Converting a (d)(4)(A) Individual SNT  into a (d)(4)(C) Pooled SNT

      I have been approached recently by several attorneys asking if their client can transfer their Individual SNT (d)(4)(A) into a Pooled SNT (d)(4)(C).  In some cases, it is because the beneficiary has moved out of state and the attorney who drafted the trust is the trustee and they no longer wish to be involved. In other cases, the trust was established with a million dollars, but now has only $100,000 and the corporate trustee’s minimum fees are no longer justified.  In another situation, the last named family member trustee does not want to serve and the corpus is below the bank’s minimum.  Finally, others have decided later that they would like any remainder to go to a non-profit organization that has established a trust years after the original SNT was drafted.

POM SI 01120.199F Early Termination Provisions and Trusts states that in order for an SNT to be terminated early, it must meet specific requirements. (1) The State(s), as primary assignee, would receive an amount equal to the total amount of medical assistance paid on behalf of the individual under the State Medicaid plan(s); (2) Other than payment for taxes due from the trust to the State(s) or Federal government due to the termination of the trusts and reasonable fees and administrative expenses associated with the termination of the trust, no entity other than the trust beneficiary may benefit from the early termination; and (3) The early termination clause gives the power to terminate to someone other than the trust beneficiary.  The most common argument is that a transfer of a individual SNT to a pooled SNT is not a termination at all.  The argument seems logical, but we all know that the law rarely has room for logic.

My counter argument and the view of Social Security is that SI 01120.199F(2) provides a clear exception allowing a pooled SNT to be transferred to another pooled SNT without it being considered an early termination.  Because there is an exception for pooled SNTs, the omission of an exception for individual SNTs would mean that Social Security would treat the transfer of an individual SNT to a pooled SNT as an early termination subject to the requirements above.

What does this really mean? It means that if you include a provision allowing the transfer of the individual SNT into a pooled SNT without complying with SI 01120.199F, your trust may not be approved and the corpus could be considered an available resource. Trusts that are reviewed during an annual review will likely be determined to be invalid. In the later case, at least the trust can be amended during the 90 day amendment period as per SI 01120.199A(2).

What if you still have the same problems as above, but cannot just transfer the trust? What can be done? First, if the trust beneficiary has not incurred a lot of medical assistance under a State Medicaid plan, you can terminate the trust early, pay the state and distribute the funds to the trust beneficiary. The beneficiary can then establish a new pooled SNT.  Beware if your client is over age 64 and you are in a state that imposes a transfer penalty.  If that is not possible, perhaps a pooled trust provider would be willing to act as trustee for your individual SNT. Not all pooled trust providers will act as trustee for individual SNTs and administration fees may be higher than for a pooled trust.

Now, for that new client that walks through the door, what are you going to do? I would recommend taking another hard look at using a pooled trust. Many organizations that operate pooled trusts, operate them in many states. If you pick a state specific pooled trust, just make sure they include language allowing your client to transfer to another pooled trust. New funds can be deposited into a client’s pooled trust account after age 64, as long as your state allows. Pooled trust providers often administer trusts worth millions of dollars and will take care of your client’s trust even if the client’s funds are spent down.  Lastly, remember, not all pooled trust organizations require the retention of corpus upon death. If one does, just ask around and you will probably find one that will work for you and your client.

Daniel C. Parri, Esq.*

* Elder law attorney, member of the Academy of Special Needs Planners, National Academy of Elder Law Attorneys, Academy of Florida Elder Law Attorneys, and executive director of CPT – A Special Needs Trust Provider

How to apply for Nursing Home Diversion and other Waiver Programs

1. Call local CARES (Comprehensive Assessment and Review for Long Term Care Services) office with demographic information (name, DOB, address & SSN). Find your local CARES office
2. Nurse or assessor from CARES will call facility where client is located
   1. If client is only seeking Nursing Home Diversion Waiver[1], CARES will complete a telephone screen and will complete a 701B Assessment.
   1. Priority is based partially on functional deficits and social supports, and other items included on the 701B
   2. CARES computer system uses responses to 701B to generate the priority score
   3. Financial situation does not factor into priority
   4. Priority scores range from 1 to 5, 5 being the highest/most frail clients
   2. Client is entered into EMS – Enrollment Management System (waiting list)
   1. Client must be 65 or older and have Medicare parts A & B
   2. Client must require some help or supervision with 5 activities of daily living (ADL) such as bathing, dressing, walking, toileting, eating, transferring, OR
   3. Require some help with 4 ADL plus require supervision of medications, OR
   4. Require some help with 3 ADL and have a diagnosis of Alzheimer’s Disease, OR
   5. Require total help with 2 ADL, OR
   6. Have a diagnosis of a degenerative or chronic condition requiring daily nursing services.
3. Client should be financially eligible when added to list, but since CARES doesn’t evaluate financial eligibility, it is not necessary. At the very least, a plan should be put in place so that eligibility can be achieved very quickly
4. Once a spot opens up for a client, client becomes a new case for CARES.
1. A full onsite assessment is done
2. CARES obtains a 3008 Medical Certification form from doctor
3. CARES will make a formal functional/medical eligibility decision
1. If client is eligible medically, financial eligibility must be shown
2. If not eligible medically, no nursing home diversion
5. Application is filed thru DCF (financial)
1. Eligibility criteria and rules are the same as for ICP
6. Pick a Diversion Provider
1. Click here for a list of providers in your county
2. Click here for a list of providers’ websites
3. Not all providers have contracts with all assisted living facilities
4. Providers may offer different services
5. It is a good idea to contact providers and ask what they offer

About monthly, an EMS release occurs, and those clients with a sufficiently high priority score (usually 3 or higher) are released by DOEA (Department of Elder Affairs) in Tallahassee.  No consideration of financial need or time in EMS is given. If a client does not score high enough, they could be in the EMS for a long period of time. If a client has been in the EMS for over a year, CARES should be calling to re-screen and get a more current Priority score.  If there has been a documentable deterioration in their functional/medical the client’s score may be regenerated and may go up. If the client is on the list for over a year and does not hear from CARES, they should contact CARES and ask for the re-screen.

Avoid the EMS by using Nursing Home Transition Program                                                                        In order to qualify, a client must reside in a nursing home for 60+ days, be approved for ICP and meet all factors of eligibility for the Nursing Home Transition program.

If you have more questions regarding applying for the Nursing Home Diversion Waiver, any other Medicaid program or have questions regarding eligibility, please call the office and we will be happy to help.

First, we need to define “living trust.” A living trust is a written agreement established by an individual during his or her life time, hence the term “living trust.” The term “revocable” means just that, the trust can be revoked or changed during the grantor’s lifetime. Upon death of the grantor, the trust become irrevocable, meaning it cannot be changed. The person establishing the trust is the grantor or settlor. The grantor contributes the assets to be owned by the trust, this is called “funding the trust.” The trustee is the administrator for the trust. Most of the time the grantor is the original trustee. The beneficiaries are the individuals who receive benefits from the trust.

The trust specifies how the trustee is to operate the trust, who are the beneficiaries and when distributions are to be made to the beneficiaries.

The question arises, why have a trust? It is a way for a successor trustee to immediately take over and handle your affairs if you become disabled or unable to handle them. A word of caution, assets MUST be transferred into the trust for it to work right. In reviewing clients’ old documents, Ray has found trusts that were never funded. Having a trust with out assets is futile.

One frequent question, “Do I still need a will?” Yes, a will is acted upon only on death while a trust can be administered during lifetime. Sometimes a “pourover” will is prepared. This is when assets owned outright by you and are not distributed by the will, pour over to the trust and are subsequently distributed according to the terms of the trust. There are some items such as the homestead that probably shouldn’t be owned by a trust.

A frequently used phrase in advertisements is “avoid probate.” Probate is not a dirty word. Probate is a legal proceeding which serves a distinct purpose, it provides for the matters of the deceased person to be taken care with a definite end and closure to bills, claims, taxes and distributions to beneficiaries.

Another misconception is having a living trust will save taxes. Wrong answer, during the grantor’s lifetime, all the income and benefits go to the grantor; therefore, the I.R.S. treats the trust as though it doesn’t exist for tax purposes. However, there are other kinds of trusts created for people having in excess of $600,000 which would be beneficial tax wise.

So, you say, Is a living trust for me? It depends upon the circumstances and what you want to accomplish. Every situation is different. Before you decide, seek legal counsel, discuss your specific situation and then decide, make an informed decision. It you have a living trust, have it because it’s right for you

Is formal probate always necessary? No, if all property is jointly owned and there are no assets in the deceased person’s name, formal probate is not required. In this case the will can be filed with the probate clerk in the county in which the deceased resided. A death certificate should also be recorded. A non-taxable certificate should be obtained from the Dept. of Revenue and also recorded in the Clerk’s office. This makes the death a public record.

There are also some abbreviated probate proceedings such as Summary Administration and Disposition of Personal Property Without Administration but there are very specific criteria to be followed in using these procedures.

Formal probate is for estates with non-exempt assets of more than $75,000 and/or when it is necessary to appoint a representative to act on behalf of the estate. It requires that the original will be filed with the probate court along with other paperwork. Probate includes naming a personal representative, informing effected parties such as beneficiaries and creditors that probate has been started, obtaining values on the assets, paying creditors, taxes and fees, preparing accountings, distributing property to beneficiaries, filing tax returns, and finally closing the estate. Frequently a surety bond is required on the personal representative, the amount varies with the size of the probate estate. The person filing the petition for formal administration must be represented by an attorney.

Summary Administration may be filed when the value of the entire estate subject to administration does not exceed $75,000 or if the decedent has been dead for more than two years. No personal representative is appointed.

A Disposition of Personal Property Without Administration may be filed to request a release of the deceased’s solely owned assets to reimburse the person who paid the final expenses; funeral bills, medical bills for the last 60 days.  This process does not typically involve the hiring of an attorney. The disposition form and instructions for Pinellas County can be found on the Clerk’s website.

What is probate property? Property that is titled in your name alone. Property owned jointly without a right of survivorship. Life insurance payable to your estate, not another person or organization. Certain assets such as the decedent’s homestead may be exempt from the claims of creditors but must still pass through probate in order to pass title to the intended beneficiaries.

The time necessary for probate varies from case to case. It could be as short as six months or as long as several years.