New Social Security policy creates confusion over Special Needs Trusts

The Social Security Administration has published a new policy requirement concerning Special Needs Trusts in the form of a  provision in its POMS [Procedure and Operations Manual]. The new POMS states that attorney fees charged for preparation of certain trusts for individuals who are now receiving, or may in the future receive SSI, must be approved by the Social Security Administration (SSA). 

POMS Link: https://secure.ssa.gov/apps10/poms.nsf/lnx/0203920007

This new policy has created some confusion, because there are numerous situations in which an attorney drafts the Trust but is not representing the client in their application for SSI benefits at Social Security, and isn’t representing the client on any appeal of a denial or termination of SSI benefits.

When a person is disabled and needs benefits through Medicaid, SSI or other programs, there is a limit on the resources (assets) that they can have. If this person is under age 65, s/he may want to transfer the excess assets into a Special Needs Trust, because this is a way to preserve and safeguard the excess monies so they can be used for future special needs.

Sometimes the disabled individual hires a lawyer for estate planning and along with things like a Power of Attorney, Will and Health Care Directive, they sign a first-party Special Needs Trust. The lawyer prepares the estate plan and guides the client on how the plan is to be implemented. Other times, the disabled individual might be inheriting money from an estate — such as, their parent died and left them an inheritance — or might be settling a personal injury case or a workers compensation case. In all of these examples, the attorney may be preparing the Trust, but is not representing the individual on any of their claims or appeals before the Social Security Administration.

There are other situations as well when an SNT is prepared.

  1. SSI recipient has an SNT that is not valid and must be modified. SSI recipient [or his POA, or his Guardian] retains lawyer who does the legal work to amend or redo the trust, with or without court proceedings depending on the circumstances, along with basic instructions, and who then provides the signed documents to the claimant to personally deliver to the SSA.
  2. Estate planning for a family with a young child who has disabilities who may or may not apply for SSI benefits when he or she is 18.
  3. Estate planning for a disabled adult person who intends to apply for SSI; preparation of a Will, POA, LW, SNT, and opinion letter with guidance on how to fund the trust and what to do when client decides to go apply for SSI.
  4. Disabled person is incapacitated and Guardian is appointed, and Guardian gets court’s permission to establish and fund an SNT so that the Guardian can file a claim for SSI benefits [or update existing file, in case funds have been received]. Guardian hires a lawyer who does this work, but lawyer does not handle the case at the SSA.

The elder law bar is working   on this issue, as is the National Academy of Elder Law Attorneys , to obtain clarification from the Social Security Administration and determine how to structure these work relationships. In the meantime, practitioners need to be aware of the situation, as their clients may receive letters asking for production of  fee agreements and fee-approval applications. Along with concern about what the process will be for fee approval, how long it will take and the impact it might have on receipt of pending assets, another worry is that the POMS includes criminal penalties for attorneys who do not comply with the directive.

If you are concerned about this topic, contact Lauren S. Marinaro, Esq., immediate past President of the NJ chapter of NAELA.

Call us for legal advice concerning Trusts, Estates and Medicaid eligibility .. 732-382-6070

Tips on designing a guardianship plan

What are the responsibilities of a Guardian of the person and property of an incapacitated individual? The Guardian is expected to fulfill a broad array of obligations, since the Guardian is responsible to arrange for and oversee the financial and personal well-being of the person under guardianship. Each individual is unique, with her or her own preferences, likes and dislikes, and cultural experiences. In some cases, the Guardian is very familiar with the individual. In other cases, it’s all new and some investigation may be required to learn about the unique attributes of the individual. And of course an individual’s interests and needs will typically change over time.

New Jersey’s guardianship statute on this subject can be found at N.J.S.A. 3B:12-57 and there are other statutes surrounding it in the Probate Code.  Among other things, the Guardian needs to arrange for “the care, comfort and maintenance and, whenever appropriate, the education and training of the ward;”  must “develop a plan of supportive services for the needs of the ward and a plan to obtain supportive services;” and must take all measures required to attain eligibility for programs and benefits, to pursue assets that are owed to the ward, and to apply the available sums in the ward’s benefit.

To develop a plan,  create a budget. The budget needs to include every single recurring cost in a typical month or quarter. Determine the recurring sources of income and apply for benefits that are available. It may be necessary to apply for Social Security Disability or retirement income, SSI, employer’s disability pension, or to file a claim for any available long-term care insurance.  Do an assessment of whether the individual can stay in their current residence or if a different residence — or health care facility — would be more appropriate. Is in-home care needed? This becomes part of the budget. Is nursing home care required? It’s important to investigate the availability of Medicaid benefits. Are their unpaid bills or unfiled taxes? Start to tackle all of that and bring things up to date.

For a ward in the community, start investigating the social supports that can add meaning to that person’s life. Does the person enjoy attending religious services? See what needs to be done to bring the person to weekly services and have a companion there for assistance.  Perhaps the person can be enrolled in recreational activity at the local “Y” or senior center. Map out a plan of activity for an in-home caregiver to do — this might include reading aloud, exercise, outdoor walking excursions, movies, particular types of menus or trips to beloved eateries.

By putting together a thoughtful plan of activity to help the individual stay engaged in his or her cultural and social life, a Guardian can support the sense of well-being, happiness and security of the person under guardianship. In this way, the Guardian  can fulfill his or her legal obligation to “give due regard to the preferences of the ward, if known to the guardian or otherwise ascertainable upon reasonable inquiry. ”

Call us for legal advice in carrying out your responsibilities as a Guardian ….. 732-382-6070