2018 BASICS OF ELDER & SPECIAL NEEDS LAW October 27, 2017 NC Bar Center Cary, NC. Table of Contents

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1 2018 BASICS OF ELDER & SPECIAL NEEDS LAW October 27, 2017 NC Bar Center Cary, NC Table of Contents I. BASICS OF SPECIAL NEEDS TRUSTS AND ABLE ACCOUNTS Brent W. Stephens Winston-Salem TABLE OF CONTENTS... I-1 INTRODUCTION TO SPECIAL NEEDS TRUSTS... I-3 SPECIAL NEEDS TRUSTS CREATED WITH A THIRD-PARTY S ASSETS... I-3 Third-Party Trusts, Generally... I-3 Testamentary Trusts... I-5 Exception to the No Repayment Obligation with Third-Party Trusts... I-5 SPECIAL NEEDS TRUSTS CREATED WITH THE INDIVIDUAL S OWN ASSETS... I-6 (d)(4)(a) Trusts... I-7 (d)(4)(c) Trusts... I-12 DRAFTING CONSIDERATIONS... I-13 Generally... I-13 Specific Drafting Concerns... I-14 ISSUES CONCERNING THE TRUSTEE... I-17 Who Should be the Trustee... I-17 Who Should Not Serve as Trustee... I-18 Unique Aspects of SNT Administration... I-18 How to Find Help with SNT Administration Issues... I-19 What the SNT Trustee Must Understand About SSI... I-19 What the Trustee Should Know About Medicaid... I-23 ADMINISTRATION ISSUES... I-24 Introduction... I-24 Coping with Family Problems... I-25 Accounting and Tax Compliance Matters... I-27 Investment Issues... I-27 The Special Needs Trust as Owner of a Home... I-28 Transportation Needs of the SNT Beneficiary... I-29 Various Distributions... I ABLE ACCOUNTS... I-31 ABLE Basics... I-31 Planning with ABLE... I-36 ATTACHMENTS... I-37 II. GUARDIANSHIP, INCOMPETENCY AND GUARDIANSHIP ALTERNATIVES Lisa M. Salines-Mondello - Wilmington PETITIONING FOR AN ADJUDICATION OF INCOMPETENCY...II-1

2 IDENTIFY THE CLIENT...II-1 Ethical Rules and Opinions to Consider and Review...II-1 PARTIES TO AN INCOMPETENCY PROCEEDING...II-2 RIGHT TO COUNSEL...II-4 Right to Counsel or Guardian ad Litem...II-4 INCOMPETENCY PROCEEDING...II-5 THE HEARING...II-9 HEALTH CARE AND FINANCIAL ATTORNEYS-IN-FACT...II-11 Through December 31, 2017 Chapter 32A...II-11 Beginning January 1, 2018 Chapter 32C...II-12 MEDIATION...II-12 FEES/COMPENSATION...II-13 LIMITING THE GUARDIANSHIP...II-13 DIGITAL ASSETS...II-15 JURISDICTION AND GUARDIANSHIP OF THE PERSON OR ESTATE TRANSFERRED FROM ANOTHER STATE...II-15 RESTORATION TO COMPETENCY...II-19 Proceeding Initiated...II-19 Hearing Set by Clerk...II-19 MEDICAID AND FINANCIAL PLANNING FOR THE WARD...II-20 Special Needs Trust...II-20 Revocable Trust...II-20 Gifting...II-20 SUPPORTED DECISION MAKING AN EMERGING ALTERNATIVE TO GUARDIANSHIP...II-22 RESOURCES...II-22 ATTACHMENT...II-25 III. PREPARING TO FILE A SUCCESSFUL LAWSUIT Rachel A. Fuerst - Raleigh INTRODUCTION... III-1 WHO IS THE PLAINTIFF... III-1 Statutory Requirements... III-1 What if the Injured Person is Dead... III-1 What if the Injured Person is not Competent... III-1 General Considerations for the Plaintiff... III-2 Check for an Arbitration Agreement... III-2 WHO IS THE DEFENDANT?... III-2 Properly Name the Defendant... III-2 Check for Agency and/or Direct Liability... III-2 COMMON STATUTES OF LIMITATION... III-3 BASIC RULES FOR DRAFTING A COMPLAINT... III-3 FILING AND SERVING A COMPLAINT... III-4 FINAL REMINDERS... III-4 IF YOU MUST REQUEST AN EXTENSION OF A STATUTE OF LIMITATION... III-5 Medical Malpractice Extensions... III-5

3 Non-medical Negligence Extensions... III-5 INDEX OF ATTACHMENTS... III-6 ATTACHMENTS... III-7 IV. MEDICAID ELIGIBILITY AND APPLICATION Andrew D. Atherton Asheville MEDICAID - INTRODUCTION... IV-1 MEDICAL CRITERIA LEVEL OF CARE REQUIRED TO BECOME ELIGIBLE (MA-2270)... IV-1 STATE RESIDENCY REQUIREMENT (MA-2220)... IV-1 Individual must be a Resident of North Carolina... IV-1 Individual Owns a Home in Another State... IV-2 INCOME ELIGIBILITY LONG-TERM CARE BUDGETING (MA-2270)... IV-2 North Carolina not an Income Cap State... IV-2 When Income Counts... IV-2 Medicaid Provides Three Different Methods... IV-2 Patient Monthly Liability (MA-2270 V.C.)... IV-3 Deductions... IV-4 Community Spouse Income Allowance... IV-5 ASSET ELIGIBILITY RESOURCE RULES (MA-2230)... IV-6 Introduction... IV-6 General... IV-7 Availability of Resources... IV-7 Incompetency... IV-7 Marital Agreements... IV-8 First Moment Rule... IV-8 Exempt of Non-Countable Assets... IV-8 Property not Otherwise Excluded... IV-10 The Community Spouse Resource Allowance (CSRA) (MA-2231)... IV-10 Gifts during the Medicaid Look Back (MA-2240 V)... IV-11 Penalty Periods... IV-11 Return of Assets (MA-2240 XII.E.)... IV-11 Budgeting during Sanction (MA-2240 XII.F.)... IV-12 Rebutting, Reducing or Eliminating a Sanction (MA-2240 XII.)... IV-12 Establishing the Transfer was for a Reason Solely Other Than Medicaid Eligibility (MA-2240 XII.C.)... IV-13 Undue Hardship... IV-13 Options for Spend Down of Excess Property... IV-13 ADDITIONAL CRISIS ELIGIBILITY BEYOND SPEND-DOWN... IV-14 Gifts... IV-15 Personal Services and Continuing Care Contracts... IV-15 Annuities... IV-15 Exempt Recipients... IV-16 Special Rules Apply with Respect to the Transfer of a Home... IV-17 Use of the Medicaid Penalty... IV-17 Uncompensated Transfers and the Look Back Period... IV-17 MEDICAID APPLICATION... IV-18

4 Documentation Needed With the Medicaid Application... IV-18 Filing in the Proper County... IV-19 Who May Apply... IV-20 Furnishing Additional Information... IV-20 Mailed, Faxed and Online Applications... IV-20 Requesting Retroactive Coverage (MA-2370)... IV-21 Pre-Eligibility Expenses and Contract for Unmet Medical Needs... IV-21 EXHIBIT A... IV-23 EXHIBIT B... IV-24 EXHIBIT C... IV-25 V. MEDICAID STRATEGIES IN LONG-TERM CARE PLANNING Andrew W. Olsen and Kara O. Gansmann - Wilmington SHORT-TERM/CRISIS PLANNING FOR LONG-TERM CARE PROTECTING ASSETS... V-1 Annuities... V-1 Promissory Notes... V-2 Exempt Transfers... V-2 Personal Service Contract... V-3 Other Ways to Preserve Excess Assets in Crisis Planning... V-3 ADVANCED PRE-PLANNING FOR LONG-TERM CARE PROTECTING ASSETS... V-3 Long-Term Care Insurance... V-3 Veteran s Pension Benefits (Aid & Attendance)... V-4 Use if IRAs... V-4 Reverse Mortgages... V-5 Irrevocable Trusts... V-5 Estate Planning Considerations for Long-Term Care Planning... V-6 AVOIDING ESTATE RECOVERY PROTECTING THE HOME... V-7 What is Estate Recovery... V-7 What Property is Subject to Estate Recovery... V-7 Planning Strategies to Avoid Estate Recovery... V-8 VI. ATTORNEY WELLNESS: ACHIEVING HEALTH PHYSICALLY, MENTALLY AND PROFESSIONALLY Sarah E. Nagae - Raleigh ACHIEVING WELLNESS AS ATTORNEYS... VI-1 THE SCOPE OF HEALTH ISSUES AMONG ATTORNEYS... VI-2 WHAT MAKES LAWYERS VULNERABLE TO HEALTH ISSUES... VI-3 DEPRESSION... VI-6 Types of Depression and Symptoms... VI-6 HOW TO HELP YOURSELF OR OTHERS EXPERIENCING DEPRESSION... VI-8 CLOSING... VI-11 RESOURCES... VI-12

5 VII. PUBLIC BENEFITS AND TRUSTS ORIENTATION Robert A. Mason, CELA, CP - Asheboro OUTLINE OBJECTIVE... VII-1 MEDICAID AND SSI: A VIEW FROM AN ORBITING SATELLITE... VII-1 MEDICAID, SSI AND TRUSTS... VII-2 Availability Issues... VII-2 Transfer Issues... VII-7 TRUSTS AND INCOME UNDER MEDICAID AND SSI... VII-11 Preliminary Rules... VII-11 SSI: Is It Income? If So, What Type? The Down-home Version... VII-12 VA SPECIAL MONTHLY PENSION AND TRUSTS... VII-14 The Problem... VII-14 WHY A GENERAL UNDERSTANDING OF TRUST TAX LAW IS IMPORTANT... VII-15 GENERAL THEORY OF TRUST TAXATION... VII-16 NONGRANTOR TRUSTS... VII-16 Generally... VII-16 Income Tax Rates... VII-17 Personal Exemption... VII-19 Nongrantor Trust Hacks... VII-20 GRANTOR TRUSTS... VII-20 Background... VII-20 Basic Concepts and Definitions... VII-21 Specific Grantor Trust Provisions... VII-25 ESTATE INCLUSION FOR STEPPED-UP BASIS... VII-27 Overview... VII-27 Two Basis Issues... VII-27 Meaning of Property Acquired From a Debtor... VII-28 Estate Inclusion... VII-29 Grantor Trusts Do Not Automatically Trigger Estate Inclusion... VII-31 The Key to Dodging the Overlap... VII-31 ATTACHMENT A TRUST AVAILABILITY CHART... VII-33