Written by Mark Eghrari
Do you need to be rich to need an estate plan? Absolutely not. At the most basic level, during your lifetime an estate plan allows someone you trust to make decisions on your behalf if you are unable to do so yourself, and after your death, ensures that your assets and your wishes are carried out as smoothly as quickly as possible.
When you think about it that way, everyone needs an estate plan.
Fortunately, a basic estate plan includes just a few simple elements.
For starters, you (and, if applicable, your spouse) should have a General Durable Power of Attorney, a Health Care Power of Attorney, a HIPAA authorization, and either a Will or, better yet, a Revocable Living Trust.
So no, you don't have to be rich to need an estate plan. The goal of an estate plan is to provide security for you and your family. When you think of it that way, wealth has nothing to do with it at all.
A Supplemental Security Income (SSI) recipient is eligible to receive a monthly cash benefit when the Social Security Administration (SSA) determines that, among other eligibility criteria, the recipient’s income and resources fall below certain limits. Generally, the SSA includes funds held in trust for the benefit of the recipient towards this resource limit; however, funds in certain types of special needs trusts (SNTs) are specifically excluded from consideration. The language of the trust, and how and by whom the trust is funded, controls whether the SSA considers the trust funds to be an available resource to the beneficiary. For example, the SSA excludes from consideration a trust funded with assets derived from a third party if the beneficiary cannot terminate the trust or direct how the funds are used for the beneficiary’s benefit. The SSA also excludes a SNT funded with the beneficiary's own resources if it is established and funded in accordance with the requirements set forth in 42 U.S.C. §1396p(d)(4)(A) and 42 U.S.C. §1396p(d)(4)(C).
When an individual applies for SSI at a local SSA field office, they should provide the staff with a copy of any trust created for the individual’s benefit. The field office will evaluate the trust to determine whether the trust funds should be counted as a resource to the applicant. The review of trusts by the SSA is a highly technical area with which very few field office case workers are experienced. The SSA conducted an internal study of its trust review process in 2013. In April 2014, it implemented a trust centralization project which created Regional Trust Review Teams to review trusts submitted as part of SSI applications. The SSA also issued the Fact Guide for National Trust Training to provide the Regional Trust Review Teams with additional guidance regarding how to evaluate trusts properly when determining SSI eligibility. Under the 2014 procedures, trusts are still submitted to the SSA's local field offices as part of the application process. However, the local field office will make only an initial determination as to whether the trust is a countable resource. The field office will then send the trust and its initial determination to the Regional Trust Review Team, which then makes a final decision regarding whether the trust is a countable resource.
Upon receipt of the final decision from the Regional Trust Review Team, the field office then issues a notice of eligibility to the SSI applicant. If the field office issues a notice to an applicant denying SSI benefits because of excess resources that include a trust, the notice must state the section of the trust document that causes the trust to be countable and the relevant citation from the Program Operations Manual System (POMS) that outlines the requirements related to the problematic section. The POMS, a manual for SSA employees with instructions regarding how to process claims for Social Security benefits, is available online at https://secure.ssa.gov/apps10/. The SSA also uses this trust review process to reevaluate trusts that were previously submitted and approved but have subsequently been amended to comply with the POMS, or are otherwise affected by a clarification or change in SSA policy.
SSA Denials Have Increased
Soon after the trust review centralization project was implemented, members of the Special Needs Alliance reported an increase in the number of notices from the SSA stating that SSI applicants and recipients were ineligible for benefits because their resources, including funds held in SNTs, exceeded the allowable limit. Although the SNTs were drafted so that the trust funds would be excluded in the determination of a beneficiary’s SSI eligibility, the SSA nevertheless determined that the SNTs were not exempt. The receipt of such a denial notice can be stressful for the SSI applicant or recipient. However, a denial notice from the SSA does not necessarily spell the end of SSI eligibility for the SNT beneficiary. The SNT may be fully compliant with the POMS requirements, and the SSA may simply have misinterpreted the trust document, resulting in a mistaken determination that the SNT is countable. Providing the SSA with additional information regarding the trust may be all that an applicant needs to do in order to obtain or maintain SSI eligibility. Members of the Special Needs Alliance, or other attorneys who regularly engage in special needs planning or Social Security disability advocacy, should be familiar with the options available to appeal a SSA decision, including how to amend the SNT so that it complies with the SSA's requirements.
The SSA is still making changes to its trust review process to ensure that it accurately and consistently reviews trusts and provides clear instructions regarding its SNT policy. It has demonstrated an ongoing commitment to address problematic issues raised by its trust review process and to clarify its policy regarding SNTs as this new system is implemented.
About this Newsletter: We hope you find this newsletter useful and informative, but it is not the same as legal counsel. A free newsletter is ultimately worth everything it costs you; you rely on it at your own risk. Good legal advice includes a review of all of the facts of your situation, including many that may at first blush seem to you not to matter. The plan it generates is sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and practices, many not published. That is what The Special Needs Alliance is all about. Contact information for a member in your state may be obtained by calling toll-free (877) 572-8472, or by visiting the Special Needs Alliance online.