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In a message dated 01/30/2004 1:02:37 AM Eastern Standard Time, tcarroll@... writes:

Self-Settled Income Supplemental Needs Trust Outline T. Seiffert, Esq.Woods Oviatt Gilman LLP700 Crossroads Building2 State StreetRochester, New York 14614A Self-Settled Income Supplemental Needs Trust is an important planning tool that can possibly save, for a qualified individual, the assets necessary to maintain a comfortable lifestyle while at the same time, qualify for Medicaid benefits.I. Who is a qualified individual? A. Under the age of 65* B. Currently receiving Social Security Disability (SSD) benefits (not SSI)** C. Wishes to qualify for Medicaid benefits D. Has more income or resources than Medicaid will allow to qualify for benefits E. Has an individual who can act as TrusteeII. How does it work?A. Assets The trust assets will include all of the beneficiary’s assets and income in excess of the Medicaid level, once the person qualifies for Medicaid. Currently, as of 2002, this means that any resources in excess of $3,800 or income over $654.00 per month would be placed in the trust. Since the trust language generically describes the trust property, there will be no need to amend the trust as the income received by the beneficiary changes, as long as any amount over the Medicaid level ($654.00) is placed into the trust on a monthly basis.B. Trustee The trustee is the person, appointed by the beneficiary, who has the power to make deposits and withdrawals from the trust account. The trustee may set up the trust account at any bank or financial institution that he or she chooses.* Please note that income and assets may only be contributed to the trust until the beneficiary reaches the age of 65. After that, the assets already in the trust may still be used, but the beneficiary is legally unable to continue to contribute to the trust principal.** The same type of trust may be used to protect resources such as retroactive benefits or proceeds of lawsuits for SSI recipients, but it may not be used to protect excess income to make someone SSI eligible. It is the Trustee’s responsibility to make sure that the deposit of the income over the Medicaid level, known as the "spenddown amount," is placed in the trust account every month. Annually, upon re-certification, it is the trustee’s responsibility to provide a simple account to the appropriate caseworker at the Department of Social Services to prove the proper amount was deposited into the trust account every month. The best way to ensure the account is accurate is to save the monthly statements from the trust account and copies of cancelled checks.C. Access Once the income has been added to the trust, it is no longer considered part of the beneficiary’s property. Therefore, DSS cannot consider either that income or the trust account as available to the beneficiary. The "spenddown" amount is essentially zero. This is the reason the income can be saved and yet the individual can still qualify for Medicaid benefits. However, since the trust account is titled in the name of the trust for the benefit of the individual, it is impossible for the individual to have direct access to the account. Instead, the trustee must be the person to write checks out of the account directly to creditors and for any other payments for the beneficiary.III. What can the trust assets be used for?Basically, anything that would make the individual more comfortable. According to Article "V" of the trust agreement, the Trustee has the discretion to pay "income and/or principal to insure that the Beneficiary enjoys…education, vocational training, hobbies, vacations, modes of transportation, entertainment and any other needs and/or comforts the Beneficiary may require to maximize the Beneficiary’s life." Clearly, the trust assets can be used for virtually anything that the would enhance the life of the beneficiary.IV. How do you establish a Self Settled Supplemental Needs Trust? First, it is necessary to draft the trust for the beneficiary and the trustee to review. In order to complete the trust, your attorney will need the full names and addresses of both the beneficiary and the Trustee, and the beneficiary’s Social Security number. Next, someone will need to establish the trust for the beneficiary. There are two ways todo this. Since the statutes governing the operation of these trusts were originally intended to assist disabled minors, the regulations state that the trust must be established by a guardian, parent or a grandparent of the beneficiary, or if such individuals are not available, the beneficiary must obtain approval from the Surrogate’s Court. The parent or grandparent need not be involved in any aspect of the trust’s operation consenting to the establishment of the trust.If a guardian, parent or grandparent is not available, it will be necessary to petition the court for approval to establish the trust. This is not a lengthy process and will not necessitate a court appearance by the beneficiary. The petition will explain the disability of the proposed beneficiary and state that there is a need for the trust to be established. It will also outline the financial status of the beneficiary. It is important that all of the information is presented accurately. In addition, the attorney will submit an affidavit to attest to the veracity of the beneficiary’s petition. The court will then review the petition and sign a decree indicating that it is permissible to establish the trust.Two waivers are also necessary for a consent for a court to establish the trust. One waiver must be signed by trustee stating that he or she agrees to his or her appointment as Trustee. The second waiver will be signed by Monroe County Department of Law agreeing to the establishment of the trust. These waivers are standard and it is not typically a problem to obtain them.Once all of the paperwork is in order, the trustee must open an account in the name of the trust for the benefit of the beneficiary at a bank or financial institution. This is done by taking the court’s decree (if needed) along with a signed and notarized copy of the trust agreement to the bank. As stated above, it will be the trustee’s responsibility to ensure that the "spenddown" amount is properly deposited into the trust every month. Failure to do so could result in the loss of Medicaid benefits for the beneficiary for the month the correct "spenddown" amount was not deposited into the trust. Again, the correct "spenddown" amount will be any income received by the beneficiary over the current Medicaid limit of $654.00.V. CostThe cost of establishing this kind of trust depends on the method used to establish the trust. If it is necessary to petition the court in order to setup the trust, the cost will beapproximately $1,250.00 which includes a $165.00 filing fee. On the other hand, if a petition is not necessary, the charge will be closer to $750.00. These quotes are subject to change and will be discussed at the first meeting. Usually it is possible to agree upon a fee payment schedule to start after the trust is funded. Attached to this outline is a Self-Settled Supplemental Needs Trust Application that must be accurately completed in order to draft the Supplemental Needs Trust.

Self-Settled Income Supplemental Needs Trust Outline

T. Seiffert, Esq.

Woods Oviatt Gilman LLP

700 Crossroads Building

2 State Street

Rochester, New York 14614

A Self-Settled Income Supplemental Needs Trust is an important planning

tool that can possibly save, for a qualified individual, the assets

necessary to maintain a comfortable lifestyle while at the same time,

qualify for Medicaid benefits.

I. Who is a qualified individual?

A. Under the age of 65*

B. Currently receiving Social Security Disability (SSD) benefits (not

SSI)**

C. Wishes to qualify for Medicaid benefits

D. Has more income or resources than Medicaid will allow to qualify

for benefits

E. Has an individual who can act as Trustee

II. How does it work?

A. Assets The trust assets will include all of the beneficiary’s

assets and income in excess of the Medicaid level, once the person

qualifies for Medicaid. Currently, as of 2002, this means that any

resources in excess of $3,800 or income over $654.00 per month would be

placed in the trust. Since the trust language generically describes

the trust property, there will be no need to amend the trust as the

income received by the beneficiary changes, as long as any amount over

the Medicaid level ($654.00) is placed into the trust on a monthly

basis.

B. Trustee The trustee is the person, appointed by the beneficiary,

who has the power to make deposits and withdrawals from the trust

account. The trustee may set up the trust account at any bank or

financial institution that he or she chooses.

* Please note that income and assets may only be contributed to the

trust until the beneficiary reaches the age of 65. After that, the

assets already in the trust may still be used, but the beneficiary is

legally unable to continue to contribute to the trust principal.

** The same type of trust may be used to protect resources such as

retroactive benefits or proceeds of lawsuits for SSI recipients, but it

may not be used to protect excess income to make someone SSI eligible.

It is the Trustee’s responsibility to make sure that the deposit of

the income over the Medicaid level, known as the " spenddown amount, " is

placed in the trust account every month. Annually, upon

re-certification, it is the trustee’s responsibility to provide a

simple account to the appropriate caseworker at the Department of

Social Services to prove the proper amount was deposited into the trust

account every month. The best way to ensure the account is accurate is

to save the monthly statements from the trust account and copies of

cancelled checks.

C. Access Once the income has been added to the trust, it is no

longer considered part of the beneficiary’s property. Therefore, DSS

cannot consider either that income or the trust account as available to

the beneficiary. The " spenddown " amount is essentially zero. This is

the reason the income can be saved and yet the individual can still

qualify for Medicaid benefits. However, since the trust account is

titled in the name of the trust for the benefit of the individual, it

is impossible for the individual to have direct access to the account.

Instead, the trustee must be the person to write checks out of the

account directly to creditors and for any other payments for the

beneficiary.

III. What can the trust assets be used for?

Basically, anything that would make the individual more comfortable.

According to Article " V " of the trust agreement, the Trustee has the

discretion to pay " income and/or principal to insure that the

Beneficiary enjoys…education, vocational training, hobbies, vacations,

modes of transportation, entertainment and any other needs and/or

comforts the Beneficiary may require to maximize the Beneficiary’s

life. " Clearly, the trust assets can be used for virtually anything

that the would enhance the life of the beneficiary.

IV. How do you establish a Self Settled Supplemental Needs Trust?

First, it is necessary to draft the trust for the beneficiary and the

trustee to review. In

order to complete the trust, your attorney will need the full names

and addresses of both

the beneficiary and the Trustee, and the beneficiary’s Social Security

number.

Next, someone will need to establish the trust for the beneficiary.

There are two ways to

do this. Since the statutes governing the operation of these trusts

were originally intended to assist disabled minors, the regulations

state that the trust must be established by a guardian, parent or a

grandparent of the beneficiary, or if such individuals are not

available, the beneficiary must obtain approval from the Surrogate’s

Court. The parent or grandparent need not be involved in any aspect of

the trust’s operation consenting to the establishment of the trust.

If a guardian, parent or grandparent is not available, it will be

necessary to petition the court for approval to establish the trust.

This is not a lengthy process and will not necessitate a court

appearance by the beneficiary. The petition will explain the

disability of the proposed beneficiary and state that there is a need

for the trust to be established. It will also outline the financial

status of the beneficiary. It is important that all of the information

is presented accurately. In addition, the attorney will submit an

affidavit to attest to the veracity of the beneficiary’s petition. The

court will then review the petition and sign a decree indicating that

it is permissible to establish the trust.

Two waivers are also necessary for a consent for a court to establish

the trust. One waiver must be signed by trustee stating that he or she

agrees to his or her appointment as Trustee. The second waiver will be

signed by Monroe County Department of Law agreeing to the establishment

of the trust. These waivers are standard and it is not typically a

problem to obtain them.

Once all of the paperwork is in order, the trustee must open an account

in the name of the trust for the benefit of the beneficiary at a bank

or financial institution. This is done by taking the court’s decree (if

needed) along with a signed and notarized copy of the trust agreement

to the bank. As stated above, it will be the trustee’s responsibility

to ensure that the " spenddown " amount is properly deposited into the

trust every month. Failure to do so could result in the loss of

Medicaid benefits for the beneficiary for the month the correct

" spenddown " amount was not deposited into the trust. Again, the

correct " spenddown " amount will be any income received by the

beneficiary over the current Medicaid limit of $654.00.

V. Cost

The cost of establishing this kind of trust depends on the method used

to establish the trust. If it is necessary to petition the court in

order to setup the trust, the cost will be

approximately $1,250.00 which includes a $165.00 filing fee. On the

other hand, if a petition is not necessary, the charge will be closer

to $750.00. These quotes are subject to change and will be discussed

at the first meeting. Usually it is possible to agree upon a fee

payment schedule to start after the trust is funded.

Attached to this outline is a Self-Settled Supplemental Needs Trust

Application that must be accurately completed in order to draft the

Supplemental Needs Trust.