ABA GP Solo ELDER LAW COMMITTEE Newsletter Spring, 2008
ABA General Practice, Solo and Small Firm Division
Chairs - Kenneth Vercammen, Edison, NJ and Jay Foonberg, Beverly Hills, CA
In this issue:
1. TYPES OF SPECIAL NEEDS TRUSTS
By Thomas D. Begley, Jr., Esquire
2 Elder Law 2008- Expanding and Marketing an Elder Law Practice Program at ABA Annual Meeting
3 New articles added in June, 2008 to Elder Law website:
1. TYPES OF SPECIAL NEEDS TRUSTS
By Thomas D. Begley, Jr., Esquire
There are essentially two types of special needs trusts: third party trusts and self-settled trusts. This article will discuss the features that are common to both trusts. In addition, there are pooled trusts. Pooled trusts can be either third party or self-settled. The distinction between a third party special needs trust and a self-settled special need trust is the source of funds. If the assets funding the trust are not the assets of the beneficiary but belong to a third party, then the trust is a third party trust. If the assets funding the trust are assets of the disabled beneficiary, then the trust is a self-settled trust.
Some trusts are pooled trusts in which the assets of many trusts are combined for investment purposes, but are managed individually for distribution purposes. There is a master trust document that is adopted to govern the trust. A pooled trust can be a self-settled trust or a third party trust, depending on whether the assets used to fund the trust belong to the person with disabilities or to a third party. Some pooled trusts provide that assets remaining in the pool upon the death of the person with disabilities is retained by the trust. Not all pooled trusts qualify under 42 U.S.C. §1396p(d)(4)(C). Some trusts simply pool assets together for investment purposes, but do not qualify under OBRA ‘93.
Third Party Trust
The first type of special needs trust that disability law attorneys commonly draft is a third party special needs trust, which is established by the third party with assets of the third party for the benefit of a person with a disability. Typically, these trusts are established by a parent for the benefit of a child with a disability. In drafting third party special needs trusts, the attorney need not be concerned with Medicare claims, Medicaid liens, or age limits relating to the beneficiary. There is no requirement that the state Medicaid agency be paid back funds on the death of the beneficiary. If income from the trust is distributed to the beneficiary, it may reduce or eliminate public benefits. Therefore, income should be distributed to third parties to pay for goods and services delivered to the beneficiary. Similarly, the assets in the trust must not be available to the beneficiary. Therefore, the attorney has great flexibility in structuring the trust to achieve the income, gift and estate tax goals of the settlor.
There is no federal statutory authority for a third party special needs trust. However, the Social Security administration has policy regarding the effect of these trusts on benefits.[1]
Self-Settled Trust
The federal statutory authority for a self-settled special needs trust is found at 42 U.S.C. §1396p(d)(4)(A)(payback trusts) and d(4)(C) (pooled trusts) and at HR 3443 Foster Care Independence Act of 1999 §205.[2] A self-settled special needs trust most frequently is a (d)(4)(A) trust and is referred to that way. It is established with the assets of the person with a disability. It must be established by the parent, grandparent, guardian of the person with a disability, or by a court. Only the person with a disability can be the beneficiary of the trust. These trusts are frequently used when an injured party receives money as a result of a tort action. The trust must be an inter vivos trust, rather than a testamentary trust, and it must be irrevocable. Prior to establishing the trust, the attorney must be concerned with the existence of any Medicare claim and Medicaid lien as well as claims for reimbursement from third party liability insurers. The trust cannot be established if the beneficiary is over age 65. On the death of the beneficiary, assets remaining in the trust must be used to pay back any state Medicaid agency providing benefits. There is considerably less flexibility with respect to achieving tax goals.
Special Needs Trust Comparison
Issue Third Party SNT Self-Settled SNT
Established By Third Party Parent, Grandparent, Guardian, or Court
Funded by Assets of Third Party Person with a Disability
Beneficiary Person with a Disability Person with a Disability and Nondisabled Person Only
Grantor Trust Can Be Yes
Grantor Trustee Can Be No
Discretionary Yes Yes
Inter Vivos Yes Yes
Testamentary Yes No
Revocable Can Be No
Gift Tax Annual Exclusion Can Use Cannot Use
Estate Tax Can Be Excluded Includable
Distributions Payments to Third Parties Payments to Third Parties
Disability SSA Definition SSA Definition
Pay Back Provision No Yes
Medicare Claim No Yes
Medicaid Lien No Yes
Age Limit None Under 65
Qualified Disability Trust Yes No
Copyright 2008 by Begley & Bookbinder, P.C., an Elder & Disability Law Firm with offices in Moorestown, Stone Harbor and Lawrenceville, New Jersey and Oxford Valley, Pennsylvania and can be contacted at 800-533-7227. The firm services southern and central New Jersey and eastern Pennsylvania. Tom Begley Jr. is one of the speakers with Kenneth Vercammen at the NJ State Bar Association's Annual Nuts & Bolts of Elder Law and co-author with Kenneth Vercammen, martin Spigner and Kathleen Sheridan of the 400 plus page book on Elder Law.
The Firm provides services in connection with protecting assets from nursing home costs, Medicaid applications, Estate Planning and Estate Administration, Special Needs Planning and Guardianships. If you have a legal problem in one of these areas of law, contact Begley & Bookbinder at 800-533-7227.
2 Elder Law 2008- Expanding and Marketing an Elder Law Practice Program at ABA Annual Meeting
Saturday, August 9, 2008 2:00 - 3:30 p.m.
American Bar Association Annual Meeting, New York City
Hilton New York
Speakers:
Jay Foonberg, Esq. - Author of Best Sellers "How to
Start and Build a Law Practice" and "How to get and keep good clients', Beverly Hills, CA
Charles Sabatino, director of the ABA's Commission on Law & Aging
Kenneth A. Vercammen, Esq. - co-author "Nuts & Bolts of Elder Law", Edison, NJ
Parag Patel, Esq. Iselin, NJ
Joan Burda, Ohio
Primary Sponsors: General Practice Section
Requested co-sponsors: ABA Commission on Law & Aging, Health Law Section,
YLD, LPM, Senior Lawyers Division, Real Probate & Trust Section, Tax Law Section
Topics:
Medicaid Law changes in 2006-2007- Protect yourself from inaccurate advice and malpractice
Getting referrals from other professionals
The aftermath of the Terry Schiavo case and Living Wills.
Forms you can use
Email newsletters
"Representing seniors- Doing well by doing good.-Do you know how?
- Foonberg's 10 page check list."
How to get more referrals and repeat business
How to manage telephone conversations with your clients
Marketing with written fee agreements
-Ethics and marketing without violating the Rules of Professional Conduct
Elder Law may be the biggest practice area of your career. There are 50,000 baby boomers/ day turning 60 and soon to be on Medicaid and will need legal advise. Elder Law is one of the biggest growth fields. Substantial changes in Medicaid law requires attorneys to learn ideas to avoid Medicaid/ nursing home liens.
[Contact Kenneth Vercammen, Esq. for program information 732-572-0500]
Contact American Bar Association's ITS at 800-421-0459 for registration
KENNETH VERCAMMEN & ASSOCIATES, PC
ATTORNEY AT LAW
2053 Woodbridge Ave.
Edison, NJ 08817
(Phone) 732-572-0500
(Fax) 732-572-0030
website: www.njlaws.com
3 New articles added in June, 2008 to Elder Law website:
Guardian Law Changes
Guardianship of Disabled Adults
If Undue Influence was 'Clear,' the Will of the Elderly Testatrix is Denied Admission to Probate.
If you have no Will
Letters of Administration if No Will
Letters of Instruction
Life Insurance Trusts
Action for Guardianship of a Mentally Incapacitated Person, Rule 4:86
Administration of Estates, Probate and Decedents
Answers to Probate Questions
Application to Surrogate's Court for Probate or Administration, Rule 4:80
Codicil to a Will
Compelling the Sale of Jointly Owned Houses-The Partition Suit
Elective Share of Spouse
Estate Planning/ Guardianship Interview Form
Estate/Will/Trust Inheritance Contests
Executor - Duties & Responsibilities
_______________________
-. WE PUBLISH YOUR FORMS AND ARTICLES
To help your practice, we feature in this newsletter edition a few forms and articles PLUS tips on marketing and improving service to clients. But your Editor and chairs can't do it all. Please mail articles, suggestions or ideas you wish to share with others in our Tort and Insurance Committee.
Let us know if you are finding any useful information or anything you can share with the other members. You will receive written credit as the source and thus you can advise your clients and friends you were published in an ABA publication. We will try to meet you needs.
Send Us Your Marketing Tips
We are increasing the frequency of our newsletter. Send us your short tips on your great or new successful marketing techniques.
You can become a published ABA author. Enjoy your many ABA benefits.
Send us your articles & ideas
To help your practice, we feature in this newsletter edition a few articles and tips on marketing and improving service to clients. But your Editor and chairs can't do it all. Please send articles, suggestions or ideas you wish to share with others.
General Practice, Solo and Small Firm Division:
Elder Law Committee and the ESTATE PLANNING, PROBATE & TRUST COMMITTEE
Who We Are
This committee focuses on improving estate planning skills, substantive law knowledge and office procedures for the attorney who practices estate planning, probate and trust law. This committee also serves as a network resource in educating attorneys regarding Elder Law situations.
To help your practice, we feature in this newsletter edition a few articles and tips on marketing and improving service to clients. But your Editor and chairs can't do it all. Please send articles, suggestions or ideas you wish to share with others.
Let us know if you are finding any useful information or anything you can share with the other members. You will receive written credit as the source and thus you can advise your clients and friends you were published in an ABA publication. We will try to meet you needs.
We also seek articles on Elder Law, Probate, Wills, Medicaid and Marketing. Please send your marketing ideas and articles to us. You can become a published ABA author.
________________________________________
The Elder Law Committee of the ABA General Practice Division is directed towards general practitioners and more experienced elder law attorneys. The committee consistently sponsors programs at the Annual Meeting, the focus of which is shifting to advanced topics for the more experienced elder lawyer.
This committee also focuses on improving estate planning skills, substantive law knowledge and office procedures for the attorney who practices estate planning, probate and trust law. This committee also serves as a network resource in educating attorneys regarding Elder Law situations.
Kenneth Vercammen, Esq. co-Chair
Jay Foonberg, Beverly Hills Co-chair, Author of Best Sellers "How to
Start and Build a Law Practice" and "How to get and keep good clients', Beverly Hills, CA JayFoonberg@aol.com>
We will also provide tips on how to promote your law office, your practice and Personal Marketing Skills in general. It does not deal with government funded "legal services" for indigent, welfare cases.
KENNETH VERCAMMEN & ASSOCIATES, PC
ATTORNEY AT LAW
2053 Woodbridge Ave.
Edison, NJ 08817
(Phone) 732-572-0500
(Fax) 732-572-0030
Kenv@njlaws.com
Central Jersey Elder Law www.centraljerseyelderlaw.com
NJ Elder Blog http://elder-law.blogspot.com/