SPECIAL NEEDS TRUSTS FOR LEGAL SERVICES ATTORNEYS

SPECIAL NEEDS TRUSTS FOR LEGAL SERVICES ATTORNEYS

DEFINITIONS Grantor (also sometimes called a Settlor or Trustor): The person who establishes the trust. This person often, though not always, is also the person putting assets into the trust. Trustee: The person who manages the trust assets and administers the trust provisions. Beneficiary: The person for whose benefit the trust is established. Revocable Trust: A trust that can be altered or terminated. Irrevocable Trust: A trust that cannot be altered or terminated.

SPECIAL NEEDS TRUSTS Special Needs Trusts are designed for beneficiaries with some type of limitation. Beneficiaries of Special Needs Trusts often receive some type of disability related public benefit (e.g., SSI or Medicaid). Sometimes trusts are established for individuals who have limitations that do not qualify for public benefits (e.g., addiction or developmental disability that does not rise to level of an SSA listing).

TYPES OF SPECIAL NEEDS TRUST Self-Settled Special Needs Trust Established by someone on the beneficiary s behalf Funded with the beneficiary s funds Often called a d4a trust after 42 USC 1396p(d)(4)(A) Must contain pay-back provision to State Medicaid program upon beneficiary s death for any benefits paid on beneficiary s behalf Settlor can determine remainder beneficiaries if any assets remain after state is paid Should contain restrictive distribution language so that trustee cannot make distributions that would negatively impact beneficiary s public benefits

TYPES OF SPECIAL NEEDS TRUST Pooled Special Needs Trust Established by the beneficiary or someone on his or her behalf Funded with the beneficiary s funds Assets are pooled for investment purposes with other beneficiary s assets Trust is established and managed by a non-profit association Upon beneficiary s death, non-profit can retain assets to benefit other individuals with disabilities If not retained by non-profit, remainder distributed to State Medicaid program to repay any benefits paid on beneficiary s behalf Often called a d4c trust after 42 USC 1396p(d)(4)(C)

TYPES OF SPECIAL NEEDS TRUST Third-Party Special Needs Trust Established by someone other then the beneficiary Funded with assets than never belonged to the beneficiary No Medicaid pay-back provisions are necessary May contain restrictive distribution language so that trustee cannot make distributions that would negatively impact beneficiary s public benefits, depending upon the beneficiary s impairments Usually used to hold inheritance or gifts, but requires prior planning

WHEN WILL YOU ENCOUNTER SNTS? Client s SSI has been reduced or terminated Client has been assessed an overpayment for SSI Client s has been assessed a spenddown for assets held in a d4a or d4c trust

AVENUES FOR ADVOCACY Appeal reduction, termination or overpayment Obtain a review of d4a trust from DHS attorney to verify compliance with relevant statutes and regulations Obtain the approval letter for a d4c master trust from trustee and copy of subscription statement for client Review distributions made from the trust to client Educate trustee of distribution restrictions and consequences on client s public benefits

RELEVANT SSA REGULATIONS Income Definitions and How We Count Income General 20 CFR 416.1100-1104 Earned Income 20 CFR 416.1110-1112 Unearned Income 20 CFR 416.1120-1124 In-Kind Support and Maintenance 20 CFR 416.1130-1148 Deeming of Income 20 CFR 416.1160-1169

RELEVANT SSA REGULATIONS Resources Definitions and How We Count Resources General 20 CFR 416.1201 Deeming of resources 20 CFR 416.1202 Deeming of resources of an essential person 20 CFR 416.1203 Deeming of resources where Medicaid eligibility is affected 20 CFR 416.1204a Limitation on resources 20 CFR 416.1205 Resources determinations 20 CFR 416.1207 How funds held in financial institution accounts are counted 20 CFR 416.1208

RELEVANT SSA REGULATIONS Resources Continued Exclusion from resources; general 20 CFR 416.1210 Exclusion of the home 20 CFR 416.1212 Exclusion of household goods and personal effects 20 CFR 416.1216 Exclusion of the automobile 20 CFR 416.1218 Exclusion of life insurance 20 CFR 416.1230 Burial spaces and certain funds set aside for burial expenses 20 CFR 416.1231

RELEVANT SSA POMS SI 00810.000 General - Income Rules for the Supplemental Security Income Program SI 00815.000 What Is Not Income SI 00820.000 Earned Income SI 00830.000 Unearned Income SI 00832.000 Unearned Income Anderson Case SI 00835.000 Living Arrangements and In-Kind Support and Maintenance

RELEVANT MEDICAL ASSISTANCE REGULATIONS 89 IL ADMIN CODE SECT. 120 Subpart C: Financial Eligibility Determination Section 120.60 Community Cases Section 120.61 Long Term Care Section 120.64 MANG(P) Cases Subpart H: Medical Assistance No Grant (MANG) Eligibility Factors Section 120.330 Unearned Income Section 120.332 Budgeting Unearned Income Section 120.335 Exempt Unearned Income Section 120.336 Education Benefits Section 120.338 Incentive Allowance Section 120.340 Unearned Income In-Kind Section 120.342 Child Support and Spousal Maintenance Payments Section 120.345 Earmarked Income Section 120.346 Medicaid Qualifying Trusts Section 120.347 Treatment of Trusts and Annuities (EMERGENCY - 36 Ill.Reg. 10253) Section 120.350 Lump Sum Payments and Income Tax Refunds Section 120.355 Protected Income Section 120.360 Earned Income Section 120.361 Budgeting Earned Income Section 120.362 Exempt Earned Income Section 120.363 Earned Income Disregard - MANG(C) Section 120.364 Earned Income Exemption Section 120.366 Exclusion from Earned Income Exemption

RELEVANT MEDICAL ASSISTANCE REGULATIONS 89 IL ADMIN CODE SECT. 120 Section 120.370 Recognized Employment Expenses Section 120.371 Income From Work/Study/Training Programs Section 120.372 Earned Income From Self-Employment Section 120.373 Earned Income From Roomer and Boarder Section 120.374 Earned Income from Temporary Employment with the Census Bureau Section 120.375 Earned Income In- Kind Section 120.376 Payments from the Illinois Department of Children and Family Services Section 120.379 Provisions for the Prevention of Spousal Impoverishment (EMERGENCY - 36 Ill.Reg. 10253) Section 120.380 Resources (EMERGENCY - 36 Ill.Reg. 10253) Section 120.381 Exempt Resources (EMERGENCY - 36 Ill.Reg. 10253) Section 120.382 Resource Disregard Section 120.383 Deferral of Consideration of Assets Section 120.384 Spenddown of Resources Section 120.385 Factors Affecting Eligibility for Long Term Care Services (EMERGENCY - 36 Ill.Reg. 10253) Section 120.386 Property Transfers Occurring On or Before August 10, 1993 Section 120.387 Property Transfers Occurring On or After August 11, 1993 and Before January 1, 2007 Section 120.388 Property Transfers Occurring On or After January 1, 2007

RELEVANT AABD REGULATIONS 89 IL ADMIN CODE SECT. 113, SUBPART C Section 113.100 Unearned Income Section 113.101 Budgeting Unearned Income Section 113.102 Budgeting Unearned Income of Applicants Receiving Income on Date of Application And/Or Date of Decision Section 113.103 Initial Receipt of Unearned Income Section 113.104 Termination of Unearned Income Section 113.105 Unearned Income In-Kind Section 113.106 Earmarked Income Section 113.107 Lump-Sum Payments and Income Tax Refunds Section 113.111 Protected Income Section 113.112 Earned Income Section 113.113 Exempt Unearned Income Section 113.114 Budgeting Earned Income of Applicants Section 113.115 Initial Employment Section 113.116 Budgeting Earned Income For Contractual Employees Section 113.117 Budgeting Earned Income For Non-contractual School Employees Section 113.118 Termination of Employment Section 113.120 Exempt Earned Income Section 113.125 Recognized Employment Expenses

RELEVANT AABD REGULATIONS 89 IL ADMIN CODE SECT. 113, SUBPART C Section 113.130 Income From Work/Study/Training Programs Section 113.131 Earned Income From Self-Employment Section 113.132 Earned Income From Roomer and Boarder Section 113.133 Earned Income From Rental Property Section 113.134 Earned Income In- Kind Section 113.139 Payments from the Illinois Department of Children and Family Services Section 113.140 Assets Section 113.141 Exempt Assets Section 113.142 Asset Disregard Section 113.143 Deferral of Consideration of Assets Section 113.154 Property Transfers For Applications Filed Prior To October 1, 1989 (Repealed) Section 113.155 Property Transfers For Applications Filed On Or After October 1, 1989 (Repealed) Section 113.156 Court Ordered Child Support Payments of Parent/Step-Parent Section 113.157 Responsibility of Sponsors of Non-citizens Entering the Country Prior to 8/22/96 Section 113.158 Responsibility of Sponsors of Non-citizens Entering the Country On or After 8/22/96 Section 113.160 Assignment of Medical Support Rights

RELEVANT SNAP REGULATIONS 89 IL ADMIN CODE SECT. 121 Subpart C: Financial Factors Of Eligibility Section 121.30 Unearned Income Section 121.31 Exempt Unearned Income Section 121.33 Unearned Income In- Kind Section 121.34 Lump Sum Payments and Income Tax Refunds Section 121.40 Earned Income Section 121.41 Budgeting Earned Income Section 121.50 Exempt Earned Income Section 121.51 Income From Work/Study/Training Programs Section 121.52 Earned Income from Roomers or Boarders Section 121.53 Income From Rental Property Section 121.54 Earned Income In-Kind Section 121.55 Sponsors of Aliens Section 121.57 Assets Section 121.58 Exempt Assets Section 121.59 Asset Disregards Subpart D: Eligibility Standards Section 121.60 Net Monthly Income Eligibility Standards Section 121.61 Gross Monthly Income Eligibility Standards Section 121.62 Income Which Must Be Annualized Section 121.63 Deductions from Monthly Income Section 121.64 Food Stamp Benefit Amount Subpart E: Household Concept Section 121.76 Categorically Eligible Households

RELEVANT HOME SERVICES REGULATIONS 89 IL ADMIN CODE SECT. 682 SUBPART C: FINANCIAL ELIGIBILITY CRITERIA Section 682.200 Assets Limitation Section 682.210 Transfer of Assets Section 682.220 Exempt Assets Section 682.230 Assets Held in Joint Ownership

RELEVANT TANF REGULATIONS 89 IL ADMIN CODE SECT. 112, SUBPART G Section 112.100 Unearned Income Section 112.101 Unearned Income of Parent, Section 112.105 Budgeting Unearned Income Section 112.106 Budgeting Unearned Income of Applicants Section 112.107 Initial Receipt of Unearned Income Section 112.108 Termination of Unearned Income Section 112.110 Exempt Unearned Income Section 112.120 Incentive Allowances Section 112.125 Unearned Income In-Kind Section 112.126 Earmarked Income Section 112.127 Lump-Sum Payments Section 112.130 Earned Income Section 112.131 Earned Income Tax Credit Section 112.132 Budgeting Earned Income Section 112.133 Budgeting Earned Income of Employed Applicants Section 112.134 Initial Employment Section 112.135 Budgeting Earned Income For Contractual Employees

RELEVANT TANF REGULATIONS 89 IL ADMIN CODE SECT. 112, SUBPART G Section 112.136 Budgeting Earned Income for Non-contractual School Employees Section 112.137 Termination of Employment Section 112.140 Exempt Earned Income Section 112.141 Earned Income Exemption Section 112.142 Exclusion from Earned Income Exemption Section 112.143 Recognized Employment Expenses Section 112.144 Income from Work- Study and Training Programs Section 112.145 Earned Income From Self-Employment Section 112.146 Earned Income From Roomer and Boarder Section 112.147 Income From Rental Property Section 112.148 Payments from the Illinois Department of Children and Family Services Section 112.149 Earned Income In- Kind Section 112.150 Assets Section 112.151 Exempt Assets Section 112.152 Asset Disregards Section 112.153 Deferral of Consideration of Assets Section 112.155 Income Limit Section 112.156 Assets for Independence Program

RELEVANT PM AND WAG PROVISIONS TANF Assets PM 07-01-00 to PM 07-01-18 WAG 07-01-00 to WAG 07-01-18 TANF Income PM 08-01-00 to PM 08-01-08-c WAG 08-01-00 to WAG 08-01-08-c AABD Cash Assets PM 07-02-00 to PM 07-02-23-b WAG 07-02-00 to WAG 07-02-23-b AABD Cash Income PM 08-02-00 to PM 08-02-07-c WAG 08-02-00 to WAG 08-02-07-c

RELEVANT PM AND WAG PROVISIONS AABD Medical Income and Assets PM 15-04-00 to PM 15-05-04-a WAG 15-04-00 to WAG 15-05-04-a AABD Medical Spenddown PM 15-08-00 to PM 15-08-15-c WAG 15-08-00 to WAG 15-08-15-c SNAP Assets PM 07-04-00 to PM 07-04-20 WAG 07-04-00 to WAG 07-04-20 SNAP Income PM 08-04-00 to PM 08-04-05 WAG 08-04-00 to WAG 08-04-05

OTHER BENEFIT PROGRAMS Illinois Cares Rx 89 IL Admin Code Sect 119.20: Eligibility Section 8 Subsidy 24 CFR 982.201 - Eligibility and targeting PHA Administrative Plans available upon request to the PHA

THE END Any Questions? Jennifer A. Johnson Vice President and Trust Officer American Bank and Trust Company 2580 Foxfield Road St. Charles, IL 60174 Tel. 630-444-2944 Fax 630-584-9896 jjohnson@ambankqc.com