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(1) (a) i) a) I.A.1.a.(1)(a)i)a)(uP$2ɯ  I  .3  0  ($0  0` (#(#2ɯ  1  .3  0 ` (#` (#(bF$0  0` (#(#0 ` (#` (#2ɯ  a  .3  0 (# (# /W/E /W / /D / /\/ /D/E($($0 SSDISNTU.S.C.A.LeighAtkinsonClydeFarrellGlennKarischBernsteinNEALACliftonKruse19thAFDCpractionersHealthcareaccountings5X5pgsnonselfHowlettSNTsHCFAO.B.R.A.U.S.C.28th($0 0 (UEGMSY_ekqAutoList181.1.1.1.1.1.1.1.(($0 0 0 (2$0 0 0 0 (<$0 0 0 0 0 ~101 RomanAuto  #, CEOP, Bold, Mark TOC Level 1   2 e  0  .3  Ԁ  l<Y=0ColumnsNewspaper Columns, .25 Gutter , |(e'6Cover PageCenter Page, Very Large, Bold, HPg       .( {^,Title1" L/R Margins, VyLrg/Bold, New Page Method/#: 1     mo( m1n:2 UpperAlphaAuto  #, CEOP, Bold, Mark TOC Level 2   2 e  a  .3  Ԁ  4H-63 Arabic #Auto  #, CEOP, Undl, Mark TOC Level 3   2 e  i  .3  Ԁ  5:4 LowerAlphaAuto  #, CEOP, Undl, Mark TOC Level 4   2 e(  0  )3  Ԁ  |2 :5 (Arabic #)Auto  #, CEOP, Mark TOC Level 5   2le(  a  )3  Ԁ  tcC:1st Art.PageNew Page #: 1; JustificationXX  ) p`CG Times3|F/:L:\JLI\JENNIFER\STYLES\PDP_60.STY$\J"u,ae^6=U\\===\====\\\\\\\\\\==Qs~sm=Gsizbsw===\\=Q\Q\Q=\\33\3\\\\DG3\\\\QQ\Q\\\\\\=\\\\\\\\\QQQQQz~QsQsQsQsQ=3=3=3=3\\\\\\\\\\Q\\\\\i\QQQ}Q}Q~Q~QnrQsQsQrQ\\\\\\\\=3=3=3=3fG\r3rBs3u7r3\j\\\\yByBzDcFcFcFbGrBr3s3\\\\\\\uQuQuQ\s3\zDbGs3\\n\\sQ=33\4==\\==/N\\\=QKK\\\\\\@\\\\@==__\00\\pp\\\mff=_\@\_\壣\==p=\\f\z\=\Q\iwUzpNmń\QQ====؄psfpfzQsGwQ\Q=3QzffQz\Qpi\p\\sQQzpfppppsG\=33QQQppQpppp===\\\\\\\ppppppppppppppppppppppGGGGGGG\\\\\\\\\\\\\\\\\\\\\\333333333333QQQQQQQQQQQQQQQQQQQppppppppppppppppppppppi\Q=3#37=CIQYag1.a.i.(1)(a)(i)1)a)(6 Z 6Times New Roman Regular"u'>E^.;=\.FF\.=.2\\\\\\\\\\22Z}qFPuodx<2<\\ZaPdZE^.;?\.FF\.<.1\\\\\\\\\\22YwxxnGZtrjtutxO1O\\^bPeR:Yh69b6h\ecNN>fSwWRO\\\\.\\\\\\\\\\\\\\e9w^w^w^w^w^PxRxRxRxRG6G6G6G6h\\\\fffftRw^e\\tR\rew^w^w^PPPPexRxRxRxRYYYYYYhhG6G6G6G6mZ9bt6t6tUdu7hhh\\NNNjNjNjNjN]t>t>ffffffwtRxOxOxOet6hNjNt>tRtR\fxRG66\/\\\\/N~{l\\;Y``\w\FD\=Nddo=.YY\99\\pll.Y=aw\h\\\\nnnn<e<<\jtttxtmmx\RmZllx^vtRmRttttttttttttttttttttttRRRRRRRmmmmmmmmmmmmmmmmmmmmmmtRtR"fzzzn\z\+\CCbbb@@bB;\\zB+++CCC\++\\z\\z\\bXXwz\zzz(C\\\߷zBLNbT 3K=K,,&KiW2N=N,,1&Nq1N=N,,z&No  =&֯) p`CG Times*4\L  p`0Dutch 801RomanSpeedo+ * p.Dutch 801BoldSpeedoGr Ap`>WP TypographicSymbolsType 1#'()LU($0  2ɯ  A  .3  0` (#(#(0$0  0` (#(#0 ` (#` (#0 (# (#2ɯ(  1  )3  0h(#(#(o$0  0` (#(#0 ` (#` (#0 (# (#0h(#(#2ɯ(  a  )3  0h(#h(#($0  0` (#(#0 ` (#` (#0 (# (#0h(#(#0h(#h(#2ɯ  i  )3  0(#(#(.$0  0` (#(#0 ` (#` (#0 (# (#0h(#(#0h(#h(#0(#(#2ɯ  a  )3  0p(#(#/ 0123`G_cimquy}Bullet ListBullet List1.Y$(EhCEKQW]cioAutoList21.1.1.1.1.1.1.1.((3$  !      0  (#$  0   5hCEKQW]cioAutoList11.1.1.1.1.1.1.1. practioner SSDI SNT OBRAKarisch DHSNAELAKrusepractionersT.A.C.toiletingnonliquidHowlett SNTsNonselfnonself ODQAee pgs HCFASettlorIbarraunreimbursed UiCEKQW]cioAutoList31.1.A.1.1.1.1.1./ 0123hvIgkosw{Diamond BullDiamond Bullet````````(ehCEKQW]cioAutoList41.1.1.1.1.1.1.1.(uhCEKQW]cioAutoList51.1.1.1.1.1.1.1.(hCEKQW]cioAutoList61.1.1.1.1.1.1.1.(hCEKQW]cioAutoList71.1.1.1.1.1.1.1.(hCEKQW]cioAutoList81.1.1.1.1.1.1.1.(hCEKQW]cioAutoList91.1.1.1.1.1.1.1.(գEGMSY_ekqAutoList101.1.1.1.1.1.1.1.(EGMSY_ekqAutoList111.1.1.1.1.1.1.1.(EGMSY_ekqAutoList121.1.1.1.1.1.1.1.(EGMSY_ekqAutoList131.1.1.1.1.1.1.1.(Wm$ @H  A C:\WINDOWS\TEMPLATE\STANDARD.WPT(3)$  !  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Ќ    0 p    VI.QUALIFYINGCOURTCREATEDSUPPLEMENTALNEEDSTRUSTS #""(#.Hp(#p(##9݌ 0# Ќ    0 p 0 p(#p(# p   A.DefiningtheTrusts #""(#.vv5 (# (##9݌  $ Ќ    0 p 0 p(#p(# p   B.CourtCreatedSupplementalNeedsTrusts #p"p"~(#.I (# (##10݌  % Ќ     0 p    VII.THEPURPOSE,MANAGEMENT,ANDCREATIONOFSUPPLEMENTALNEEDS |"$ ' TRUSTS  L# ( #p"p"~(#.ppp(#p(##10#@(#(#(#. &p(#p(## ݌̌    !0 p 0 p(#p(# p   A.PurposeofanSNT #p"p"~(#.PP3 (# (##10!"݌ $"* Ќ    "0 p 0 p(#p(# p   B.ManaginganSNT #p"p"~(#.1 (# (##10""݌ %h#+ Ќ    #0 p 0 p(#p(# p   C.Supplementingvs.SupplantingtheBasicApproach #p"p"~(#.JJR (# (##10##݌ &<$, Ќ    $0 p 0 p(#p(# p   D.QualifyingSelfSettledandNonselfSettledSNTs #p"p"~(#.R (# (##11$$݌ h'%- Ќ    %0 p 0 p(#p(# p   E.CreatingSNTsFeaturesandRequirements #p"p"~(#.TTL (# (##12%%݌ <(%. Ќ    &0 p 0 p(#p(# p   F.1396(SelfSettled)SNTsandthe PaybackProvision #p"p"~(#.ffW (# (##12&&݌ )&/ Ќ    '0 p 0 p(#p(# p   G.DefendingthePaybackProvision #p"p"~(#.A (# (##12''݌ )'0 Ќ    (0 p    VIII.SECTION1396INDIVIDUAL(SelfSettled)SUPPLEMENTALNEEDSTRUSTS #p"p"~(#.Xp(#p(##13((݌ +0)2 Ќ    )0 p 0 p(#p(# p   A.1396p(d)(4)(A)Individual,underAge65,SelfSettledSNT #p"p"~(#.` (# (##13))݌ \,*3 Ќ    *0 p 0 p(#p(#0@ (# (#   1.ClientProfileNumberOne:1396p(d)(4)(A)Individual(SelfSettled)Supplemental 0-*4 NeedsTrust#p"p"~(#.4@ (#@ (##14**݌ .+5 Ќ    ,0 p 0 p(#p(#0@ (# (#   2.AnalysisofMs.Jones1396(A)IndividualsSupplementalNeedsTrust#p"p"~(#.n@ (#@ (##14,!,݌ .x,6 Ќ    7-0 p 0 p(#p(# p   B.1396p(d)(4)(C)PooledInterest,over(orunder)Age65,SelfSettledSNT #p"p"~(#. n (# (##157-R-݌ /H-7 Ќ    T.0 p 0 p(#p(#0@ (# (#   1.ClientProfileNumberTwo:1396p(d)(4)(C)Pooled(SelfSettled)Supplemental  NeedsTrust#p"p"~(#.4@ (#@ (##16T.o.݌  Ќ    /0 p 0 p(#p(#0@ (# (#   2.AnalysisofMs.Jones1396(C)PooledInterestSupplementalNeedsTrust#p"p"~(#. p@ (#@ (##16//݌ m Ќ    00 p    IX.COMBININGSTATEANDFEDERALLAWSTOCREATESPECIALTRUSTS #p"p"~(#...Op(#p(##1600݌  @ Ќ    10 p 0 p(#p(# p   A.Utilizing867oftheTexasProbateCodetoCreate1396Trusts #p"p"~(#.>>a (# (##1611݌  Ќ    20 p 0 p(#p(#0@ (# (#   1.ClientProfileNumberThree:867/1396p(d)(4)(A)Individual(Self  Settled)SupplementalNeedsTrust#p"p"~(#.$$I@ (#@ (##1822݌   Ќ    @40 p 0 p(#p(#0@ (# (#   2.AnalysisofMs.Jones867/1396(A)IndividualSNT#p"p"~(#.,,^@ (#@ (##18@4[4݌ U  Ќ    a50 p 0 p(#p(#0@ (# (#   3.ClientProfileNumberFour:867/1396p(d)(4)(C)PooledInterest(SelfSettled) % X  SupplementalNeedsTrust #p"p"~(#.@ @ )@ (#@ (##18a5|5݌    Ќ    60 p 0 p(#p(#0@ (# (#   4.AnalysisofMs.Jones867/1396(C)PooledInterestSNT#p"p"~(#.XXb@ (#@ (##1866݌   Ќ    70 p 0 p(#p(# p   / /B.Utilizing142oftheTexasPropertyCodetoCreate1396(A)Trusts/ /#p"p"~(#.e (# (##1978݌ e  Ќ    %90 p 0 p(#p(#0@ (# (#   1.ClientProfileNumberFive:142/1396p(d)(4)(A)Individual(SelfSettled) 9l  SupplementalNeedsTrust#p"p"~(#.B@ (#@ (##19%9@9݌  <  Ќ    :0 p 0 p(#p(#0@ (# (#   2.AnalysisofAmys142/1396(A)IndividualSupplementalNeedsTrust#p"p"~(#.  m@ (#@ (##20::݌   Ќ    ;0 p    X.THIRDPARTY,NONSELFSETTLED(ORNONGRANTOR)SUPPLEMENTALNEEDS y TRUST #p"p"~(#. #p(#p(##20;;݌ I| Ќ    <0 p 0 p(#p(# p   A.NatureandPurposeofNonGrantorSupplementalNeedsTrusts #p"p"~(#.XX] (# (##20<<݌ P Ќ    =0 p 0 p(#p(# p   B.RequirementsforNonGrantorSupplementalNeedsTrusts #p"p"~(#.X (# (##21==݌ $ Ќ    >0 p 0 p(#p(#0@ (# (#   1.ClientProfileNumberSix:CommonLaw,NonselfSettled,NonGrantorSupplemental  NeedsTrust#p"p"~(#.4@ (#@ (##22>>݌  Ќ    +@0 p 0 p(#p(#0@ (# (#   2.AmysCommonLaw,NonselfsettledSupplementalNeedsTrustStructureAnalysis e #p"p"~(#.@ @ )@ (#@ (##22+@F@݌̌    _A0 p    XI.CONCLUSION #p"p"~(#. p(#p(##22_AzA݌  Ќ   /P / /V /Y    3C  ɯ$$ CTRX3' LetterX3' Letter3' Letter3' LetterT&&%%&&&&%%&&XXXX  3XP Xh3     #dddd  CXXXX   / Y=(,(#(#(   /{^     SPECIALTRUSTS:867,142,1396SupplementalNeedsTrustsWhenandHowtoUseThem{^7F           2ɯ  I  .3  Ԁ  INTRODUCTION,SCOPE,ANDACKNOWLEDGMENTSOG  jG   =p n   2ɯ  A  .3  Ԁ  IntroductionnaH  |H      Itismyintentinthispapertooutlinethestructureanduseofcertainspecialtrusts(sometimesalsoreferredtoas disabilitytrusts)andtoexplainhowthosetrustsrelateto adisabledorincapacitated }  person'sability toaccesspublicsourcesforbeneficialsupport.Thepaperwillexaminetheissuesa Q  practionershouldconcentrateonwhenqualifyingdisabledorincapacitatedclientsformedicalassistanceunderMedicaidand/orothergovernmentprograms.Includedatthebeginningofthepaperissomebasicinformationonbothstateandfederallawrequirementsandrestrictionsforthe Medicareand Medicaidprograms,DisabilityInsuranceBenefits( _DIB_)program,andSupplementalSecurityIncome( SSI)program.Sixclient profileswillbepresentedinthepaper,eachillustratingthecircumstancesusuallyencounteredbythepractionerwhenassessingwhetherornotadisabledclientwouldbenefitfromtheuseofa specialor disabilitytrusttosheltertheirassetsandqualifytheclientforprogramassistance. Becausethepapersfocusisontheuseofspecialtruststoqualifydisabledorincapacitatedindividuals   forassistance,thepaperwillnotdiscusspropertytransfersordeliberatewealthreductionforpersonsenteringnursinghomesandattemptingtoqualifyforMedicaidprogrampaymentsforthatlongtermcare.  Ex n   2ɯ  B  .3  Ԁ  ScopenmO  O      The specialtrustscoveredbythepaperareMedicaidqualifyingnonselfsettledSupplementalNeedsTrustscreatedthroughcaselawor commonlawandselfsettledSupplementalNeedsTrustscreatedpursuanttofederallawundertheprovisionsoftheOmnibusReconciliationActof1993(OBRA93)specifically42U.S.C.A.1396p(d)(4)(A)( 1396SNTTrusts),42U.S.C.A.and1396p(d)(4)(C)( PooledSNTTrusts)SupplementalNeedsTrusts( SNTs)createdpursuanttoSections867873oftheTexasProbateCode( 867/1396Trusts)andSection142.005oftheTexasPropertyCode( 142/1396Trusts).  Thereasonthetrustsarediscussedhereandarereferredtointhepaperas specialtrustsor   disabilitytrustsisthatitispossibletoplacetheassetsofthetrustbeneficiary(thedisabledorincapacitatedperson)insuchatrustandthenqualifythebeneficiaryforgovernmentassistanceprogramsthatwouldotherwisebeunavailabletothebeneficiaryduetotheincomeandassetlimitationsplacedonprogramrecipients. 󀀀      Draftformsofthetrusts andcourtpleadingsdiscussedareprovidedforuseinTexasandsomeof ! thosedocumentsarereprintedherewiththepermissionofGlennKarischfromhispaperCourtCreated " TrustsinTexas,StateBarofTexasAdvancedDrafting:EstatePlanningandProbateLawCourse(1995), Q # updatedtoreflect1997legislativechanges(1998).DocumentscreatedusingtheseformshavebeenacceptedbytheTexasDepartmentofHumanServicesandtheSocialSecurityAdministrationasqualifiedtrustsforthegovernmentalprogramstheseagenciesadministerasdiscussedherein.  TheTexasDepartmentofHumanServices( DHSorthe Department)administerstheMedicaidprograminTexasandtheSocialSecurityAdministration( SSA)administerstheSupplementalSecurityIncomeandDisabilityInsuranceBenefitsprograms.Theauthordoesnotwarrantthattheformsasprovidedmeetallrequirementsoftheagencies,orofstateandfederallaws.n   2ɯ  C  .3  Ԁ  Acknowledgmentsn*Y  EY   '#,   IgratefullyacknowledgetheassistanceofClydeFarrell,GlennKarisch,LeighAtkinson,andDavidGoodmanfortheirhelpandinsightintheresearchandpreparationofthispaper.ForexcellentandindepthdiscussionsofMedicaidplanninginTexas,courtcreatedtrusts,andtheuseofspecialtrustsinpersonalinjuryandothercasessee:H.ClydeFarrell,FinancingLongTermCareinTexas,publishedbytheTexas *'0 ChapteroftheNationalAcademyofElderLawAttorneys;GlennM.Karisch,CourtCreatedTrustsinTexas, +'1 StateBarofTexasAdvancedDrafting:EstatePlanningandProbateLawCourse(1995),updatedtoreflect1997legislativechanges(1998);RogerM.Bernstein,SusanG.Haines&MarySmith,SpecialNeedsTrusts: Q-)3 DraftingandAdministration,NationalAcademyofElderLawAttorneys:NAELAAdvancedElderLaw !.T*4  InstituteNovember,1997;andCliftonB.Kruse,Jr.,MedicaidTrusts:EstatePlanningUsingNonMedicaid .$+5 DisqualifyingSelfSettledandThirdPartyTrusts,19thAnnualAdvancedEstatePlanningandProbate  Course,StateBarofTexas,June1995.    2ɯ  II  .3  Ԁ  FEDERALMEDICALINSURANCEANDASSISTANCEPROGRAMS _s: '_   =p n   2ɯ  A  .3  Ԁ  BackgroundforBenefitProgramsn(`s: C`      Inordertodothesimplestassessmentofaclientseligibilityforstateandfederalbenefitsprograms,itisnecessaryforthepractionertoknowatleastalittlebitaboutthetypesofprogramsavailabletoqualifyingapplicantsandtobeabletoproperlyidentifytheprogramsfortheclient.Thefollowinginformationisprovidedhereforthatpurpose.n   2ɯ  B  .3  Ԁ  Medicarevs.Medicaidnbs: b        Inessence Medicare isafederalhealthinsuranceprogramavailabletoindividualswho:1)meeteither   therequireddisabilityorageguidelinesoftheprogram,and2)havepaidmoneyintotheprogramthroughselfemploymenttaxesand/orSocialSecurity/Medicarewithholdingpaymentsfromtheperson'sincomeor,insomecases,theincomeofaspouseorparent. Medicare coverageisthehealthinsurancecoverage 4  availabletoallAmericanswhohavepaidSocialSecuritytaxesandwhoaredrawingeither SocialSecurity   RetirementbenefitsorSocialSecurityDisabilitybenefits (seeSectionIVbelow).     Therefore,inordertoreceiveMedicareinsurancecoverage,theclaimant,orsomeonewhosepaymentscanbeattributedtotheclaimant,musthavemadecountablepaymentsintotheprogram.Thescopeofthecoverage,i.e.whattheprogramwillpayfor,issetbyfederallawsandregulationsandisadministeredinthedifferentstatesbycompaniesandagencieswhocontractwiththefederalgovernmentthroughtheSocialSecurityAdministrationtoprovidethoseadministrativeservices.Aswithanyinsuranceprogram,somemedicalservicesarecoveredbyMedicareandsomearenot,andsomecopaymentordeductibleamountisnormallyrequiredformostofthecoveredexpensesfromthepatient/claimant.  BecausepeoplereceiveMedicarecoverageiftheyhavepaidintotheMedicareprogram,Medicare -` isnotanincomeorassetrestrictivegovernmentalprogram forpurposesofcoveringtheclaimant's 0 medicalneeds.Inotherwords,itmakesnodifference,intermsofapatient'squalifyingforandreceiving  Medicarecoverage,whatthatclaimant'scurrentincomeis,orwhatassetssheorhemayown,orwhetherany  orallofthoseassetsareheldintrust.Therefore,becausethepractionertypicallydoesnotconsiderspecialtruststructuresforaclientinordertoqualifytheclientforMedicarecoverage,therulesandregulationsof At theMedicareprogramandthebenefitscoveredbytheprogramwillnotbediscussedinthispaper.Instead, D  indoingtheanalysisofaclient'smedicalandfinancialneeds,thepractionershouldbeconsideringthe   advantagesordisadvantagesofusingspecialtruststructurestoqualifytheclientforMedicaidand/or ! otherincomeandassetrestrictivegovernmentprograms.  "    Medicaid isafederalgovernmenthealthcareprogramusedtoprovidemedicalcareandservicesto Q # indigent(readaspovertylevel)persons.Assuchitisclassifiedwithotherfederalgovernment Welfare %!X$ programssuchasAidtoFamilieswithDependentChildren( AFDC)and SupplementalSecurityIncome !(% ( SSI) ,etc.Undertheseincomeandassetrestrictiveprograms,thefederalgovernmentpaysanamountof "& moneytoeachoftheindividualfiftystateswhothenbecomeresponsibleforadministeringthosefederalfundsandprovidingcoveredservicestostateresidents.42U.S.C.1396aand42U.S.C.1396d.Fundsadministrationandcoveredservicesareprovidedthroughcontractswithstateagenciesandapprovedserviceproviders.Thestateshavesomelatitudewithinthefederallawsandregulationsinsettingtheirownindividualguidelinesforpeoplequalifyingforandreceivingthefederalfundsassistance.Thus,theprogramsbecomecreaturesofbothfederalandstatelaw,meaningthatbothmustbeconsideredwhenmakingdecisionsaboutpeoplewhoreceivebenefitsundertheprograms.n   2ɯ  C  .3  Ԁ  QualifyingforMedicaidn sse, &s   *P&/   ThereasonweshouldconsidertheuseofaspecialtrusttoqualifyaclientforincomeandassetrestrictiveprogramssuchasMedicaidisthatthepersonmaynothavemadeanycountablepaymentsintothe +'1 Medicareprogramorbecausesuch povertyprogramsmedicalcoveragemaymeetmoreoftheclient'sneedsthanthecoverageprovidedforbyMedicareorbytheclient'sprivateinsurance.Thisisparticularlyimportanttoconsiderwhenthepersoneitherisnowresidinginaskillednursingfacility( nursinghome), oritislikelythatthepersonmayhaveaneedforsuch longtermcareintheforeseeablefuture.Medicare's .0+5 coverageofthistypeofmedicalexpenseisextremelylimitedandunlesstheclientalreadyhasprivatecoverageforlongtermcare,alternategovernmentbenefitsprogramsmayneedtobeconsidered.   UnlikeMedicarecoverage,theMedicaidprogramcoversmostofthemedicalcostsofpeoplein m qualifiednursingfacilitieswhosemedicalconditionrequiresthattheyreceivecontinuouscareofthatkind.OtherMedicaidalternativeprogramsmayalsocoversomeorallofthecostsassociatedwithprovidingdailylivingassistanceandsomeskillednursingormedicalcareforqualifiedindividualsintheirhomes( communitybasedor alternativecare). Weshouldconsiderwhetherornotwecanutilizeaspecial  truststructuretoqualifyanincapacitatedordisabledclientforMedicaidwhentheclienthasassetsthatexceedthoseallowedbytheprogramsguidelinesbutitislikelythatthoseassetswillbeinsufficienttosupportalloftheclientsneeds.  ! T   0  Note: Althoughpractionersandothersrefertotheprogramasthe Medicaidprogram,thattermisnot    foundinthestatutesandregulationsgoverningtheprogram.Thosesourcesrefertotheprogramasthe MedicalAssistanceProgram.Becausetheterm Medicaidissowidelyusedandrecognized,however,Iwillrefertotheprogramas Medicaidinthispaper.Also, asstatedaboveinthe 5h  introductiontothispaper,thefederallegislationcontrollingprogramassistanceandtheuseofspecialtrustsisreferredtobypractionersas OBRA93."ThefederalDepartmentofHealthandHumanServicesHealthCareFinancingAdministration( HCFA)regulatestheprogramsforthefederalgovernmentandthestatesandthatagencypublishesitsrulesandregulationsforstatesadministeringMedicaidfundsinthe StateMedicaidManual.ThisHCFAmanualisthe handbookusedbyagencycaseworkersandintakepersonnelwhentheyareassessinganapplicantsprogrameligibility. SeeHCFATransmittalNo.64(StateMedicaidManual32573259.8)fortheDepartments  regulationsandrulesaffectingtrustsandtheexceptionstotransfersmadeintotrustsbytheOBRA93legislation. 󀀀(#(# n   2ɯ  D  .3  Ԁ  MedicaidBasicsnDep    )\   AsofJanuary1998toqualifyforMedicaidnursinghomebenefitsinTexas,anunmarriedapplicantcannothavemonthlyincome,onaverage,thatexceeds$1,482.00andheorshecannothavemorethan$2,000.00in availableor countableresources(cashorpropertyreadilyconvertibletocash,i.e.stocks,bonds,etc.).Theapplicant'shomesteadandcertainotherpersonalpropertycanbeexemptedfromthecalculationsofavailableresources,meaningthatthispropertyneednotbeliquidatedandtheproceedsspentbeforetheprogrambenefitsbegin.Theprogramsrestrictionsandlimitationsonincomeandavailableresourcesarereviewedandsubjecttochangeyearly. Astheinformationinthispaperwillexplain,    however,theprogramregulationsdoallowthatsomeonemayqualifyforbenefitseventhoughtheyownassets,orhaveincome,inexcessoftheprogramguidelinesifthoseassetsarepropertyplacedandshelteredincertainlimited qualifyingtrusts.  M #   Differentformulasforfinancialqualificationareappliedformarriedandforsinglepersonsseekingprogrambenefits( applicants)andtheformulasvaryaccordingtothetypeofassistancebeingsought.Itisbeyondthescopeofthispapertofullydiscussallofthegovernmentprogramsthatareavailableandalloftherulesandregulationsaffectingthoseprogramsdifferentiatingtherulesbetweenthoseforsingleandthoseformarriedapplicants.Therefore,theprogramsoutlinedherearethemostcommonlyencounteredprogramsforwhichtheuseofaspecialtrustmayaidinqualifyingaclientforassistance.Theprogramswillbediscussedwithinthetermsofqualifyinganunmarriedapplicant.However,thetechniquesforusingspecialtrustsforprogramqualificationisnotalteredbytheclientsmaritalstatusandthetechniquespresentedwillworkthesameformarriedorunmarriedclients.  TheinformationpresentedinSectionIIIbelowisintendedtoprovidepractionerswithbasicprograminformationbycoveringsomeoftherulesandassetrestrictionsoftheMedicaidprograminTexasandthetypesofassistancecoveredbythatprogram.TheinformationisreprintedherewiththegenerouspermissionofH.ClydeFarrellandisadaptedand/orexcerptedfromMr.FarrellsexcellentpublicationentitledFinancingLongTermCareinTexas,publishedbytheTexasChapteroftheNationalAcademyof +'1 ElderLawAttorneys.ThefulltextofMr.Farrellspapermaybepurchasedbycalling18004246291.   2ɯ  III  .3  Ԁ  SUMMARYOFMEDICAIDELIGIBILITYREQUIREMENTSion     !.T*4   .$+5 n    2ɯ  A  .3  Ԁ  NationalityandResidencen$cing I      ToqualifyfortheMedicaidprogram,theapplicantmustbe(a)aU.S.citizenor(b)analienlawfullyadmittedtotheUnitedStatesforpermanentresidenceor(c)otherwisepermanentlylivingintheU.S.undercoloroflaw(asdefinedintheregulation).40T.A.C.15.300(a),(b).TheapplicantmustbearesidentofTexas.Thatis,heorshemusthaveestablishedresidenceinTexasandintendtoremainhere.40T.A.C.15.301(a).NospecifictimeperiodofresidencyinTexasisrequired.TraveloutofTexasdoesnotterminateresidencyhere,iftheapplicanthasanintenttoreturntothestate.n   2ɯ  B  .3  Ԁ  Age,Blindness,orDisabilityncing Ð   M    Anapplicantfornursinghomecaremustbeeitheraged(65orover),blind,ordisabled(undertheSocial  P  SecurityDisabilitydefinition).40T.A.C.15.305(a).Inpractice,thisrequirement[being disabled]isneveranissue,becausethe medicalnecessityrequirement[forreceivingskillednursingMedicaidbenefits](discussednextbelow)ismorestringentthanthe disabilityrequirementofSocialSecurity.(SeeSection4belowforSocialSecuritydefinitionof disabled.)n   2ɯ  C  .3  Ԁ  MedicalNecessity&DisabilityforNursingHome&CommunityBasedCarenؓcing    0    Anapplicantmustmeetthe medicalnecessitytestforeithernursinghomeMedicaidorfortheCommunityBasedAlternativesProgram.40T.A.C.19.60119.604.Theinitialassessmentformedicalnecessityismadeonform3652A(theCAREform)uponadmissiontothenursinghome,[orprogramapplication]andafollowupisdoneannuallythereafterinmostcases.TheassessmentisdonebytheDirectorofNursesatthenursinghomeandbyanurseandphysicianemployedbytheinsurancecompanycontracted[for]byDHS(currently,NationalHeritageLifeInsuranceCo.).Theagencysdecisionregardingwhetherornotsomeonemeetsthemedicalnecessityrequirementisappealablethroughtheprograms fairhearingprocess.  Essentially,someonemeetsthe medicalnecessity requirementiftheyhaveamedicaldisorderor M diseasenecessitatingregularattentionbyregisteredorlicensedvocationalnurses.Aninabilitytoattendtothe activitiesofdailyliving,suchasbathing,grooming,andeating,isnotsufficienttomeetthestandardofmedicalnecessity.See40T.A.C.19.2402etseq.fortheapplicableregulations.  The disability requirementtoqualifyforCommunityCareprogramsislessstringentthanthemedical  necessitytestdescribedabove.TheCommunityCareprogramsrequirethattheapplicantmeetthedefinitionofbeing disabledasdefinedbytheSSIprogram,(seediscussionbelow)which[definition]isthatthepersonhavetheneedforassistanceinatleastsomeactivitiesofdailylivingasdeterminedbytheassessment 8 interview.  CommunityorHomeCareprogramsprovideassistancewithbathing,dressing,toileting,foodpreparation,andhousekeeping,etc[forqualifiedindividualsintheirhomesorcommunityplacement].Thenumberofassistancehoursanapplicantwillqualifyforperweekvariesbasedonthecaseworkersdeterminationoftheapplicantsneedsasgainedfromtheassessmentresponsesgiventothecaseworkerbytheapplicantortheirrepresentative.Althoughthecurrentregulationsstatethatuptoamaximumof50hoursofassistanceperweekisavailabletoqualifiedapplicants,Departmentcaseworkersstatethattheywillprovidenomorethan35hoursofassistanceperweektooneapplicant.These assistancehoursdonotincludeanymedicalbenefits.n   2ɯ  D  .3  Ԁ  Income&ResourceLimitationsnomes    %("*   Themonthlyincomelimitationforqualificationfor skillednursingcare undertheMedicaidprogram &"+ foranunmarriedapplicantincalendaryear1998is$1,482in countableincome.ThisamountisadjustedonJanuary1ofeveryyearforinflation.The resourcelimitationforanunmarriedapplicantis$2,000.Thisamounthasremainedthesamesince1989.Seethediscussionof resourcesbelowforhowtodeterminewhatresourcesare countable.  Thefinancialrestrictionsfor CommunityBasedCare programsforanunmarriedindividualarethe * '0 sameasforskillednursing(nursinghome)Medicaid[asdiscussedabove],exceptforaprogramcalledthe FamilyCareprogram.Thisprogramallowsindividualstohaveasmuchas$5,000.00inavailableresources;however,thenumberofapplicantsacceptedonthisprogramislimitedmeaningthatotherwisequalifiedapplicantsmaybedeniedassistancebecausetheprogramisfull.See40T.A.C.481.6001 48.6020forregulationsgoverningtheCommunityBasedAlternativesPrograms. . +5   Income fortheprogramsisdefinedasthe receiptofanypropertyorserviceaclientcanapply,either   directlyorbysaleorconversion,tomeetbasicneedsforfood,clothingandshelter.And countable  income isdefinedas theamountofaclientsincomeafterallexemptionsandexclusions.40T.A.C. u 15.100(MedicaidEligibilityHandbook24102411).Thisdefinitionisbroaderthantheincometaxdefinition.Forexample,theMedicaiddefinitionincludesgiftsandpersonalinjuryawards.  Exemptincome isincomethat isnotcountedineligibilitynorappliedincomedetermination.40  T.A.C.15.100.See40T.A.C.15.460,(MedicaidEligibilityHandbook24202421)forincomeexemptions.( Appliedincomeistheamountoftheclientsincomethatispaidtoward( appliedto)hisorhernursinghomeorothercare.)Importantexamplesofexemptincomeincludethevalueofmedicalservicesprovidedfreeorforwhichsomeoneelsepaystheproviderdirectly,paymentstoprovidersofsocialservicesbyagovernmentprogram,andspecificallydefined infrequentorirregularincome.  Thefollowingareerroneouslylistedas exclusionsintheMedicaidEligibilityHandbook.Actually,theyare exemptions,becausetheyarenotcountedfordeterminingeithereligibilityorappliedincome:VAaidandattendanceallowances,VAreimbursementforunusualmedicalexpenses,andVAhouseboundallowances.40T.A.C.15.465(e)(1)(MedicaidEligibilityHandbook2435,2436).  Excludedincome isincomethat isnotcountedwhendeterminingeligibilitybutthatiscountedto  @  determineappliedincome.40T.A.C.15.100.See40T.A.C.15.46015.465(MedicaidEligibilityHandbook24302439)forincomeexclusions.  ThepaymentofnursinghomecarebytheVeteransAdministrationdoesnotaffectMedicaideligibility.40T.A.C.15.455(c)(3)(D);MedicaidEligibilityHandbook2452.33.Therefore,itisclearthatclientsmayapplyimmediatelyforMedicaid,despitepotentialVAeligibility;andsubsequentestablishmentofVAeligibilitywillnotresultinabreakinMedicaidbenefits.ThiscanbeimportantifMedicaidisneededforservicesnotcoveredbyMedicare,suchasmedications,andtoavoidMedicarescopaymentsanddeductibles.n   2ɯ  E  .3  Ԁ  RulesAffectingRentalIncomenĮnce ߮   1d   Rentalincomeismostcommonlyaconcernwhenanexemptresidence,whichisanapplicantshomestead,isbeingrentedforcash.Ingeneral,countablerentalincomeisgrossincomereceived,lessactualexpensessuchas(butnotlimitedto)propertytaxes,utilities,maintenance,repairsandadvertising.40T.A.C.15.455(e)(4);MedicaidEligibilityHandbook2453.4.Anewdepartmentruleaddsthefollowingprovisions:  2ɯ  F  .3  Rentalpaymentsmadetoanapplicantsagentunderapowerofattorneyarealwaystreatedasreceivedbytheclient.Paymentstoother responsiblepartieswhoprovideastatementthattheyarenotmakingthepaymentsavailabletotheapplicantarenottreatedasreceivedbytheapplicant,iftheymadetherentalagreementwiththetenant.Mortgagepaymentsmadebyatenanttothemortgagecompanyaretreatedascountableincometotheapplicant;butiftheresidenceisvacantandsomeoneotherthantheapplicantpaysthemortgage,thosepaymentsarenottreatedasincome.  2ɯ  G  .3  Rentalpropertyexpensesaredeductedonlyforthemonthinwhichtheyarepaid,regardlessofwhentheexpensesareincurred. (Note :Thisprovisionappearsinconsistentwiththeestablishedrulethat "& fluctuatingincomeissubjectedtosixmonthaveraging,atleastintheappliedincomecalculation(aftereligibilityisestablished).Departmentsourcessay,however,thattheywillinfactcontinuetoapplythesixmonthaveragingruleinthediscretionoftheeligibilityworker.SeeMedicaidEligibilityHandbook2464. ) 5%h!) 0  Note: Inthepast,ithasworkedwelltorentthe(homestead)residencetoatenantwhoagreestopayall & #+ taxes,insurance,maintenance,repairsandotherexpensesinlieuofrent.Theexpensesexactlyoffsettherentpaymentsmade,sothereisnonetincometobecounted;andtheresidenceismaintainedatnonetexpensetotheclient.Becausethetotalpaidisusuallylessthanfairmarketvalueoftherent,thisisalsoagooddealforthetenant,whoisusuallyafamilymember.Thiswouldappeartostillbeanoptionundertheproposed[Department]rules,solongasamortgagepaymentisnot[beingmadebythetenanttothemortgagecompany]asstatedabove. +'1(#(#  n   2ɯ  H  .3  Ԁ  AvailableorCountableResourcesnnce    ]-)3   Resourcesarecash,otherliquidassets,oranyrealorpersonalpropertyorothernonliquidassetsownedbyaclient,his[orher]spouse,orparent,thatcouldbeconvertedtocash.40T.A.C.15.100,MedicaidEligibilityHandbook2310.Instrumentsthatproduceincome,suchaspromissorynotesandbonds,are /,6 countedasresourcestotheextentoftheirfairmarketvalue;andinaddition,thepaymentsreceivedbytheclientarecountedasincomeinthemonthreceived.Ifthereisamortgageonrealpropertyorasecurityinterestonpersonalproperty,onlytheequityvalueiscounted.  Resourcesarecountedonlyasof12:01a.m.onthefirstdayofeachmonth. Changesfromthattime =p untilonemonthlaterdonotaffectcountableresourcesforthatmonth.Countableresourcesarereducedbytheamountoffundsencumberedbefore12:01a.m.ofthefirstdayofthemonth.Thatis,ifacheckis  outstandingatthattime,thebankbalanceatthetimeisreducedbytheamountofthecheckforthepurposeofdeterminingcountableresources.40T.A.C.115.400(a),(b),15.435(b)(2),MedicaidEligibilityHandbook2310.  Tobecounted,resourcesmustbebothowned(solelyorinpart)bytheapplicantand accessibletototheapplicant. Ifaclienthastheright,authorityorpowertoliquidatethepropertyor[heror]hisshareofit,thepropertyisaresource.Ifaclientwouldberequiredtoseekcourtactiontoaccessordisposeofproperty,thatpropertyisnotconsideredaresource.40T.A.C.15.415(a),(b),MedicaidEligibilityHandbook2313.Aclientsresourcesareconsideredavailabletoherorhimwhentheyarebeingmanagedbyalegalguardian,agentunderapowerofattorney,orotherfiduciaryagentoftheclient,unlessacourtdeniestheguardianoragentaccesstotheresources.40T.A.C.15.415(e),(f),MedicaidEligibilityHandbook2313.4. [Further,aswillbediscussedmorefullyinSectionVbelowresourcesheldin   qualifyingtrustswillnotbeincludedintheclientscountableresources.]      Ifaclienthasajointbankaccountandtheycanlegallywithdrawfundsfromit,allofthefundsintheaccountareconsideredaresourceoftheclient.However,thisisonlyapresumption,andtheclientmustbeallowedanopportunitytoprovethatsomeofallofthefundsarethepropertyofsomeoneelse.40T.A.C.15.43(m),MedicaidEligibilityHandbook2331.3.  Ifanapplicantconvertsonetypeofpropertytoanothertype,thenewpropertymayormaynotbecountedasa resource.IftheDepartmentpolicydoesnotcountthetypeofpropertythathasbeenacquiredbythe conversion, thenthenewpropertyisnotacountableresource.Anycashreceivedfromthesaleof U aresourceisconsideredaresource,notincome.40T.A.C.115.420,15.440(c),MedicaidEligibilityHandbook2314,2344.Bycontrast,a lumpsumpayment otherthanfromconversionofaresource , iscountableincomeinthemonthitisreceived(soitwillusuallyresultinatleastonemonthsdisqualification)andisacountableresourcethereafter.40T.A.C.15.450(b),MedicaidEligibilityHandbook2411. Exampleof lumpsumsareinheritances,deathbenefits,personalinjuryawards,and m paymentsofretroactivepublicbenefits. Deathbenefitsareexcludedasincomewhentheyareusedtopay At thelastillnessandburialexpensesofthedeceased;andtheyareexcludedasresourcestotheextenttheyhavenotbeensousedbythefirstdayofthesecondcalendarmonthafterthemonthinwhichtheyarereceived.40T.A.C.15.435(1),MedicaidEligibilityHandbook2332.5.n   2ɯ  I  .3  Ԁ  ExcludedResourcesncou    U #   Thefollowingisasummaryoftypeofpropertyexcludedfromconsiderationas resources.Itisnotintendedtocovereverydetailinthelegalsourcesbutrathertoprovideaplainlanguagechecklistandsourceofcitations.  Theapplicantshome isexempt,meaningoneprincipalplaceofresidence.Thefollowingrulesapply #' toqualifyingthepropertyasaresidence:  Intenttoreturnrequired. Thefactthattheclientlivesinanursinghomedoesnotprecludeexclusion 9%l!) ofahome.WhatisrequiredisthattheclientexpressanintenttoreturntothehomeonForm1245,StatementofIntenttoReturnHome.Iftheclientlacksthecapacitytodothis,itcanbedonebyarelative,representativepayee,legalguardianorphysician.Thecaseworkermustalsoobtainacorroboratingstatementfromoneofthosepersons.NeitherthelawnortheDepartmentspracticerequiresthattherebyanyparticularlikelihoodthattheclientwillinfactbeabletoreturnhome.40T.A.C.15.441(a)(3),MedicaidEligibilityHandbook2341.12.Ifaspouseordependentrelative(incertainspecifieddegreesofkinship)livesinthehome,itisexcluded,apparentlywithoutanyintentoftheclienttoreturn.40T.A.C.15.441(a)(4)(andsee40T.A.C.100fordefinitionof relative),MedicaidEligibilityHandbook2341.13.  HomemustbeinTexas(usually). AhomelocatedoutsideTexascannotbeexcluded.40T.A.C. ,(2 15.441(a)(2),MedicaidEligibilityHandbook2341.11.However,ifthecommunityspouselivesoutsideTexas,herorhishomecanbeexcludedforthepurposeofinitialeligibility,subjecttotherequirementthattitlebetransferredtothecommunityspousebeforethefirstannualreview.40T.A.C.15.441(a)(9),MedicaidEligibilityHandbook2341.11. /,6 Ї  Saleofthehome. Placingthehomeonthemarketforsaledoesnotmakeitaresource.Iftheclient  ispurchasingareplacementhome,theproceedsofthesaleoftheoriginalhomearenotcountableresourcesuntiltheendofthethirdfullcalendarmonthaftertheirreceipt.40T.A.C.15.441(a)(6),(10),MedicaidEligibilityHandbook2341.15,2341.16.  BurialSpaces. A burialspaceoragreementthatrepresentsthepurchaseofaburialspaceheldfor D theburialoftheclient,hisorherspouse,oranyothermemberoftheclients immediatefamilyisexcluded,regardlessofvalue. Burialspaceincludesaburialplot,gravesite,crypt,mausoleum,casket,urn,niche,orotherrepository,plusreasonableimprovementsoradditionsincludingvaults,headstones,markersorplaques,caskets,arrangementsfortheopeningandclosingofthegravesite,andcontractsformaintenanceofthegravesite. Immediatefamilyincludestheclientsspouse,minorandadultchildren,stepchildren,adoptedchildren,brothers,sisters,parents,adoptiveparents,andthespousesofthoseindividuals.Itdoesnotincludegrandchildrenortheclientsspousesimmediatefamily.Iftherelationshipisbymarriageonly,themarriagemustbeineffectfortheexclusiontoapply.40T.A.C.15.441(b)(6)(A),(B),MedicaidEligibilityHandbook2341.5.  BurialFunds. Amaximumof$1,500ofseparatelyidentifiableburialfunds,plusinterestorother 5h  earningsafterdesignation,isexcluded.Thesefundsmaybeincash,financialaccounts,securitiesorrevocableburialarrangements.ThedesignationisdoneonDHSForm1252.Thevalueofirrevocableburialarrangementsandfacevalueofexcludedlifeinsuranceissetoffagainstthe$1,500exclusion.Thedesignationcanbemaderetroactively,andcaseworkersareinstructedtoallowclientstodosoifthatwillmakethemeligible.40T.A.C.15.442(e),MedicaidEligibilityHandbook2342.5.  PrepaidBurialContracts. Anirrevocable,prepaidburialcontractisexcluded,regardlessofitsvalue. L 40T.A.C.15.435(h),MedicaidEligibilityHandbook2331.9.AllprepaidburialcontractssoldbeforeSeptember1,1993wererequiredbylawtoberevocableasto90%oftheproceeds.Therefore,unlessacontractofthistypeismadeirrevocable,90%ofitsvaluecountstowardthe$1,500burialfundminimum.  OneAutomobile. Thevalue,ofuptoamaximumamountof$4,500,ofoneautomobileisexcluded. ] Ifthevehicleownedisworthmorethan$4,500,thevalueover$4,500iscountedasaresource.However,theautomobileisexcludedwithoutregardtoitsvalueifitisusedforanyofthefollowingpurposes: Transportationtoorfromworkorinatradeorbusinessbytheclientortheclientsspouse;orTransportationofahandicappedindividual,andtheautomobileisespeciallyequippedtopermittheindividualtodriveit;orTransportationfortreatmentforaspecificorregularmedicalproblemoftheclient,clientsspouse,oranymemberofthehousehold(presumptively,anaverageofatleastfourtimesperyear).40T.A.C.15.442(a),MedicaidEligibilityHandbook2342.1.  HouseholdGoods,PersonalEffects,andLifeInsurance. Iftheclientsequityinthehousehold !$% goodsandpersonaleffectsitemsexceeds$2,000,itiscountedasaresource.40T.A.C.15.442(b),MedicaidEligibilityHandbook2342.2.Iftheclientismarriedandtheclientsspouselivesinthecommunity,allpersonalandhouseholdeffectsareexcluded,regardlessoftheirvalue.42U.S.C.A.1396r5(c)(5),MedicaidEligibilityHandbook2342.2.Termlifeinsurancewithnocashvalueisexcluded,regardlessoftheamountofthedeathbenefit.40T.A.C.15.442(d),MedicaidEligibilityHandbook2342.4.Withcashvalueinsurancesuchaswholelife,universallife,etc.,thecashvalue(notincludingdividendadditions)iscountedasaresource.However,ifthetotalfacevalueofthepoliciesownedbytheclientis$1,500orless,thecashvalueisexcluded.40T.A.C.15.442(c),MedicaidEligibilityHandbook2342.3.  AssetsHeldinTrust. Generallyspeakingassetsheldintrustarecountedasresourcesavailabletothe *H&/ clientiftheclienthastheauthoritytorevokethetrust;orifthetrusteehasdiscretiontomakedistributionstotheclientandtheclientcontributedthepropertytothetrust,i.e.thetrustis selfsettled.Thisistrue +'1 unlessthetrustfallsintooneofthecategoriesofexempt( qualifying)trustsidentifiedinSection5below.̀   2ɯ  IV  .3  Ԁ  SOCIALSECURITYDISABILITYPROGRAMS: _DIB_AND SSIayb    ).\*4   .,+5 n    2ɯ  A  .3  Ԁ  DefiningDisabilitynQial v      TheSocialSecurityDisabilitybenefitsprogramsarefederallyfundedhealthcareandincomeassistanceprograms.TheprogramsareadministeredbytheSocialSecurityAdministration( SSA)andareavailabletoindividualswhomeettheSSAdefinitionof disabled. SSAsdefinitionofdisabledis theinability[of =p aperson]toengageinsubstantialgainfulactivityduetoamedicallydeterminablementalorphysicalimpairmentwhichcanreasonablybeexpectedtolast12monthsorresultindeath.20_C.F.R._Ԁ404.1505.Onlyindividualswhomeetthisdefinitionofdisabledareallowedtoreceivebenefitsunderthevariousdisabilityprograms.AsisthecasewithMedicareandMedicaid,accesstothebenefitsisbasedonwhetherornottheclaimanthaspaidintothesystemthroughtaxablewagecontributions,orisbasedontheindividualmeetingtheprogramsguidelinesrelatingtoincomeandassetrestrictions.n   2ɯ  B  .3  Ԁ  DisabilityInsuranceBenefitsnUial p        SocialSecurityDisabilityinsurancebenefits ( _DIB_) are monthlyincomepayments availableto   people,ortheirdependents,iftheindividualshavepaidinsufficientcontributionstotheprogramthroughtheiremploymenttaxes.SimilartoSocialSecurityRetirementpayments,_DIB_Ԁbenefitsaremonthlycashpaymentsmadetothedisabledperson.Theamountoftheincomebenefitisbasedontheageoftheapplicantandthetotalamountoftheircontributedpayments. 42U.S.C.402et.seq.AsisthecasewithSocial   SecurityRetirementbenefits,whensomeonequalifiesto receive_DIB_Ԁmonthlypayments, theyarealso   qualifiedto receivehealthcarecoveragethroughthe Medicareprogram. Becausetheamountofmonthly y benefitpaidiscalculatednotontheclaimantsfinancialneedsbutontheamounttheclaimanthascontributedthroughtheirtaxes,_DIB_Ԁisnotanincomeorassetrestrictiveprogramwithinthecontextbeingdiscussedinthispaper.Therefore,therulesandregulationsforassistanceunderthisprogramwillnotbeaddressedheresincewedonotneedtoutilizespecialtruststructurestoqualifyclientsfor_DIB_Ԁbenefits.n   2ɯ  C  .3  Ԁ  SupplementalSecurityIncomenial )   ]   SupplementalSecurityIncome ( SSI)isamonthly cashincomeassistance programintendedtohelp -` payfortheapplicantsfood,clothing,andshelter.42_U.S.C_Ԁ1381et.seq.Assuch,thebenefitsaredesignedtosupplementtheincomeorassistanceotherwiseavailabletoaged,blind,ordisabledcitizenswhomeettheassetandincomerestrictionsoftheprogram. TheSSIprogramsmonthlypaymentsarebasedonthe  totalamountofmonthlyincomethepersonreceives, includingbutnotlimitedto,wagesearned,payments u availablethroughothergovernmentassistanceprograms,giftsofmoneyorproperty,andthevalueof inkindsupportwhichcanbeappliedtowardforfood,clothing,orshelter. Theprogramalsoappliesthe L sameasset(countableresource)restrictionsasareappliedfortheMedicaidprogram. SocialSecurity    Act1902(a)(10)(ii)(V),42U.S.C.1396a(a)(10)(A)(ii)(V).SeeSection3aboveand42U.S.C.1382(b)foralistofSSIresourceexclusions.  ThemonthlyincomecapforSSIqualificationislowerthanthatoflongtermcareMedicalAssistanceOnlyMedicaiddiscussedabove($1,482.00permonth).ThecurrentmonthlyavailableearnedincomeallowanceforSSIqualificationforanunmarriedpersonis$514.00.IncomeisdefinedforSSIpurposesat20_C.F.R._Ԁ416.1100416.1182,andisgenerallyregardedas anythingyou[theSSIrecipient]receiveincashorinkindthatyoucanusetomeetyourneedsforfood,clothing,andshelter.SeealsoSocialSecurityAdministrationProgramsOperationalManualSystem(POMS)atSI101120.200J.3.  SSIassistancepaymentsaremadetoanyqualifiedaged,blind,ordisabledperson.Unlike_DIB_Ԁbenefits,eligibilityforbenefitsdoesnotdependonwhetherornottheindividualhasmadepaymentsintotheprogramthroughspecifictaxcontributionsorwagewithholding.n   2ɯ  D  .3  Ԁ  SSIandMedicaidn~ial    ($-   Further,inTexas,anyonewhoqualifiesto receiveSSIpayments alsoqualifiesto receivehealthcare Q)%. generalinsurancecoverageundertheMedicaid program .ThetypeofMedicaidincludedinSSIbenefits %*X&/ coverspaymentsforhealthcarecostssuchasdoctorvisits,hospitalcharges,andprescriptions,etc.ThisisnotthesameMedicaidprogramcoverageasoutlinedmorefullyaboveinSection3whichalsoincludes +'1 informationonMedicaidprogramcoverageforlongterm(nursinghome)care(referredtoMedicalAssistanceOnlycoverage).  SSIRuleforPropertyHeldinTrust. AswasstatedaboveregardingMedicaidrestrictions,generally, 9.l*4 propertyheldinatrustisacountableresourceforSSIpurposesiftheclient haslegalauthoritytorevokethetrustandthenusethefundstomeethis[orher]food,clothingorshelterneeds,oriftheindividualcan /,6 directtheuseofthetrustprincipalforhis/hersupport,andmaintenanceunderthetermsofthetrust,thetrustprincipalisaresourceforSSIpurposes.POMSSI01120.200D.1.a.(Mar.1994).Thisistrueunlessthe  trustfallsintooneofthecategoriesofexempt( qualifying)trustsdiscussedbelow.However,becauseSSIisan incomeassistance program, cashdistributionsfromaqualifiedtrustmadedirectlytoatrust =p beneficiary, evenifthatcashisthenusedbythebeneficiarytopurchasewhatwouldotherwisebean D excludedresource, willbecountedasincometothebeneficiaryandmay,therefore,disqualifythe  beneficiaryfromSSIandMedicaid.      BecausetheSSIprogramisassetandincomerestrictive,theuseofspecialtrustscanaidin   qualifyingaclientforSSIbenefitsincludingMedicaidhealthinsurancebenefits. 󀀀Thisisvery Y  importantinassessingourclientsneedsbecauseveryoftenthedisabledorincapacitatedclientmaynotneedskillednursingcareandMedicaidbenefitsforthattypeofassistance,butwillneedhealthinsurancebenefits,suchaspaymentsforprescriptions,hospitalization,anddoctorvisits.And,aseachofusknows,italsoisoftentruethatprivateinsurancecompanieswilltypicallydiscontinueorrefusehealthcarecoveragefordisabledorincapacitatedclaimantsiftheirdisabilityispermanent.̀   2ɯ  V  .3  Ԁ  GETTINGDOWNTOIT.USINGSPECIALTRUSTSTOQUALIFYFORBENEFITS  @  ASSISTANCEANDTOCONSERVECLIENTINCOME&ASSETS       n   2ɯ  A  .3  Ԁ  ShelteringOtherwiseDisqualifyingAssetsinSpecialTrustsn   )    }   TheSSIandMedicaidtrustrulesdiscussedabovemaketheuseofspecialtrustsofprimaryimportancetothepractionerwhenmakingadeterminationaboutthetypeofspecialtrusttobeutilizedforaclient.ByshelteringtheclientsassetsthatexceedthoseallowedbyMedicaid,SSI,andotherprogramsrestrictionsina special, disability,or qualifyingtrust,(oneofthetypesofselfsettledstatutory 1396SNTs,orthirdparty,nonselfsettled commonlawSNT)anddesignatingtheclientasthebeneficiaryofthetrust,theclientmaystillbeabletoqualifyforMedicaid,SSI,and/orotherprogrambenefitseventhoughtheassetsheldinthetrustfarexceedtheresourcelimitsallowedbytheprograms.n   2ɯ  B  .3  Ԁ  ClientCircumstancesnA  \      Thereareseveralquestionstoconsiderindecidingwhichspecialtruststructures,ifany,wouldbebestsuitedtosuchaclientsneeds.Aswillbeclearlydemonstratedintheclientprofilesdiscussedbelow,thefollowingfactorsarealwaysrelevantinmakingthesedeterminations:Theageoftheclient;Thenatureoftheclientsdisabilityorincapacity(physicaland/ormentalimpairment);Whetherornottheclientcurrentlyownsorhasapresentrighttoreceivedisqualifyingassets;Thecharacterandvalueofalloftheclientsassets;Theclientspresentandfuturemedicalassistanceneeds;Whetherornottheclientisunderguardianshiporisinneedofguardianship;Whetherornottheclientispresentlyinvolvedinalawsuit;andWhetherornottheclienthasasurvivingparent,grandparent,orlegalguardian.n   2ɯ  C  .3  Ԁ  CategoriesofSpecialTrustsn     *'0   Asstatedintheintroductiontothispaper,asusedherein,theterm specialtrustreferstooneofthefollowingtypesoftrustwhichareusedtoqualifyaclientforgovernmentassistance: 1396IndividualSupplementalNeeds(selfsettledunderage65)Trusts(createdunder42U.S.C. .P*4 1396p(d)(4)(A) ; . +5   /+6 1396PooledInterestSupplementalNeeds(selfsettledoverorunderage65)Trusts(createdunder42U.S.C.1396p(d)(4)(C);867TrustswithSupplementalNeedsProvisions(createdunder867oftheTexasProbateCodeand42U.S.C.1396p(d)(4)(A)and(C);142TrustswithSupplementalNeedsProvisions(createdunder142.005oftheTexasPropertyCodeand42U.S.C.1396p(d)(4)(A);andThirdPartyIndividualSupplementalNeeds(nonselfsettlednoagelimitation)Trusts(createdbycaselaw). Asthediscussioninthefollowingsectionswillillustrate,answeringthequestionsposedinSection5.2above   willdirectthepractionertothetypeoftrustthatmustbeusedtoprotectthebeneficiarysassetsandallowthebeneficiarytoqualifyforprogramassistance.   2ɯ  VI  .3  Ԁ  QUALIFYINGCOURTCREATEDSUPPLEMENTALNEEDSTRUSTS{      n   2ɯ  A  .3  Ԁ  DefiningtheTrustsn     m   Basicallythegroupoftrustsreferredtoas SupplementalNeedsTrusts(or SNTs),sometimesalsoreferredtoas SpecialNeedsTrusts,aretrustswhich,ifproperlycreatedunderstateandfederalbenefitslaws,insulatetheassetsofadisabledpersonthatareplacedintheSNTfrombeingcountedagainstthatperson(whoistheSNTbeneficiary)whenthebeneficiaryisbeingconsideredfor,orisreceiving,assetorincomerestrictivegovernmentprogramassistance,suchasSSIand/orMedicaid.Thetrustsallowthedisabledbeneficiarytofinanciallyqualifyforprogramswhichtheyotherwisewouldnotbeabletoqualifyforbecauseoftheirincomeorassetsexceedtheincomeandresourcelimitationsplacedonprogramrecipients.(Seediscussionsabove.)ThevariousprogramsrulesgrantexemptionsfromtheincomeandresourcelimitationsforanypropertythatisheldinqualifyingSNTs,regardlessofthevalueortypeofthepropertyheldinthetrust.42U.S.C.A.1396p(d).n   2ɯ  B  .3  Ԁ  CourtCreatedSupplementalNeedsTrustsn     -`   Trustscreatedunderstatelawprovisions,namely,142oftheTexasPropertyCodeandSection867oftheTexasProbateCodearenottruststhat,inandofthemselves,arealways usedtoqualifyadisabledor   incapacitatedpersonforstateandfederalassistanceprograms.However,boththestateandfederallawsthatcontroltheassistanceprogramsallowcourtstocreatequalifyingSupplementalNeedsTrustswhichinsulatetrustpropertyfrombeingcountedasanavailableresourcetothetrustbeneficiary.AcourtspowertocreatesuchatrusthasalwaysbeenrecognizedbytheOBRA93legislation(42U.S.C.1396p(d)(4)(A)and(C))  !D$ andwiththe1997statelegislativechangestotheTexasTrustandProbateCodes, Texascourtshavenow !% beengrantedthespecificpowertocreateandamendcourtcreatedtruststoinclude1396SNTprovisions . #'   Therefore,therequirementsforcreatingtrustsunder142and867willbediscussedherealongwiththefederalregulationsaffectingthecreationanduseofSupplementalNeedsTrusts.42U.S.C.1396p(d)(4)(A)and(C),andTexProp.Code142.005,andTex.Prob.CodeAnn.867!873.   2ɯ  VII  .3  Ԁ  THEPURPOSE,MANAGEMENT,ANDCREATIONOFSUPPLEMENTALNEEDSTRUSTS$  $   '#, n   2ɯ  A  .3  Ԁ  PurposeofanSNTn&  &   9)l%.   The purpose ofaSupplementalNeedsTrust istousetrustassets ,corpusandincome,specifically to  *<&/ supplement thecare,coverage,andassistance benefits beingprovidedtothedisabledbeneficiarybythe *'0 governmentprograms butnottosupplantthecoverageprovidedbytheprograms. Tothatend,typically +'1 thetrusttermsrequirethattheTrusteeberestrictedfrommakingtrustdistributionsdirectlytothebeneficiary,ortoserviceproviders,topayforanythingthatcouldotherwisebepaidforbygovernmentprogramscoveringthebeneficiary.IfaTrusteedoesmakesuchadistribution,theTrusteerisks disqualifyingthebeneficiaryfromthebenefitsprogramandjeopardizestheprotectionoftrustassetsfrom .(+5 beingcountedasanavailableresourcetothebeneficiary.SeeCliftonB.Kruse,Jr.,_O.B.R.A._Ԁ93Disability  Trusts!AStatusReport,10NAELAQUARTERLYNO.1(Winter1997).    n   2ɯ  B  .3  Ԁ  ManaginganSNTn+  +   =p   TheexistingconfusionwithregardtoallowabledistributionsfromSNTsiscertainlyunderstandablewhenyouconsiderallofthevariousgovernmentprogramsandallofthedifferentprogramrestrictionsoncountingabeneficiarysincomeandassetsforprogramqualification.TheconfusionprobablyarisesmostoftenbecauseofthesortofprograminterdependencydescribedaboveinthediscussionsaboutSSIandMedicaid,forexample.Aswasdiscussedabove,ifwecanqualifyourdisabledclientforSSI,theclientwillalsobequalifiedtoreceiveMedicaidassistance.However,SNTtrustdistributionproblemsmayariseduetothatfactthattheSSIandMedicaidprogramshavedifferentrulesforcountingtheclientsincomeandassetswhenconsideringtheclientsprogrameligibility.n   2ɯ  C  .3  Ԁ  Supplementingvs.SupplantingtheBasicApproachn/rgo /   ]    What,then,isthebasicruletokeepinmindwhenmakingSNTdistributions?Iftheprogramwillpayforthegood,service,care,ormedicalexpense,etc.,dontusetrustdistributionstopayforthesamegood,service,care,ormedicalexpense. Whatthatmeansinsimpletermsisthattrustassetscanbeusedto   payforanythingthatthebenefitprogramsdonotpayfor,BUTCANNOTBEUSEDTOPAYFORTHESAMEBENEFITSandassistancethattheprogramsdopayfor.  q   Simplyrememberthatusingtrustassetstopayforthesamecostsasthosecoveredbytheprogramsequatestousingtrustdistributionsto supplant theassistancecoveredbytheprograms.Ontheotherhand, H iftheprogramsdonotpayfortheparticulargood,service,care,ormedicalexpense,etc.andtrustdistributionsareusedtocoverthoseexpenses,thatdistributionequatesto supplementing theassistance  coveredbytheprograms.  AnExampleofSupplementing: TheMedicaidprogramwillpayforthepurchaseofcertain ] wheelchairs.Theprogramwillnotpayforthepurchaseofa sportswheelchair.Ifthetrustbeneficiarycouldbenefitfromandwantsasportswheelchair,clearlythetrustcouldsupplementtheMedicaidassistanceavailablebypurchasingasportswheelchairforthetrustbeneficiary.Further,theMedicaidprogramwillallowarecipienttoownacar,buttheprogramwillnotpayforspeciallyequippedvehiclestoaccommodatedisabledpersons.TheassetsintheSNTcouldbeusedtopurchaseortospeciallyequipavehicleforthetrustbeneficiary.  AnExampleofSupplanting: TheSSIprogramisdesignedtoaidprogramrecipientsinmeetingthe D costsoftheirfood,clothing,andshelter.Therefore,usingtheassetsoftheSNTtopurchasethebeneficiarysfood,clothing,andshelterwouldbesupplantingtheassistanceprovidedbytheprogram.However,computerequipment,televisions,stereos,vacationtravel,books,entertainmentexpenses,etc.arenotfood,clothing,orshelter(ormedicalexpensesforthatmatter).Therefore,trustexpendituresfortheseexpensesdonotsupplanttheassistancebeingprovidedbytheprogram.  Please notehowever, thattheSSIprogramdoeshavesomecomplicatedrulesforcounting inkind !(% paymentsforarecipients supportandthose inkindpaymentsmayleadtoprogramdisqualification._Schmitt_ԀSmithoutlinessomeofthepitfallsofinkindsupportandmaintenance,or ISM,paymentswithintheSSIprograminherNAELAarticleasfollows:0    Ifthebeneficiaryreceivesfood,clothingorshelterasaresultofpaymentsbytheTrusteetootherpersons,thenthebeneficiarywillhaveincomeintheformofinkindsupportandmaintenance(ISM). & #+ ThisiswhytheTrusteeisdirectedtoexercisehisorherdiscretionunder[thetermsof]thetrustagreementtomakedistributionswhichwillsupplement(i.e.[payfor]additionalorextraitems)andnot[to]provideforthebeneficiarysbasicneeds. (#(# 0    However,inmanycases,theTrusteealsohasauthoritytomakedecisionswhichareinthebestinterestofthebeneficiary.Thatmayrequireexaminingcarefullyhowtherulesregarding inkindsupportandmaintenancewillbeapplied.Problemscanarisewhen inkindincomeconsistsoffood,clothing,orshelter.ThebeneficiarysSSIbenefitswillbereducedoreliminated[thereforeplacinganyMedicaidassistanceatrisk]ifheorshereceivesISM. (#(# 0    ThetheoryisthatsinceSSIbenefitsarespecificallyintendedtopayforapersonsfood,clothing,andshelter,ifthatpersonreceivesthosegoodsorservicesfromanothersource,[e.g.thebeneficiarystrust]thenlessSSIbenefitsareneeded.Asaresult,ifyoupaythebeneficiarysrent,grocerybills, /+6 meals(forexample,arestaurantmeal),orpurchaseacoatforthebeneficiary,youwouldbeprovidingISMtothebeneficiary.Intheory,youarethenalsoreducinghisorherneedforSSIbenefits. (#(# 0    TherearesometimeratherfinedistinctionsbetweenallowableinkindincomeandcountableISM.Forexample,youcanpayforsometravelarrangementsbutnotforothers(forexample,chargedplanetickets[areok]!butnotahotelroom,becausethatisshelter).Youcanpayforsomeentertainmentexpensesbutnotforothers(forexample,amoviepass[isok]butarestaurantmeal[isnot],becausethatisfood). (#(# 0    IfyoudogiveISMtothebeneficiary,hisorherSSIbenefitswillbereducedaswell,butnotonadollarfordollarbasis,likewithcash.TherearetwodifferentformulasthatSocialSecurityusestoreducetheSSIbenefitsforapersonwhoreceivesISM.Whichformula[thatgetsapplied]dependsonthehouseholdandlivingarrangementsoftheSSIrecipient.MaryT._Schmitt_ԀSmith, Afterthe    WeddingAdministrationofSpecialNeedsTrusts,TuningUptheTrustee,NationalAcademyofElder    LawAttorneys:NAELAAdvancedElderLawInstituteNovember,1997. (#(#   AidfortheTroubledTrustee. WhatthenisaTrusteetodo?HowdoesaTrusteeknowwhich -`  distributionsarepermittedandwhicharenot,whichcostsarecoveredbywhichprogramsandwhicharenot?Youcanreadthebenefitscoveragematerialsandguidelinespublicationsprovidedbythegoverningagenciesand/or(ifthatisasdauntingastryingtodiscernwhatiscoveredbyyourinsurancepolicy)youcanaskexperiencedpractioners,theagenciesbenefitscounselors,orothertrainedcaseworkersorcaremanagers.Ifthisinformationshowsthattheexpense!awheelchair,prescriptionmedicines,medicalservice,shelter,food,whatever!isacostpaidforbytheassistanceprogramcoveringyourbeneficiary,applythebasicruleand, THETRUSTEESHOULDNOTPAYFORTHATEXPENSEWITHTRUSTFUNDS.   n   2ɯ  D  .3  Ԁ  QualifyingSelfSettledandNonselfSettledSNTsn`Jrms {J      TherearereallytwotypesofSupplementalNeedsTrusts,selfsettledandnonselfsettled,orthirdpartysettled,trusts.Bothtypesworkthesamewayandaccomplishthesamethingfortheclient.Thatis,thetrustsinsulatetheassetsplacedinthetrustsothatthoseotherwisedisqualifyingassets arenotcountedas ( availableresourcestothetrustbeneficiarywhenthebeneficiaryappliesfor,orreceives,benefitsfromanassetand/orincomerestrictivegovernmentalprogramsuchasSSIorMedicaid.  A selfsettledSNT isoneinwhichthetrustcorpusismadeupofassetsthateitherbelongedtothetrust i beneficiary,orthatthebeneficiaryhadapresentrighttoreceive,priortotransferringtheassetsintothetrust.SupplementalNeedsTrustscreatedonbehalfofthedisabledorincapacitatedperson,whicharefundedwithproceedsfromthedisabledpersonspersonalinjurycauseofaction,ortheirsavingsorinvestmentsaccountsforexample,wouldbeconsideredaselfsettledSNT.  Ontheotherhand,a nonselfsettled(orthirdpartysettled)supplementalneedstrust isoneinwhich }" thetrustcorpusismadeupofassetsthatneitherbelongedtothetrustbeneficiarynorthatthebeneficiaryeverhadapresentrighttoreceivepriortotransferringtheassetsintothetrust.SupplementalNeedsTrustscreatedonbehalfofthedisabledorincapacitatedpersonbyathirdpartyandwhicharefundedwithpropertythatpassestothetrustbydirectionofsomeonesWill,orbyintervivostransferfromthethirdparty,forexample,wouldbeconsideredanonselfsettledSNT. n   2ɯ  E  .3  Ԁ  CreatingSNTsFeaturesandRequirementsnNRrms iR   1%d!)   Aswillbeshowninthediscussionbelow,therequirementsforcreatingvalid nonselfsettled &4"* supplementalneedstrustshavebeendevelopedthroughcaselaw. Therefore,thetrustsareoftenreferred &#+ tobypractionersas commonlawSNTs.Therequirementsforcreatingvalid selfsettledsupplemental '#, needstrustsarecontrolledbythestateandfederallawsandregulationsmentionedabove(i.e.SNTscreatedusing142,867and1396)andtheyareoftenreferredtoas statutorySNTs. Although both M)%. typesoftrustaresimilarinthatthetrustsshouldbeirrevocableandthetermsshouldrestricttheTrusteesothatdistributionscannotbemadetopayforthesamethingsthatthepublicassistanceprogramwouldotherwisepayfor , thetrustshavesomesignificantdifferences. +'1 n   2ɯ  F  .3  Ԁ  1396(SelfSettled)SNTsandthe PaybackProvisionnW' 1W   e-)3   Perhapsthemostsignificantdifferenceintherequiredprovisionsofcertainstatutoryselfsettledvs.commonlawnonselfsettledtrustsiswhatisreferredtoas thepaybackprovision.Thepaybackrule,foundintheprovisionsof42U.S.C.1396(p)(d)(4)(A)and(C),requiresthatqualifyingtrustscreatedunderthat /,6 statutemustdirectthatonthedeathofthebeneficiary,thestateMedicaidprogramisentitledtobepaidback  fromanyremainingtrustassets,anamountthatisequaltothecostspaidbytheprogramonbehalfofthebeneficiary. Thereisnosuchpaybackprovisionrequirementfornonselfsettled,orcommonlaw m SNTs .Clearlythen,ofprimaryimportancetothepractionerwhendecidingwhichspecialtruststructureto At useforadisabledclientisthequestionofwhetherornottheclientalreadyowns,orhasapresentrighttoreceive,theotherwisedisqualifyingassetsthatwillbeplacedinthespecialtrust.IftheclientisgoingtoreceivetheassetasagiftorabequestinaWill,forexample,wewouldwantthegrantortocreatethesupplementalneedstrustbeforethepropertyisactuallyreceivedbythedisabledperson/beneficiaryandthenwewouldavoidusingatruststructurewithanypaybackprovisionlanguageinit.Conversely,iftheclientalreadyownsthedisqualifyingasset,andtheclientmeetstheotherrequirementsofthestateandfederalstatutesforusingaspecialtrust,seediscussionsbelow,thenwewouldcreatethesupplementalneedstrustaccordingtothestatutoryrequirementsusingtherequiredpaybacklanguageandtransfertheclientsotherwisedisqualifyingassetsintotheselfsettledtrust.n   2ɯ  G  .3  Ԁ  DefendingthePaybackProvisionnK_' f_   5h    Onethingthatneedstobekeptinmindandunderstoodaboutthepaybackprovisionrequiredby42U.S.C.1396p(d)(4),however,isthatthelawplacesnoobligationwhatsoeveronthetrust(ee)toreserveorconserveanytrustassetsduringthebeneficiary'slifetimeinordertocoverthepaybackobligation.Infactquitetheoppositeistrue.ItistheintentoftheOBRA93legislationthatthetrusteespendanyandallamountsnecessaryfromtrustassetstoimprovethequalityoflifeandcareavailabletoanSNTbeneficiary.Ifthetrusthasnomoneyremaininginitatthebeneficiary'sdeath,thereisnoobligationonthetrust,thebeneficiary,orhisorherestateorheirs,tosatisfythepaybackprovision.Oriftheremainingassetsareinsufficienttocoverallofthecostsoftheassistanceprovided,thereisnoobligationtosatisfythepaybackprovisioninfull.Ifallofthetrustassetsarespentonthebeneficiaryssupplementalneedsduringthebeneficiaryslifetime,thetrustisclosedwhenitsassetsaregoneandthestateMedicaidprogramreceivesnopaymentatallagainstthecostsofthebenefitsprovidedtothebeneficiary.  Toillustratethesepoints,ifthetrusthas$350.00initwhenthebeneficiarydiesandthebeneficiaryhasreceived$176,000.00inMedicaidassistance,thepaybackrequirementisfullymetbypayingthestateback$350.00.Thebalanceofthecostsforservicesprovidedtothebeneficiaryisforgivenandnofurther paybackisrequired.Ontheotherhand,ifthebeneficiaryhasreceivedonly$350.00inMedicaidassistancewhensheorhediesandthetrusthas$176,000.00init,thestatereceives$350.00fromthetrustandtheremainingassetspassontothebeneficiarysestateorheirs.Or,ifallofthe$176,000.00inthetrusthasbeenspentonthebeneficiaryandthebeneficiaryisstillliving,thetrustcanbeclosedandthestatehasnorighttoreceiveanycostsbackfromthebeneficiaryfortheassistancethatthebeneficiaryhasreceived.And,inthislastcase,sincethebeneficiaryisstillliving,thebeneficiarycontinuestostayeligibleforallprogrambenefitsandcontinuestoreceivethemedicalcoverageandotherassistancethattheprogramsoffer.  ThethingweshouldrememberwhenconsideringtheprosandconsofcreatingselfsettledstatutorySNTsforourclientsistherealitythat,inmostcases,withoutthetrustanditspotentialforconservingandslowingdownthefinancialdrainontheclientsotherwisedisqualifyingassets,theclientwouldinalllikelihoodhavetospendalloftheirownresourcespayingforthecostsassociatedwithmeetingtheirneedsduringtheirlifetimeanyway.Therefore,theclientisclearlynoworseoffforhavingcreatedandutilizedthe1396trust.Bytakingadvantageofqualifyingtheclientforgovernmentassistancethroughtheuseofthestatutoryselfsettledtrust,wemaynottotallyavoidthecircumstanceofdepletingtheclientsresources,orpayingbackthestatewhentheclientdiesforprogramcoveragereceived,butwemaybeabletobettermaximizetheclientsresourcestherebyallowingustopayforsomeoftheclientssupplementalqualityoflifeneeds.Wemayalsobeabletoincreasetheearningandinvestmentpoweroftheclientsfinancialresources,therebyextendingtheamountoftimethatthefinancialresourcesareavailabletotheclientforthosesupplementalneeds.   2ɯ  VIII  .3  Ԁ  SECTION1396INDIVIDUAL(SelfSettled)SUPPLEMENTALNEEDSTRUSTSEn' `n   +'1 n   2ɯ  A  .3  Ԁ  1396p(d)(4)(A)Individual,underAge65,SelfSettledSNTnro' o   E-x)3   OBRA93"statesthatanindividualshallnotbeineligibleformedicalassistancesolongastheindividualsassetsareheldinatrustforthatindividualssolebenefitandthetrustmeetsthefollowingrequirements: /+6 Ї0  Atrustcontainingtheassetsofanindividualunderage65whoisdisabled(asdefinedinsection1614(a)(3)[42U.S.C.1382c(a)(3)]),[theSocialSecuritydefinitiondiscussedabove]andwhichisestablishedforthebenefitofsuchindividualbyaparent,grandparent,legalguardianoftheindividual,oracourtiftheStatewillreceiveallamountsremaininginthetrustuponthedeathofsuchindividualuptoanamountequaltothetotalmedicalassistancepaidonbehalfoftheindividualunderaStateplanunderthistitle.[42U.S.C.1396petseq.]42U.S.C.1396p(d)(4)(A). (#(# ClydeFarrell,inpgs.6970ofhispapercitedherein,explainsthis exceptiontotheselfsettledtrustrules: 0  Clienteligibilityrequirements. This exceptiontotheselfsettledtrustrulesisavailableonlyto  P  personsmeetingthefollowingrequiremen