Can I set up a special needs trust for my older brother who is receiving benefits?

Q: My 70-year-old brother is a named beneficiary in my Parents’ trust and will receive $120,000.00. I would like to ensure that this money can be preserved for his needs going forward – assisted living, nursing home etc. without affecting his current social security benefits. His wife is also receiving benefits of some sort. Neither are competent to manage their own affairs. (Ligonier, PA)

A: First question that needs to be known is, are your parent’s alive? Is your parent’s trust irrevocable? If so, what type of discretion does the trustee have in making distributions to trust beneficiaries? You really need to have the trust instrument examined by a competent estate or trust attorney.

I’m a Black Sheep. My brother has always been the favorite

Q: I still live with my parents and have a learning disability where I can’t get a job. My brother on the other hand, works two jobs for sixteen hours a day for almost 40 years. He has a beautiful two-story house, 4 cars and at least 4 big-screen T.V.s. My parents are very proud of him and love him to death. I’m 59 years old. I haven’t worked much in my life and have no retirement or much social security coming my way. My parents loathe me for this and treat me like trash! I told them if things get to worse then I’m going to live in the streets and be homeless. My mom said, “well go ahead, there’s the door”. I heard that she and dad are going to leave my brother their weekend home up in the mountains. The guy is going to be wealthy! I’ll be eating out of trash cans with just a $1.50 in the bank.

A: If by chance you are collecting SSI or Medicaid for your disability, you may become ineligible for those benefits if you receive money from your parents. There is a way for your parents to leave you money or gift money to you and that involves establishing a special needs trust. They would need to see an elder law attorney to set this up.

How can I put a CD in my son’s name so he would get 1/2 of it if I died or go into a home?

Q: My one son is on Social Security Disability and I want to make sure that if I should die, he would get 1/2 of the CD to help him pay his rent. My main concern is whether if I should go into a nursing home would they take all the CD or just 1/2.

A: The answer is more complicated than you probably realize and you may want to consult with an elder law attorney with whom you can share all the facts which need to be known. If your son is on SSDI, then he can receive this gift with no penalty. If he is on SSI, which is needs based government program, this gift may jeopardize his benefits. Also, it is worth considering is how this transfer will impact your eligibility for Medicaid, in the event you need to apply for Medicaid in the future. If this transfer is done within five-years prior to your Medicaid eligibility it could rule you ineligible to receive benefits to the extent of the amount of the transfer. Also, be aware that if you title the CD as joint tenants with right of survivor, he will receive the entire value of the CD upon your death. An elder law attorney may counsel you on other methods to shelter this money for him such as a special needs trust. It would probably be worth the consultation fee.

Can I set up a trust for my mentally handicapped sister?

Q: Can I set up a trust or something similar for my mentally challenged sister? She currently receives state insurance and cannot have more than $2000 in her bank account. Otherwise, she will lose her health benefits if she has more than that. Do you know the best way to put money away for her that won’t interfere with these benefits?

A: It sounds like she received Medicaid benefits? There are two types of special needs trusts (SNT) which can be used to maintain eligibility for Medicaid while improving a disabled person’s quality of life. They are categorized as first-party and third-party. A first-party SNT can only contain assets belonging to the disabled individual and falls into two categories; the d4A self-settled trust and the d4C pooled trust. A d4A SNT can be established by a parent, grandparent, guardian, or court. An account in a d4C pooled trust can be opened by a parent, grandparent, guardian, court, or the disabled individual. If you are thinking of establishing a SNT using your own money or someone other than your sister’s money, you will be doing the SNT. This is a very complicated area of the law and you will need the help of an experienced elder law attorney who does special needs trusts. You can locate one by going to the website of the National Academy of Elder Law Attorneys or the PA Association of Elder Law Attorneys. Be sure to ask any attorney if he or she uses SNT’s.

Will an unknown pension disqualify Dad from his Medicaid benefits?

Q: My dad has re-qualified for Medicaid this April. An unknown pension has surfaced that dad never knew he had. Now he will get 20 years of payments. Will this disqualify him from Medicaid or can the money be moved under the Medicaid Law?

A: You need to meet with an elder lawyer versed in Medicaid law immediately. You can shelter some of this income but more specific information is needed to be known as to how to proceed. A personal care contract and a special needs trust, come to mind as possibilities.