Hosted by the Kentucky Autism Training Center: An Overview of Special Needs Trusts Richard N. Bush, Attorney at Law March 22, 2011 Topic Areas •Federal and Kentucky statutory framework •The “nuts and bolts” of an SNT •Planning Considerations •Additional Documents •Summary 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] Kentucky 907 KAR 1:650 [Treatment of trusts and Medicaid] Kentucky Cabinet For Health and Family services: http://chfs.ky.gov/dms/incorporated.htm What are the requirements for establishing an Special Needs Trust (SNT)? When is an SNT is appropriate? First Party versus Third Party SNTs .Identical in operation .Medicaid Recovery .Source of funding .Sometimes both are needed 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? 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 distribution Powers and duties of Trustee; Removal of Trustee Tax provisions; generation skipping Advisory Committee/Trust Protector Misc; signatures and attachments Planning Considerations Who’s in charge? Frequently parents or a sibling; Parent issues, age, divorce, sibling rivalry Sole Benefit Trust…Other siblings? Planning Considerations .Medicaid Reimbursement .Financial Planning .Checks and balances .Planning for the next generation Who should be the Trustee? Consider… •Fiduciary Responsibility •Control within family •Aging •Co-trustees •Distinguish: guardian and/or Social Security Payee Planning for the Next Generation The “pool” of future Trustees Corporate Trustees Checks and Balances .SNTs are Private documents .Potential for error .Advisory Committee .Trust Protector .Guardian/advocate Financial Planning Critically important topic! Long term view Financial Planner (vs CPA?) Taxation of trust Additional Documents .Last Will and Testament .Power of Attorney .Healthcare/Medical POA .Living Wills (Kentucky) .Living Trusts for Parents/siblings Summary Consequences of doing nothing SNT “only game in town” Unique to each individual and family Summary Plan“crystal ball gazing” Get the best advice possible in all areas: living arrangements, financial, legal, and others areas Questions? Richard N. Bush Attorney at Law 235 South Fifth Street Fourth Floor Louisville KY 40202 (502)584-7255 Bushmark4@aol.com