Update. No Social Security COLA. Special Needs Trust Fairness Act of /16/2015

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1 Update Robert B. Fleming Fleming & Curti, PLC Tucson, Arizona No Social Security COLA For only the third time in its history, Social Security will see no cost of living increase in Still, some things do change: QC $1,220 $1,260 SGA $1,090 $1,130 Maximum SS retirement $2,663 $2,639 Part B premiums $ $ for 70% of participants; up to $ for new enrollees, up to $1,000+ for high earners Special Needs Trust Fairness Act of 2015 S 349 Grassley (R-IA) passed Senate on 9/9/15 by unanimous consent HR 670 Glenn Thompson (R-PA) and Frank Pallone (D-NJ) 9/9/15 passed Senate 9/18/15 hearing in House Energy and Commerce Subcommittee on Health Several new House sponsors Rick Courtney s testimony may have made a big difference 1

2 SSA Modifies POMS POMS constantly undergo changes Check on recent POMS updates Subscribe to POMS update notices Note no archiving of old versions Note no strikeout / bold change-tracking Who says they don t have a sense of humor? See POMS SI : Example 3: Bill Murray Example 5: Arnie Becker Sample POMS Change POMS SI F.2.c demonstrates how to consider trustee fees in a sole benefit trust Before September 28, the note encouraged eligibility workers to question fees charged by family member trustees Thanks to Mary Alice Jackson, David Lillesand and others, that sly dig has been removed ABLE Act Still waiting June 26 IRS notice of proposed rulemaking public hearing October 14 Final IRS regulations due end of October Statutes adopted in most states (see The ARC website) 2

3 Cases Cumberland & Erly, LLC v. Nationwide Mut Ins. Co., DC Md, 9/3/2015 Federal Dist. Ct. memorandum decision Law firm sues insurance co. under employee dishonesty policy for $157, taken from SNT (for which firm was trustee) by legal assistant at firm Nationwide Mutual claimed: No insurable interest as trustee Loss by law firm (reimbursement of funds) not directly caused by employee dishonesty Summary judgment for law firm against insurer Home Care Assoc. of Am. V. Weil, # (DC Circ., 8/21/15) Fair Labor Standards Act case questioning whether domestic-service worker exemption for companionship or live-in care DofL changed regulations to cover third-party hired companions and live-in workers in 2013, citing profound changes in workplace Trade association for home-care agencies sued in 2014 District Ct: 3 rd -party employers can t be covered Ct of Appeals reverses Upshot: companions and live-in workers paid through agencies covered by min wage, hour limitations 3

4 Risk Management Strategies, Inc. v. Texas Workforce Commission, # CV, (Tex.App. May 22, 2015) RMS provides caregivers for SNT trustees (banks); caregivers often family members Texas unemployment commission alleged RMS was payrolling for the real employers, the bank trust departments RMS sought judicial review; trial court dismissed on sovereign immunity Ct of Appeals reverses on one point, remanding for an opportunity to amend Significance outside Texas? Elias v. Colvin, # (DC PA 7/27/15) SSI recipient had debit card with direct access to 1 st -party SNT assets, used it for housing and other expenses ALJ found trust did not meet requirements to be a SNT, and was a countable resource District Court gave deference to POMS secs. SI and SI BUT beneficiary s actions were in contravention of trust terms Should penalty be invalidation of trust, or cessation of benefits? Remand Harrell v. Badger (Fla.App.) p 4/413 Testamentary trust for David, Charles appointed as trustee Charles transfers assets to pooled trust Charles wife charges under care agreement, lists and sells house Trial court: complaining relatives wouldn t have gotten anything anyway dismissed Ct App: decanting to pooled trust impermissible, Charles surcharged 4

5 Draper v. Colvin (8 th Circ) p 1/410 Parents establish d4a SNT for Stephany SNT assets: proceeds from PI settlement SSA: parents acted as agents of Stephany, not as parents SNT defective Parents get nunc pro tunc validation from local court of parents as establishers SSA: SNT still defective District Court concurs Circuit Ct of Appeals: POMS entitled to deference, SNT defective Guthrie v. Guthrie, Ark.App. p 6/415 After the youngest of James and Vicki Guthrie s three children turned 18, James sought to terminate child support JG, age 24, is autistic and receives $710/mo in SSI and has $19,000 SNT James agrees he can afford to support JG Trial court: pay $508/month plus Vicki s legal fees Court of Appeals: reduced to $467/month Minassian v. Rachins (Fla.App.) p 9/418 Not a SNT case, but involving a trust protector s powers Trust for widow with strong language indicating intent to benefit widow Widow is trustee In litigation with step-children, trustee appoints drafting lawyer as trust protector; he modifies trust to eliminate claims Trial judge says not on my watch Ct of App says read it and weep 5

6 Dayton Bar Assoc. v. Washington (Ohio) p 6/415 Attorney Cheryl Washington represents mother in establishing guardianship Washington receives $170K+ in settlement proceeds, places them in IOLTA account When new counsel gets authority to establish and fund SNT, Washington s IOLTA check (for $75K+) bounces Ultimately Washington distributes a total of $105K+ Suspended from practice for 6 months, but with one-year stay More Resources Special needs trust Q&A: flemingandcurti.com/faqs/specialneeds.html Fleming & Curti website and weekly newsletter: issues.flemingandcurti.com/ Special Needs Alliance resources: 6