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On December 7, 2016, the U.S. Senate passed the Special Needs Trust Fairness Act. This Act makes it possible for a disabled adult who is mentally competent to establish his or her own special needs trust if they acquire assets that will put them over the asset limit for programs such as Medicaid or SSI. It corrects the false presumption in prior law that all disabled persons lack the mental capacity to handle their own legal and financial affairs.
Under prior law, only a parent, grandparent, court appointed guardian or a court itself could establish the type of special needs trust that allows a disabled individual to benefit from their assets for their supplemental needs while maintaining eligibility for Medicaid and SSI (also known as a (d)(4)(A) trust, after the enabling legislation). The Social Security Administration would sometimes even deny trusts established by a court if the disabled individual was the one who petitioned the court for an order to establish with the trust, with the outrageous position that the court was acting as the mere agent for the disabled individual. The new legislation will halt that practice.
Not all caseworkers with the Social Security Administration are aware of the new legislation and a problem we have seen is caseworkers issuing eligibility denials after evaluating trusts drawn up under the new law under the standards of prior law. This problem can be reversed by an appeal.
An individual who is not mentally competent will still need a court or other authorized party to establish a trust for them. However, by doing away with the need for a court order for competent adults, the new legislation may save a competent adult disabled beneficiary thousands of dollars in legal fees and lost benefits, as well as the time and indignity of having to involve the court in his or her financial affairs. If you would like further information on special needs trusts and how to establish them, please contact us at (231) 773-1169
Estate and Gift Tax
Estate, Gift and GST Tax Exemption Equivalent: $5,490,000
Gift Tax Annual Exclusion: $14,000
Annual Exclusion for Non citizen Spouse: $149,000
Maximum Estate and Gift Tax Rate 40%
Estates and Trusts Code
Intestate Share of Surviving Spouse with Children with Decedent: $224,000
Intestate Share of Surviving Spouse with no Children with Decedent: $150,000
Homestead Allowance (spouse/minor’s shelter during estate administration): $22,000
Exempt Property (spouse/children’s right to household and personal property): $15,000
Family Allowance (to support spouse/minors during estate administration): $27,000
Small Estates (qualifies for summary procedure): $22,000
Small Trusts (May be terminated as too small to justify administration expenses): $75,000
Medicaid Asset and Income Thresholds
Maximum Community Spouse Asset Allowance: $120,900
Minimum Community Spouse Asset Allowance: $24,180
Maximum Community Spouse Income Allowance (monthly): $3,023
Monthly Income Cap for Home and Community Based Waiver: $2,205
Average Monthly Cost of Nursing Home Care (Divestment Penalty Divisor): $8,018
Maximum Home Equity Value $560,000
Veterans Aid & Attendance Benefits (Maximum Monthly Benefit)
Single Veteran $1,794.25
Married Veteran $2,127.08
Surviving Spouse of Veteran $1,153.00
Veteran Married to Veteran $2,846.08
If you would like further information on estate planning orelder law topics, please contact David E. Waterstradt, JD, CELA, at231/773-1169 or by email at david@davidwaterstradt.com. David is a Certified Elder Law Attorney bythe National Elder Law Foundation, the only elder law certification programaccredited by the American Bar Association.
Under prior law, only a parent, grandparent, court appointed guardian or a court itself could establish the type of special needs trust that allows a disabled individual to benefit from their assets for their supplemental needs while maintaining eligibility for Medicaid and SSI (also known as a (d)(4)(A) trust, after the enabling legislation). The Social Security Administration would sometimes even deny trusts established by a court if the disabled individual was the one who petitioned the court for an order to establish with the trust, with the outrageous position that the court was acting as the mere agent for the disabled individual. The new legislation will halt that practice.
By doing away with the need for a court order, the new legislation will can save a competent adult disabled beneficiary thousands of dollar sin legal fees and lost benefits, as well as the time and indignity of having to involve the court in his or her financial affairs. If you would like further information on special needs trusts and how to establish them, please contact us.
With respect to married couples, the asset limit is higher than $2,000. How much higher depends on how much the couple owned at the time a spouse entered the hospital or nursing home. Essentially, the limit is one-half of the couple's assets up to a maximum of $119,220. A skilled elder law attorney can help a married couple keep all assets in excess of this amount with no spend down required. Essentially, the plan involves converting the excess assets to income with a promissory note or annuity. That income all comeback to the spouse who remains living at home over time.
If you have a loved one who needs to become Medicaid eligible, it is important that you consult with us as soon as possible because timing is everything. We are here to help you with every aspect of the Medicaid process, including developing a custom plan to help you maximize the assets you can keep,assisting you with any spend down desired or required, compiling the information necessary for the Medicaid application, completing and submitting the Medicaid application, and aiding you with annual follow-up to retain Medicaid eligibility. We look forward to helping you and your family through this complicated and difficult process.
Thankfully, on March 29, 2016, Michigan law was changed. Now it will be possible for each individual to designate a “funeral representative” who has legal authority to make your funeral arrangements. To be legal and binding, your designation has to be in writing and witnessed by two persons. If your funeral representative fails to exercise their powers within 48 hours of receiving notice of death,the persons who would have had priority under prior law may act
Your funeral representative can be almost any person you want, even someone who is not a relative. The only restrictions are that your funeral representative cannot be an owner or employee of a funeral home, health care facility, cemetery or crematory,unless such a person is your spouse or relative. You can revoke or amend your funeral representative designation at any time.
Apparently there is some dispute whether a designated funeral representative will have a legal obligation to carry out your funeral wishes. The Michigan Funeral Director’s Association has stated that it does not believe this duty exists under the new law. However, a funeral representative is defined as a “fiduciary” under the new law. A fiduciary has the responsibility to act in the best interests of the person who appointed him. Therefore, there is arguably a legal duty to follow the decedent’s wishes. In any case, the new law is certainly an improvement. By allowing you to designate the person of your choice, you should have much more certainty that your wishes will be followed. As always, open communication with the person or persons you wish to designate as your fiduciaries (including funeral representative, patient advocate, agent under durable power of attorney,trustee and/or personal representative) will help ensure that your carefully laid plans are carried out.
If you would like further information on Designated Funeral Representatives or other elder law or estate planning topics, please contact David E. Waterstradt, JD, CELA at 231.773.1169 or by email at david@davidwaterstradt.com. David is a Certified Elder Law Attorney by the National Elder Law Foundation, the only elder law certification program accredited by the American Bar Association.