SPECIAL NEEDS TRUSTS. Johnson County Bar Association November 1, 2017 Overland Park, Kansas. Presented By: Stacey L. Janssen

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1 POST 18 YEARS: THE CHALLENGES OF GUARDIANSHIP ONCE A CHILD IS NO LONGER A CHILD SPECIAL NEEDS TRUSTS Overland Park, Kansas Presented By: Stacey L. Janssen Dysart Taylor Cotter McMonigle & Montemore, P.C sjanssen@dysarttaylor.com

2 INTRODUCTION Federal and state governments provide a number of programs designed to provide income and medical benefits to the disabled and the poor. With names like SSI, SSDI, Medicare, Medicaid, PD waiver, HCBS, FE, Veteran s benefits waiver; it is enough to make even the experienced attorney confused and weary Special needs trust (also referred to as supplemental needs or supplemental care trusts) are an important part of Medicaid and estate planning. These types of trusts are designed to preserve eligibility for governmental benefits for a particular group of beneficiaries. Special needs trusts first began with provisions of the Medicare Catastrophic Coverage Act of 1988 (MCAA), which was later repealed. Congress again dealt with special needs trusts under the provisions of OBRA 93. In OBRA 93, Congress specifically authorized the use of special needs trusts and established mandatory requirements and criteria for such trusts. Three types of special needs trusts are recognized in OBRA. They are found at 42 USC 1396p(d)(4)(A), 42 USC 1396p(d)(4)(B), and 42 USC 1396p(d)(4)(C). This presentation will discuss selfsettled special needs trust, as well as third party special needs trusts. I. ESSENTIAL PROVISIONS OF THE TRUST A. Public Benefits Overview 1. Social Security Benefits. The Social Security Administration is a department of federal government which administers Social Security benefits and Medicare. The Social Security Act, 42 U.S.C , is one of the most complex pieces of legislation and covers a host of programs. Most people are familiar with Social Security as a retirement benefit, but benefits are also available to those who are disabled. Those benefits are knows as Title II Old Age, Survivors and Disability Insurance (OASDI). The key term here is insurance. Persons who are employed pay FICA taxes, those taxes are paid into the social security trust fund and depending on the amount and duration of the contribution, then you are eligible for Social Security Disability benefits. This program is not needs based, meaning that recipients need not establish need, only establish that they meet the medical criteria for benefits. The amount of benefits depends on the amount paid into the Social Security system by way of FICA taxes. 2. Supplemental Security Income (SSI). This program is also administered by the Social Security Administration and is often referred to as Title XVI. This is a means tested program for persons who have not paid in sufficient FICA taxes to receive SSDI benefits or whose SSDI benefits are sufficiently low enough that they qualify for a supplement. To be resource eligible for SSI, a

3 Page 2 of 15 applicant may not have countable resources of more than $2,000. All countable income, as well as some in kind contributions, count toward income eligibility. SSI for 2017 is $735 for an individual and $1, for a married couple. 3. Medicare. Medicare regulations are found at Title XVIII and are available to those who are insured under Title II, as well as those who are age 65. For those under age 65 and determined eligible for SSDI, they become eligible for Medicare two (2) years from the onset of their disability. Medicare provides coverage for hospitalization, doctors care, durable medical equipment but very limited long term care benefits. 4. Medicaid (KanCare, MoHealthnet). Medicaid is a joint federal and state program. The federal rules can be found in Title XIX. Kansas regulations for Medicaid programs are promulgated by the Kansas Department for Children and Families and in Missouri the Division of Family Services. Medicaid is a means tested program. The rules for a single person are the same as for SSI. There are special rules for married persons who are seeking assistance with long term care expenses. The basis eligibility rules for the applicant are as follows: a. Medical Need, 65 or older, or disability determination by Social Security. b. Resource Test, non-exempt assets of $2,000 or less in Kansas and $ in Missouri. c. Income Test, the general rule is that the protected income cannot exceed medical expenses or more simply you cannot pay your medical bills with your available income. 42 USC Sec. 1382a, 42 CFR Sec d. Transfer Test. Medicaid will look in the 60 months prior to the Medicaid application for any transfers of resources for less than fair market value. Any uncompensated transfer or gifts will result in a period of ineligibility imposed from the date the applicant is otherwise eligible for Medicaid.

4 Page 3 of 15 B. Special Needs Trust 42 USC 1396p(d)(4)(A) (hereinafter referred to as an A trust ) 1. Assets of an individual. 2. Under age Who is disabled, receiving Social Security Disability (SSDI) or Supplemental Security Income (SSI) or determined to meet Social Security standard of disability. 42 U.S.C. 1396p(d)(4). 4. Established by the individual s parent, grandparent, conservator, or legal guardian or Court. In re Guardianship and Conservatorship of Watkins, 24, Kan. App.2d, 947 P.2d 45 (1997), permits a conservator in Kansas to establish an A trust. 5. For the sole benefit of the individual. C. When do you use an A trust? The A trust is useful for persons under age 65 who find themselves with excess resources which prevent their eligibility for Medicaid. For example, a medicaid recipient who suddenly receives an inheritance or divorce settlement. A disabled child who is about to turn 18 years of age and for whom funds will make him or her ineligible for Medicaid. Personal injury settlements, medical malpractice claims, worker s compensation award, Social Security Disability awards, etc. are all possible resources which could cause a Medicaid recipient to lose eligibility or prevent Medicaid eligibility. D. Who can create the trust? An A trust, while it is made up of assets of the individual (Medicaid applicant or recipient), can be created by the individual because of recent changes to the law. The trust can also be created by a parent, grandparent, conservator, or legal guardian. An A trust is not made of assets from these persons, but the trust is created by a third party using the individual s assets. The Kansas Guardian and Conservatorship Act does recognize the power of a conservator to create such a trust.

5 Page 4 of 15 E. So what is the catch? The A trust is permitted on the condition that the trust provides for the estate to payback or reimburse the Medicaid agency for the cost of care provided to the Medicaid recipient upon the death of the beneficiary. F. Special Needs Trust / Income Trust 42 USC 1396p(d)(4)(B) (hereinafter B Trust) The B trust permits the creation of so-called Miller trusts. Miller trusts are helpful in states which have an income cap as part of Medicaid eligibility. The income is paid into the trust and then to the beneficiary so that it is protected and not counted toward eligibility. Kansas and Missouri are no longer an income cap states. G. Special Needs Trust/Pooled Trust/Non-Profit Association 42 USC 1396p(d)(4)(c), (hereinafter referred to at a C trust) 1. Under Age 65 or in Kansas a person of any age. 2. Assets of an individual. 3. Who is disabled. 4. Trust created by individual, parent, spouse, grandparent, conservator, guardian or court. 5. For the sole benefit of the individual. 6. Trustee is a non-profit association. 7. Separate accounts for each beneficiary. 8. Pay back provision. 9. C trust options a. ARCare, Barbara Helm, , 8001 Conser, Suite 100, Overland Park, Kansas, arcare@crn.org.

6 Page 5 of 15 b. Midwest Special Needs Trust, , PO BOX 7629, Columbia, Missouri, H. Issues When Considering an A or C trust 1. Availability of a suitable Trustee a. Family- can they be trusted to be loyal. b. Corporate- may be reluctant to do this type of trust, may not have the expertise in dealing with the disabled and public benefits. 2. Size of the estate. 3. Time available. I. Making the trust work 1. Income should not be paid directly to the beneficiary. Medicaid and SSI are means tested programs. Income to the beneficiary will be used to reduce benefits or to increase their patient obligation. Failure to report income can result in an overpayment and/or be considered Medicaid fraud. Practice Tip: Trustee should pay third parties for goods or services which benefit the beneficiary. For example, Trustee pays the nursing home for a private room, or pays the massage therapist directly. 2. In kind support and maintenance like food and shelter may be used to reduce SSI benefits as SSI is intended to provide these types of items. Therefore, the Trustee must understand the types of benefits and make payments for the beneficiary accordingly. Practice Tip: Trust should provide that the Trustee should consult with public benefits advisor (i.e. an attorney). Eligibility requirements do change and it is important that the Trustee understand the complicated nature of public benefits laws and how different benefits intersect.

7 Page 6 of Accounting/Supervision. Currently supervision of these trusts and the Trustees by courts or by Medicaid agency is limited. Look for this to change. Trustees would be advised to keep careful records, including a needs assessment of the beneficiary. This can also be helpful if there is a change in Trustee. J. Choice of Trustee. Family Member vs. Independent Trustee. The Trustee will be responsible for complying with Medicaid rules, investment, annual accountings, etc. The Trustee also has a fiduciary duty to the beneficiary. It can be difficult to find the family members who can exercise independent judgement and provide the level of professionalism necessary. When possible an independent, non-family member such as a professional fiduciary is preferable. Given the size of the estate, it may not be financially possible to hire a corporate trustee. K. Supplemental Needs or Supplemental Care Trusts The sections above discuss Special Needs Trusts. For the purpose of today s discussion, we will consider that term to apply to the trusts recognized in federal and state law where the assets of an individual are used to create a trust to shelter them from being considered as part of Medicaid eligibility. The term Supplemental Needs or Supplemental Care trust will refer to a trust created by a third party with the third party s assets which are intended to be used for the beneficiary and will not be considered available for Medicaid purposes. 1. Provisions of a Supplemental Care Trust a. Uses the assets of a third party who has no legal duty to support the beneficiary. For example: parents of an adult child, grandparents, sibling, NOT THE MEDICAID APPLICANT S SPOUSE OR PARENTS OF A MINOR CHILD. b. Purpose is to preserve Medicaid and/or SSI eligibility for the beneficiary and allow assets in the trust to supplement what is available through other public or private means. c. Trustee has unfettered, arbitrary discretion to pay or to withhold principal and income of the trust.

8 Page 7 of 15 d. Intent of the Grantor and authority of the Trustee must clearly state that the purpose of the trust is to supplement and not supplant public benefits of any public agency. e. Intent of Grantor and authority of Trustee is to pay out benefits to supplement public benefits, to provide luxuries, to provide for quality of life issue, etc. f. Beneficiaries can be more than just the individual, can provide for other children, etc. g. No pay back provision. 2. Kansas Supreme Court held that a discretionary trust cannot be considered as an available resource in determining eligibility for medical assistance. Myers v. Medicaid, 254 Kan. 467, 866 P.2d 1052 (Kan. 1994). 3. In Kansas, K.S.A , tightens the requirements for a third party supplemental care trust as follows: a. Assets of a third party who had no duty to support the beneficiary (specifically aimed at parents of minor children). b. Magic words: supplement but not supplant Medicaid, medical assistance, Title XIX of the Social Security Act. L. Creating the Supplemental Care Trust 1. No court approval is needed. 2. Advance approval of Medicaid not needed. 3. Medicaid notification is required when trust is funded. 4. Revocable vs. Irrevocable a. If part of estate planning, then consider revocable with ability to make irrevocable.

9 Page 8 of 15 b. If used as part of third party s Medicaid planning, needs to be irrevocable. 5. Testamentary vs. Inter Vivos a. Testamentary supplemental care trusts would come into existence upon death. If do not have a disabled beneficiary consider some standard language to allow the Trustee or personal representative to not pay benefits to a disabled heir but instead to hold in trust subject to supplemental care trust language. b. Inter Vivos or trust created during Grantor s life if have a disabled beneficiary already. Allow ability to fund upon death or as circumstances require. II. WHICH PROVISIONS TO AVOID AND WHY A. Do not use support trust language. Use Special Needs Trust language. Example: Support Trust Language. The primary purpose of this Trust is to enable the Trustee, in Trustee s sole discretion, to provide for the care, health and support of the primary Beneficiary whether or not said Beneficiary is disabled or incapacitated, and the powers of the Trustee as hereafter set forth, are to be interpreted in such a manner as to accomplish said goal Example: Special Needs Trust Language. In making distributions from this Trust, the Trustee is authorized to consider, in the Trustee's sole and absolute discretion, the reasonableness or advisability of making distributions in satisfaction of the Beneficiary's supplemental care. As used in this instrument, "supplemental care" refers to the requisites for maintaining the Beneficiary's good health, safety and welfare when, in the discretion of the Trustee, such requisites are not being provided by any governmental agency, office or department, non-profit organization, or are not otherwise being provided by any other public or private source. While the Trustee is authorized to consider these other sources, the Trustee may also, in the exercise of the Trustee's sole and

10 Page 9 of 15 absolute discretion, disregard these other sources when making distributions to or for the benefit of the Beneficiary. Distributions may be made from the trust estate without securing prior Court approval. It is the intention of the Settlor to create a supplemental and/or emergency fund for the benefit of the Beneficiary and not to displace or supplant public assistance or other sources of support which may otherwise be available to the Beneficiary. B. Use Caution With Regard to in kind benefits. In kind benefits of food and shelter can reduce by as much as one-third the amount of Supplemental Security Income. So it is important to know if your beneficiary is receiving SSI. Even if your beneficiary is receiving SSI, the monthly income may not matter so much. You will want to give your Trustee the ability to make distributions even if it may reduce benefits, as the Trustee in its sole discretion may decide. Example: Public Assistance Programs: The Trustee may, in the exercise of the Trustee's best judgment and fiduciary duty, seek support and maintenance for the Beneficiary from all available public resources. The Trustee shall take into consideration the applicable resource and income limitations of any public assistance program for which the Beneficiary is eligible. C. Do not make the Beneficiary the Trustee or give the beneficiary any control over the Trustee. The assets will not be considered exempt for Medicaid purposes if the beneficiary has control over the trustee. Instead give the power to remove to other persons. Example of Authority to Remove a Trustee: Unless otherwise ordered by a court of competent jurisdiction, the Beneficiary's Personal Agent, as defined in Section 6, below, may for any reason remove any Trustee upon thirty (30) days advance written notice. Definition of "Personal Agent": As used in this Trust, the term "Personal Agent" shall mean successively, in the order named, (I) the court-appointed guardian or Guardian of the estate of the beneficiary; (ii) a person appointed as the beneficiary's attorney-in-fact under a duly executed and valid Durable Power of Attorney; (iii) the spouse of the beneficiary;

11 Page 10 of 15 (iv) the parents of the Beneficiary, or the survivor, but not the Settlor of this Trust; or (v) the siblings of the beneficiary, or the survivor. D. Do not give the Beneficiary the power to amend. Again any control by the beneficiary will cause the trust assets to be counted toward eligibility. Limitations on Settlor's and Beneficiary's Powers: Neither the Settlor nor the Beneficiary (other than by exercising the testamentary power of appointment granted to the Beneficiary in Section , above) shall have any right or power, whether alone or in conjunction with others, in whatever capacity (I) to alter, amend, revoke, or terminate this Trust or any of the provisions of this Trust, in whole or in part; (ii) to designate the persons who shall possess or enjoy the trust estate, and/or the income therefrom; or (iii) to exercise any of the incidents of ownership in any property transferred to the Trust. Despite the above, however, the Beneficiary shall have the power to reacquire trust corpus by substituting other property of equal value. Limited Power of Trustee to Amend: Notwithstanding the provisions above, the Trustee shall have the power, by an instrument in writing filed with the Trust records (and, if ordered by a court of competent jurisdiction, with prior approval of such court), to alter or amend any provisions of this Trust to: make changes that are recommended, or required, to allow the Beneficiary to qualify, or continue to qualify, for public benefits and services of any kind in any jurisdiction, including but not limited to benefits under the Medical Assistance Program, 42 U.S.C and its successors; provided, however, that any such amendment shall not diminish, alter, reduce or otherwise negatively affect the provisions of Section , above, or the Trustee's duty to make such payments. Unless otherwise ordered by a court of competent jurisdiction, the decision to amend this Trust or not shall be made by the Trustee in its sole and absolute discretion, either on its own motion or on the motion of any beneficiary (or such beneficiary's Personal Agent, as defined in this Section 6), including the Beneficiary, who is then presently eligible to receive distributions from the Trust. To the extent possible, amendments should conform with the purposes of this Trust and with any regulations that are approved by any governing body or agency relating to 42 U.S.C. 1396p, or related statutes, including state statutes that are consistent with the provisions and purposes of the Omnibus Budget Reconciliation Act of

12 Page 11 of and amendments to such Act. The Trustee shall give notice of any proposed action to alter or amend this Trust to the Medicaid agency. III. DRAFTING MISTAKES TO AVOID. A. Forgetting the Payback provision of D4A Trust, which looks like this: Reimbursement for Medical Assistance: Unless sooner terminated by exhaustion of the trust estate, any assets remaining in the Trust upon the death of the Beneficiary shall, after the payment of all reasonable fees required to liquidate and terminate the trust (including attorneys fees and the Trustee s fees and expenses), first be used to reimburse the Kansas Health Policy Authority for medical assistance paid on behalf of the Beneficiary under the Kansas plan authorized by Title XIX of the Social Security Act, 42 U.S.C. 1396, et seq. ("Medicaid"). If the Beneficiary has resided in and received such medical assistance from more than one state, then each such state agency shall be entitled to reimbursement from the Trust. If the remainder of the Trust is not sufficient to completely reimburse all such states, then the states shall be reimbursed an amount of the remainder of the Trust equal to their proportionate share of the total amount of all such benefits paid by all of such states on the Beneficiary's behalf. Assets remaining in the Trust after such reimbursement shall be distributed as set forth in Section , below. The Trustee shall not be personally liable for any such reimbursements if there are insufficient or no assets remaining in the Trust with which to reimburse, but shall pay all existing assets if any to reimburse such states that have paid benefits on the Beneficiary s behalf. The Trustee may conclusively rely upon the written statement of the state agency administering the Medicaid program as to the amount of medical assistance that has been paid on behalf of the Beneficiary. The Trustee shall not contest the amount claimed by Medicaid unless the Trustee has good cause to believe the amount claimed is inaccurate. B. Including a payback provision in a Third Party/Supplemental Care Trust. If the trust is funded by using the assets of a third party who has no duty to support the trustee, you do not need to include a payback provision. C. Including more than one Beneficiary in a D4A Trust. This trust must be the for the sole benefit of the Medicaid recipient. See Transmittal B.6., also Social Security Administration POMS SI F.

13 Page 12 of Be careful about compensation to other persons. It must be reasonable and related to the disability of the Medicaid/SSI recipient. 2. The death of the Beneficiary. Distributions to other persons (example the minor children of the beneficiary) of remaining trust assets may violate the sole benefit requirement. Instead use the following: Distribution of Remaining Trust Estate: Upon the death of the Beneficiary, the Trustee shall terminate this Trust and distribute the remaining trust estate (including any accumulated income that is specifically referred to), after the application of Section above, as follows: to or for the benefit of such persons, in such amounts and upon such terms, trusts and conditions as the Beneficiary shall appoint under the terms of the Beneficiary's Last Will and Testament, making specific reference to this power. In the event the beneficiary has not executed a Last Will and Testament, the Trustee shall distribute the remaining trust estate to the Beneficiary s heirs at law. "Heirs at law" shall be determined by the laws of descent and distribution for intestate estates of the State of Kansas ( Missouri) as such laws are in effect at the time of any distribution under this Section D. Supervision of the Trustee. The trust should provide that the Trustee accounts for trust activity at least annually. The trust may also want to provide additional authority to monitor the Trustee to a trusted family member or friend, keeping in mind the beneficiary is disabled and may not be able to supervise the activities of the Trustee. Accounting: The Trustee shall provide a complete accounting when requested or required by any court of competent jurisdiction. The Trustee shall keep accurate books of account of all transactions pertaining to the trust estate, showing all disbursements, charges for the Trustee's services, receipts of principal and income, and all investments and changes of investment. The Trustee shall render an account at least annually, and shall at the time of the death, resignation, or removal of any Trustee, or at any other time the Trustee chooses, render an intermediate or final account to the Beneficiary or to those persons that may have a right (whether discretionary or absolute) to the distribution of income or principal who are then of sound mind and over the age of eighteen (18) years. The Trustee shall provide the beneficiary's Personal Agent (as defined in

14 Page 13 of 15 Section 6, below), with any annual or intermediate account if the beneficiary is incapacitated. Upon the rendering of an accounting by the Trustee, or upon the death, resignation or removal of a Trustee, a majority in interest of the beneficiaries to whom income may then be payable hereunder (or a natural parent, attorney-in-fact under a valid Durable Power of Attorney, Guardian, or guardian of any minor or legally incompetent beneficiary), shall, without liability to any present or future beneficiary of any trust created hereunder, within ninety (90) days of such event, review the accounts of such Trustee and provide the Trustee (or its legal representatives) with (1) if applicable, a written itemization of the items questioned in the accounts (in which case the Trustee shall have thirty (30) days to respond) and (2) written approval (or disapproval) of the accounts and a full and complete release and discharge to each such Trustee. Failure to do so within the time allotted shall constitute the full approval and complete release and discharge of the Trustee; provided, however, that a person who is also a Trustee cannot give such release and discharge to his or her own accounts. The Kansas Department of Social and Rehabilitation Services and/or the Kansas Health Policy Authority shall be exempt from such time limitations. Despite the above provisions, any such release shall not release the Trustee from liability for any breach of fiduciary duty, misrepresentation or fraud. It is Settlor's intention to vest in such persons the power for and on behalf of all beneficiaries to give such approval, release and discharge, even though such persons' interests may possibly be or become adverse to those of other beneficiaries; and it shall not be necessary to consult or to procure the concurrence of any remainderman or other party having a vested or contingent or other interest in any trust created hereunder; and any such approval, release and discharge shall constitute (1) a complete bar to any action by any beneficiary to question any transaction for the period covered by the account so approved and (2) a valid and effective release with respect to any such transaction, with all the force and effect of a decree of a court of competent jurisdiction judicially settling such accounts and discharging such Trustee from any and all liability in respect to the administration of any such trust in such transaction.

15 Page 14 of 15 E. USING A D4A TRUST WHEN A D4C MAY BE THE BETTER CHOICE. Clients should be advised of the D4C options. In a smaller estate, the D4C option can save money. The drafting and approval of a D4A trust can be costly. A family can save thousands of dollars by choosing the D4C. The D4A trust is also faster. Many families just wait too long. Any resource held more than thirty (30) days, is potentially disqualifying. If the beneficiary, has waited too long, then a D4C can be a more expedient option. Finally, often there is not a suitable Trustee. The D4C is a safe and reliable trust administration choice. F. USING A TRUST OF ANY KIND IF THE MONEY IS GOING TO BE SPENT QUICKLY. Creating a trust of any kind is costly. There are attorneys fees and maybe court fees in establishing the trust. There are also fees in maintaining a trust such as trustee fees, tax return fees, transaction fees, etc. If the amount of money can be spent down on exempt assets quickly then there may be no need for a trust at all. Exempt asset for Medicaid and SSI, include irrevocable burial funds and plans, one car, a house, most tangible personal property for use by the Medicaid recipient. The Medicaid recipient may also have debt that they want to pay. G. NOT GETTING MEDICAID PRIOR APPROVAL FOR A D4A TRUST. Many drafting errors will be caught if the trust is submitted to the Medicaid Agency for prior approval. See Attachment 1. You can request approval as follows: 1. Brian M. Vazquez, Kansas Dept. of Health & Environment, Health Care Finance Legal Group, Ste. 560, Curtis Bldg., 1000 SW Jackson, Topeka, KS Missouri Department of Social Services, Division of Legal Services, 221 W. High St., Rm. 230, PO Box 1527, Jefferson City, MO H. NOT GETTING COURT APPROVAL. Getting court approval can be very helpful for the success of the trust. Approval may be required if a Guardian or Conservator has or should be appointed because of disability. 1. In Kansas Court approval is required if there is a guardian or conservator. Court approval if guardianship or conservatorship. See K.S.A In Missouri a Special Conservator can be used to create a trust. R.S.Mo

16 Page 15 of If the source of funds is from a court proceeding, then court approval of a distribution to the trust is advisable. This could be a personal injury case, probate proceeding, etc. When the settlement is approved by the court, set out in the petition that payment will be made to the SNT, give notice and a copy of the trust to the appropriate Medicaid agency. IV. REVISING EXISTING SNT S A. Reformation. Sometimes a SNT will not have language that will meet Medicaid s standard. For example, someone may have left out special needs language, the payback provision or the more often the distribution is confusing because there is both support and special needs language. Fortunately the Uniform Trust Code which has been adopted in Kansas and Missouri, allows for modification of even irrevocable trust. 1. If Settlor is alive then a trust maybe modified or terminated with the consent of the Settlor and all qualified beneficiaries, even if the modification is inconsistent with a material purpose. K.S.A. 58a-411 (a); R.S. Mo (1). 2. If the Settlor is deceased, a court may modify an irrevocable trust with the consent of all the beneficiaries if the modification is not inconsistent with a material purpose. K.S.A. 58a-411(b); R.S.Mo (2). B. Decanting. Missouri permits decanting of an old trust into a new trust. R.S.MO , permits a Trustee who has discretionary power to make a distribution of income or principal to beneficiaries of a trust to appoint all or part of the income and principal into a second trust. So, all or part of a defective SNT could be decanted into a new and hopefully perfect SNT. The advantage of decanting, is no court is involved and the decanting decision is made by the Trustee, so there are no transfer issue that might arise from decanting.