Family members often experience a feeling of accomplishment when they sign their special needs trusts (SNTs), but signing trust documents is really only the first step in reaching the ultimate goal. The SNT is just a piece of paper if the clients and their team of advisers (often a lawyer, financial adviser, and accountant) have not planned how to fund the trust. Funding the Trust-Common Alternatives Some families have sufficient assets to fund their SNT by directing their assets into the trust through their estate plans. However, even these families may be concerned about future financial setbacks or long-term illnesses…
Who Will Be Subject to the New Surtax? One of the largest tax increases arising out of the President's health care reform initiatives is a new tax on the qualified unearned or passive income of individuals, trusts and estates. That tax begins January 1, 2013, will be imposed at a 3.8% rate and is designated as a Medicare contribution tax (the Medicare surtax). Initially advertised as applying only to high income individuals, the Medicare surtax also applies to estates and trusts once the taxable income reaches the top marginal tax rate. Estates and trusts reach the threshold for taxation at…
Estate planning is never easy, if only because it means thinking about protecting your loved ones when you’re no longer around. It’s bad enough making plans to protect self-sufficient heirs who take care of themselves and an inheritance. However, it can be a real challenge when planning for heirs with special needs for a variety of personal and legal reasons. Unfortunately, as The Wall Street Journal Online recently pointed out, with the economy and politics as they are, there are new concerns to bear in mind as you plan. Both the State and federal budgets are strapped for cash and…
The beneficiary of a SNT has been medically approved to use medical marijuana and has her medical marijuana card. The SNT trustee wants to pay for the medical marijuana. However, while medical marijuana is legal in California, it is illegal under federal law. As I understand it, the federal government is not enforcing the law against medical marijuana in California now, but it has reserved the right to do so later. The SNT trustee has asked about the appropriateness of distributing trust assets to pay for the medical marijuana. I would advise against making any distributions to pay for medical…
Planning for a special needs child, after preparing a Special Needs Trust, is the “Letter of Intent” or Personal Needs Notebook, where the parents should provide the following information to the trustees: (1) the nature of the child’s disability; (2) emotional and financial care provided by the family; (3) persons involved with the child; (4) the child’s capabilities and limitations; (5) their likes and dislikes; (6) their behavioral quirks and nuances; (7) their daily routine; and (8) how they act with other people and in other places when the parents are not around.
In the State of Maryland, and Federal Law parents of a special needs child can set up a Supplemental (or a Special Needs) trust for their children which will not disqualify them from government benefits, such as Social Security and Medicaid. Unfortunately, prior to this protection, parents would simply disinherit their disabled children rather than see their hard earned savings be squandered to the state. Now, the child receives money from the trust for their extra needs i.e. what the state does not supply, such as vacations; special equipment; medical help that the state does not provide or supply, glasses,…
A pooled trust is created by the person with special needs, a parent, grandparent, guardian, or a court. However, the trust is administered by a non-profit organization. The trust is funded by the disabled beneficiary’s assets. Each beneficiary has a separate account established, but for the purposes of investment and management of funds, the trust “pools” all these various accounts into one. However, upon the death of the disabled beneficiary, if there are funds remaining in the account, the trust pays to the State of Maryland, an amount up to the total amount of Medical Assistance provided to the beneficiary. The…
Until the Patient Protection and Affordable Care Act of 2010 (ACA), the only health care coverage available to persons with disabilities was Medicare or Medicaid. For persons with disabilities who have a limited work history, unless they became disabled before age 22 and later qualified for Medicare upon the worker parent’s retirement, disability or death, Medicaid has been the only available source of health care coverage. Consequently, the ACA eliminates the option for health insurance companies to deny coverage for a preexisting condition. Therefore, the new health insurance provides options for people with disabilities. Since September 23, 2010, health insurance…
These special types of trusts allow you to supplement any government benefits to which your
loved one may be entitled, without disqualifying them from receiving those benefits.
Frederick, MD 
301-663-9230
