Special Needs Trust

[houstonssteaks]

Hello,
We live in California and have established a special needs trust for our son. We want to fund it with a limited interest in our business. We petitioned the court and were informed by the judge that the correct agencies have not been notified. I know that Alta Regional must be notified. Does the IRS and Franchised tax board need to be notified. Can anyone give me a list of the agencies which must be notified to fund a special needs trust.
Thank You
Michael

 

[army judge]

Hello,
We live in California and have established a special needs trust for our son. We want to fund it with a limited interest in our business. We petitioned the court and were informed by the judge that the correct agencies have not been notified. I know that Alta Regional must be notified. Does the IRS and Franchised tax board need to be notified. Can anyone give me a list of the agencies which must be notified to fund a special needs trust.
Thank You Michael

A "special needs trust" is also known as a "supplemental needs trust".

A supplemental needs trust requires some special language, in order to create it.
It also needs that language before it can legally be created.
Don't try to do this without a lawyer.
Sure, you may get it done, but if your child or loved one has special needs, you need to ensure they are addressed.

The trust must state that it is intended to provide "supplemental and extra care" over and above that which the government provides.

The trust must declare that it is not intended to be a basic support trust.
The declaration must not contain an estate tax provision called a "Crummey Clause."

A properly drafted "Special Needs Trust" should reference the Social Security Operations Manual and the relevant portions from within the Manual that authorize the creation of such a Trust. Much more importantly to the FEDERAL GOVERNMENT "the trust" must contain the required language regarding payback to Medicaid.

The Trust should also contain provisions that explain the exception to the Omnibus Budget and Reconciliation Act (OBRA-93) provisions which authorize the creation of the Trust, and a copy of the relevant provisions from the United States Code (USC).

A properly drafted Trust will address the issue concerning paybacks to Medicaid or other such sources. The United States Congress mandates that repayment language must be included in all Supplemental Needs Trusts, whether repayment is required or not.

The amendments to the Omnibus Budget and Reconciliation Act of 1993 (OBRA-93) require that a payback be made to Medicaid, but only under certain specific circumstances.

A Supplemental Needs trust that is funded by parents or other third party sources will not be required to pay back Medicaid.

A Trust which is funded by a personal injury Settlement that is properly Court-ordered into the Trust will not be required to pay back Medicaid.

The only assets within the Trust that are subject to the repayment obligation are those assets which originally belonged to the disabled individual him or herself that are transferred into the Trust.

Examples of assets which would belong to the disabled individual in the first place could be such assets as earnings from a job, savings, certain Social Security back payments, personal injury recoveries which are not Court-ordered into the Trust, and the like.

The disabled individual's estate then might be liable for an amount equal to the Medicaid used during the lifetime of the disabled or chronically ill individual.

It is not uncommon for a Trustee or a disabled individual to ask a court to direct certain assets into the Trust. In that event, those assets may not be subject to the repayment provision of OBRA-93.


The ABA has some very good advice about creating and funding a special needs or supplemental needs trust.

I suggest you read it, and retain a QUALIFIED attorney to create the trust for you.
Not every attorney is capable of drafting a special needs trust.
Look around and you'll find one.
Or, work with an attorney you TRUST to secure one to represent you!

http://www.abanet.org/genpractice/newsletter/lawtrends/0501/estate/financialplanning.html

 

[houstonssteaks]

Agencies to be notified

Thank You, I will make sure it has these provisions. Do you know which government agencies need to be notified?
Michael

 

[army judge]

Thank You, I will make sure it has these provisions. Do you know which government agencies need to be notified?
Michael

Medicare and The IRS. But, before you notify anyone, you have to get the trust created and sanctioned by the court.

You must also make sure the disability qualifies as a permanent condition. Some conditions do not qualify.

You shouldn't do this pro se.