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RayAnswers, Attorney
Category: Estate Law
Satisfied Customers: 37061
Experience:  Texas lawyer for 30 years in Estate law
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A friend was diagnosed with dementia in 2009 at which time

Customer Question

A friend was diagnosed with dementia in 2009 at which time she ran her own business. She closed her business upon the advice of her doctors. Her mother (now deceased) made a will in which she included a special needs trust. Since it is very nearly time to put her in a care facility, I called the trust and they wanted a detail of her assets. They explained gibberish. I have read the establishment of the trust and there is no mention of beneficiary assets. There is a great deal about the latitude of the trust and I understand that. Can the trust be held accountable in a court of law for withholding support for the beneficiary? Since the doctors don't have a clue about dementia, it may well be that she may recover and find that she impoverished herself without reason.
JA: Since estate law varies from place to place, can you tell me what state this is in?
Customer: The will and trust was in New York. She resides in Texas.
JA: Has anything been filed or reported?
Customer: None at this time.
JA: Anything else you want the lawyer to know before I connect you?
Customer: We are not married. But she has named me durable power of attorney.
Submitted: 1 month ago.
Category: Estate Law
Expert:  RayAnswers replied 1 month ago.

Hi and welcome to JA. Ray here to help you today.Please bear with me a few moments while I review your question, conduct and prepare your response.

Expert:  RayAnswers replied 1 month ago.

Well the idea of the Special Needs Trust is for her to apply for medicaid for nursing home care and the SNT pays for her other needs if there are things outside medicaid she needs.You would want to submit letter to trustee stating her needs for food, clothing, etc.medical bills not paid by medicaid.All of these are payable by the trustee.

Expert:  RayAnswers replied 1 month ago.

pecial needs trusts are designed to supplement, not replace, the kind of basic support provided by government programs like Medicaid and Supplemental Security Income (SSI). Special needs trusts pay for comforts and luxuries -- "special needs" -- that could not be paid for by public assistance funds.

This means that if money from the trust is used for food or shelter costs on a regular basis or distributed directly to the beneficiary, such payments will count as income to the beneficiary. This can affect eligibility for government benefits like Medicaid and SSI. One of the trustee's most important jobs is to use discretion in making distributions from the trust so as not to jeopardize the beneficiary's eligibility for these government benefits.

If the beneficiary receives SSI, here are some basic expenses that should not be paid through a special needs trust without consultation with a special needs attorney.

  • Cash given directly to the beneficiary for any purpose
  • Food or groceries
  • Restaurant meals (except if given as an occasional gift)
  • Rent or mortgage payments
  • Property taxes
  • Homeowners or condo association dues
  • Homeowners insurance if the insurance is a mortgage requirement
  • Utilities such as electricity, gas, and water
  • Utilities hookup or connection charges

However, many of these payments will only cause a one-third reduction in SSI benefits. The trustee may determine that the benefit of the trust making these payments far outweighs the loss of income.

Expert:  RayAnswers replied 1 month ago.

So a trustee may use trust funds to buy non countable items such as:

  • One home of any value. Owning one home as a primary residence won’t disqualify your loved one from receiving SSI. However, if the beneficiary receives only Medicaid (not SSI), the home value may be limited to $500,000 or $750,000.
  • One motor vehicle. The beneficiary can own one motor vehicle, regardless of value, without affecting SSI eligibility.
  • Home furnishings and personal effects. These categories are extremely broad and have no limiting definition. Pretty much anything that can fit in your loved one’s home is covered.
  • Property essential for self-support. This category encompasses property that is used for work, either as an employee or running a trade or business. There are limits on the value of these items depending on the rate of return they provide and other variables.
  • Assets used toward an occupational goal. Under SSI’s Plan for Achieving Self-Support (PASS) program, the government allows SSI recipients to use specific assets toward an occupational goal, such as college, vocational training, or starting a business. Under PASS, funds that might normally result in ineligibility, for benefits or lowering the SSI monthly payment, could be used toward an approved occupational goal without penalty. To learn more about PASS, go to http://www.socialsecurity.gov/ssi/spotlights/spot-plans-self-support.htm.
  • Burial and life insurance policies. Life insurance policies with cash surrender values less than $1,500 and burial insurance policies of any value are not counted. However, funds set aside for burial expenses in an account or trust are limited to $1,500 or less.
Expert:  RayAnswers replied 1 month ago.

Thanks again let me know if you have more follow up.

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