in line with what you need from me and that you see how I can support you and the firm more. And I’d like to talk about how to value the role I currently play in the firm. I have some ideas I’d like to share with you.”

Usually, a boss is more than willing to listen to your suggestions and give feedback, and prefers this to having to come up with all the ideas himself. And usually you end up with a decision closer to what you ultimately wanted if you initiate the ideas!

Now, there’s a dangerous pause where you can lose control of the meeting. Let your boss reply, but don’t let him start throwing out ideas and thoughts. Go over what you have prepared before you start brainstorming about the future. So, if your boss starts to toss around ideas, politely interject:

“Great, let me jot down what you said so we don’t forget that idea, and if I could, let me run through what I’ve accomplished over the past (time frame since last raise). I found it very interesting when I reviewed it, and I think it will help us see what I am capable of in the future as well.”

See how we just “spun” this from being a laundry list of things you have done to an essential part of the “future idea” process? It’s much more engaging for a business owner.

Are you willing to let some things go, accept reality? Can you appreciate your full plate? Can you appreciate your full schedule? Can you find a peaceful center when dealing with things that normally drown you into worrying? Can you love pressure and respond appropriately? Can you find the right question to ask yourself? Tony Robbins recommends these questions when faced with a big problem:

1. What is not perfect yet?
3. What am I willing to do to make it the way I want it?
4. What am I willing to no longer do to make it the way I want it?
5. How can I enjoy the process while I do what is necessary to make it the way I want it?

The idea is to focus on solution rather than the problem itself. Remember, overwhelm is not a set of circumstances. It is resistance to what is. The DISTINCT difference of how to STOP overwhelm is what you are willingness to stop and restart and take responsibility.

Shared with permission by “Don’t be a Yes chick…”

Molly Hall

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Three Major Changes in Legal Interpretations You Need to Know

February 20, 2013

by Lawyers With Purpose with No Comment VA

The VA has been denying Improved Pension with Aid and Attendance claims at record numbers in the past four months. Attorneys and claimants are getting frustrated beyond belief. Are you one of them? Do you know why?

At our January program I discussed some of the major changes occurring at the VA today and what we expect to see in the future. It was an eye opener for attendees. All agreed that you cannot and should not practice in the area of VA benefits unless you keep a close tab on the mood and character of the VA and the changes it is making.

Having said all that, the VA laws have not changed. Yet, the VA has changed their “interpretation” of the laws and have made changes to their adjudication practices and procedures in three main areas

(1) how they are treating single premium immediate annuities with regard to countable net worth;
(2) whether or not they will deduct independent living facility and assisted living facility fees as permissible unreimbursed medical expenses (based on stricter medical needs verification); and
(3) eliminating the annual eligibility review process.

Changes to laws and procedure we expect in the future include:

(1) an imposition of a transfer of assets penalty, to include assets transferred to trusts;
(2) assets in certain trusts being treated as part of the net worth calculation to determine eligibility;
(3) longer application and appeals processing times.

Positive changes that have been made, although the results have not yet been proven, is that the VA has added an expedited claims process for widows of veterans (currently the average wait for approval is 12 months). An expedited claims process for veterans already existed.

More, now than ever, it is critical to keep your hand on the pulse of the VA. To do so, we invite you to become a member of Lawyers With Purpose, LLC and keep reading our blogs.

Victoria L. Collier, CELA, Co-Founder Lawyers with Purpose, LLC, Author, 47 Secret Veterans’ Benefits For Seniors.

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Lewis v. Alexander (3d Cir. 2012) Sets the Stage for Possible Review of SNT’s by Supreme Court

February 19, 2013

by Lawyers With Purpose with No Comment SNT

OBRA ’93 authorized the concept of a “pooled” Special Needs Trust, separate accounts in which may be established for the sole benefit of a beneficiary with a disability. 42 U.S.C. § 1396p(d)(4)(C), and related POMS provisions, set forth the following requirements.

a. A pooled Special Needs Trust must be “established and managed by a non-profit association.” POMS SI 01120.203.B.2.c defines a non-profit association as “an organization established and certified under a State nonprofit statute.” As of January 2011, tax-exempt status is no longer required of the non-profit association.

b. A pooled Special Needs Trust must contain the assets of individuals who are “disabled,” as defined by 42 U.S.C. § 1382c(a)(3).

c. The pooled Special Needs Trust must maintain a separate account for the sole benefit of each beneficiary with a disability, but may pool the assets of the separate accounts for purposes of investment and management. See POMS SI 01120.203.B.2.d and POMS SI 01120.203.B.2.e.

d. A separate account with the pooled Special Needs Trust must be established by (i) the beneficiary’s legal Guardian of the Property or Conservator; (ii) the beneficiary’s parent or grandparent; (iii) a court; or (iv) the beneficiary himself. (In contrast, the beneficiary of a (d)(4)(A) Special Needs Trust may not serve as the Settlor to establish a first-party Special Needs Trust for himself.)

e. To the extent that the pooled Special Needs Trust does not retain any amounts remaining in a separate account upon the beneficiary’s death, such assets must be used to reimburse Medicaid (but not the Social Security Administration) up to the total amount of medical assistance benefits paid on behalf of the beneficiary during his lifetime. See also POMS SI 01120.203.B.2.g.

(1) POMS SI 01120.199.F.2 sets forth modified requirements for an acceptable “early termination” provision applicable to a beneficiary’s account with a pooled Special Needs Trust. The requirements described in POMS SI 01120.199.F.1 (for first-party Special Needs Trusts), need not be satisfied in the context of a pooled Special Needs Trust if the early termination provision only allows for the transfer of an account from one pooled Special Needs Trust to another. However, no funds may be retained by the first pooled Special Needs Trust if the termination of the beneficiary’s account occurs during his life rather than by virtue of his death.

f. There is no express statutory limitation on the age of a beneficiary of an account with a pooled Special Needs Trust, i.e. the statute on its face permits the establishment of an account even if the beneficiary is 65 or older. However, if the beneficiary is 65 or older, many States choose to impose a penalty for the uncompensated transfer of the beneficiary’s assets to the pooled Special Needs Trust if the beneficiary wishes to qualify for Medicaid long-term care (i.e. nursing home) coverage, or for certain long-term care services rendered in the community. See 42 U.S.C. § 1396p(c)(1)(B)(i)-(ii), (c)(1)(G), (e)(1), (f), and POMS SI 01150.121.A.3. Some States take the position that an account with a pooled Special Needs Trust cannot be established for a person who is 65 years or older even if the person were willing to accept a transfer penalty.

g. Separate accounts for a pooled Special Needs Trust may be established as first-party or as third-party, i.e. with reference to the source of the assets with which the account will be funded.

h. Pooled Special Needs Trusts are typically governed by a “Master Trust Agreement” that applies to all of the separate accounts. A separate account is established by completing a “Joinder Agreement,” which usually does not require the involvement of an attorney (one of the most popular aspects of this option). This is also a very cost-effective option for a beneficiary who has too many assets to maintain his eligibility for means-tested government benefits, but not enough to warrant the expense of creating or maintaining a (d)(4)(A) Special Needs Trust.

i. An account with a pooled Special Needs Trust is often the only option for a beneficiary who (i) has no living parents or grandparents, (ii) may be “disabled” but who is mentally competent and thus cannot qualify for a legal Guardian or Conservator, (iii) cannot convince a court to serve as the Settlor of a (d)(4)(A) Special Needs Trust, and/or (iv) is age 65 or older.

On June 12, 2012, the United States Court of Appeals for the Third Circuit held that the Medicaid program administered in the Commonwealth of Pennsylvania could not impose additional criteria for the exemption of pooled Special Needs Trusts authorized by 42 U.S.C. § 1396p(d)(4)(C), over and above those criteria specifically enumerated in the statute. See Lewis v. Alexander, 685 F.3d 325 (3d Cir. 2012).

Pursuant to the federal preemption doctrine, the Court struck down the following elements of a Pennsylvania statute that purported to impose additional qualification criteria over and above those set forth in the federal statute: (i) a restriction on the amount of funds in a deceased beneficiary’s account that can be retained by the pooled Special Needs Trust; (ii) a requirement that expenditures from a beneficiary’s account must be “reasonably related” to the beneficiary’s needs; (iii) a requirement that the beneficiary’s special needs could not be met without the funds in the beneficiary’s account; (iv) a definition of “special needs” that limits permissible disbursements to “items, products or services . . . related to the treatment of the beneficiary’s disability;” and (iv) a restriction limiting beneficiaries of a pooled Special Needs Trust to those under 65 years of age.

The Court held that “Congress intended that special needs trusts be defined by a specific set of criteria that it set forth and no others. We base this upon Congress’ choice to provide a list of requirements to be met by special needs trusts. The venerable canon of statutory construction— expressio unius est exclusio alterius—essentially says that where a specific list is set forth, it is presumed that items not on the list have been excluded. . . . Absent an explicit statement or a clear impression that States are free to expand the list, expressio unius leads us to conclude they are not.” Id. at 347. Earlier in its decision, the Court concluded that “in determining Medicaid eligibility, States are required to exempt any trust meeting the provisions of 42 U.S.C. § 1396p(d)(4).” Id. at 344. The Third Circuit’s holding that “42 U.S.C. § 1396p(d)(4) imposes mandatory obligations upon the States” is contrary to the position of the Second Circuit in Wong v. Doar, 571 F.3d 247 (2d Cir. 2009), and the Tenth Circuit in Keith v. Rizzuto, 212 F.3d 1190 (10th Cir. 2000), which held that 42 U.S.C. § 1396p(d)(4) does not mandate that the States exempt special needs trusts meeting the statutory criteria. Id. at 343.

On January 14, 2013, the United States Supreme Court denied the request by the Commonwealth of Pennsylvania to grant a writ of certiorari in the Lewis v. Alexander case, thus leaving in place the decision of the Third Circuit, and the conflict thus created with the Second and Tenth Circuits. Accordingly, the issue of whether a Medicaid program can impose additional criteria for exemption of Special Needs Trusts is ripe for a review by the United States Supreme Court.

Kristen Lewis

What The Doctor Ordered

February 18, 2013

by Lawyers With Purpose with No Comment Uncategorized

I delivered a workshop yesterday to another sell-out crowd of 60 plus year-olds. The most predominant question they wanted to know? How do I protect my assets from the government, nursing homes, lawsuits and family predators. As I presented my two hour workshop that day, I found them begin to unwind and see the many challenges they face without proper planning. Notwithstanding my education on beneficiary designated accounts, asset protection to loved ones, after that the importance of customized wills, health care proxies, powers of attorney and personal care plan, the conversations was dominated by asset protection now.

As I explained the power of the IPUG, an asset protection trust that the client is allowed to maintain control and continue to derive the income from, and even benefit from without direct access to the assets, the clients’ eyes got wider. What intrigued them most was that they can stay in control and that they could change their beneficiaries if they needed to. Most of them declared they really didn’t need it, but they wanted to make sure it was available for them if they did and more importantly for their loved ones, if it was needed for them now or any time prior to the client’s death. I was intrigued to see how important this was to the client but not surprised when 90% of them signed up for a vision meeting to identify the best strategy for them to protect their assets and their family.

Still perplexed like so many attorneys that are so afraid to do what is so common and so settled under the law. The last lawyer who had questions I referred to my law review article, “Irrevocable Tier Grantor Trust, The Estate Planning Landscape Has Changed”. The significance of the article is that it relies on law, not emotion and not on what other lawyers “say” but in fact what the law says. More exciting is that there is no law in contrast to these fundamental principles that a grantor can be the trustee of his own irrevocable trust even when he is the beneficiary. But for those that don’t see it, it’s okay. We have plenty of capacity to do trusts for your client as well!