1. Estate Planning and Special Needs Trusts Presented by: Joshua L
Estate Planning and Special Needs Trusts Presented by: Joshua L. Brothers Barbara Byram William L.E. Dussault

2. Public Benefits Review
SSI/Medicaid
Disabled, blind, >65
Disabled = no SGA ($1,000.00/month)
“Means tested”
Income
Earned ($2:$1)
Unearned ($1:$1)
ISM (up to 1/3)
Assets < $2000 (individual)
Exemptions include primary home (<$500k), vehicle, personal property, SNT
SSDI/Medicare
Disabled, blind, >65
Disabled = no SGA ($980/month)
“Entitlement program”
Available to individuals who have paid FICA taxes in the last 20 of 40 quarters prior to disability
Not “means tested”
Medicare available when: over 65 or meets SSA disability definition, 29 months post injury

3. Last Will and Testament (aka the “Will”)
Most common estate planning document
Controls distribution of “probate” assets at death
Washington’s probate process
Federal Estate tax considerations ($3,500,000 in 2009; none in 2010, $1,000,000 in 2011)
Living trusts and estate taxes
$2,000,000 WA State Estate tax
Should I leave assets to an individual with disabilities?
Outright distribution
Disinherit the individual
“Testamentary” special needs trust

4. Roles of Individuals in a Will
Executor:
Duties
Who to name?
Guardian:
Should be consistent with any Court files
Trustee:

5. Probate vs. Non-Probate Assets
Probate assets are assets held in the decedent’s name without a beneficiary designation that pass in accordance with the decedent’s will.
Non-probate assets are those that pass by a written instrument or arrangement other than a will
Jointly owned property with right of survivorship (bank accounts and real property)
Pay on Death (POD) Account
Trust
Community Property
Individual Retirement Accounts (IRA)
401(k) Plans
Life Insurance
Review non-probate assets on a regular basis

6. What is a Trust? Separate legal entity
Barrier between beneficiary and Trust assets
Roles
Trustor or Settlor
Trustee
Beneficiary
Basic Functions of a Trust
Safeguard assets
Financial Management
Distributions
“Types” of Trusts are just restrictions on basic functions
Can serve as an alternative to guardianship

7. What is a Special Needs Trust (SNT)?
Purposes:
Financial management
Continued eligibility for “means” sensitive benefits (primarily SSI and Medicaid)
Restriction on expenditures – “extra and supplemental needs” of the beneficiary
Needs not covered by SSI and Medicaid
Cannot pay for basic food (groceries) and shelter (rent and basic utilities) or primary medical services otherwise covered by benefits
Can be used to pay for vacations, clothes, entertainment, education, etc.
Trust restrictions must be observed.
Must be “irrevocable”
Sole benefit

8. Source of Funding Matters
2 sources of funding:
Assets of anyone but the beneficiary (3rd Party SNT)
The beneficiary’s assets (Self-Settled SNT or (d)(4)(A) SNT)
Source determines who can establish the SNT and the terms of the SNT
Self-settled are any assets which the beneficiary or his/her guardianship is entitled to receive
Outright inheritances or gifts
Settlements/judgments
Social Security back payments

9. Self-Settled (d)(4)(A) SNT
Beneficiary’s own assets
Restrictions
Beneficiary must be disabled
Established by parents, grandparents, guardian, or court
Beneficiary must be under 65 years of age
Medicaid Reimbursement
“Grantor” Trust if drafted appropriately
Alternative: (d)(4)(C) SNT
Pooled Trust
Retained Trust assets replaces Medicaid Reimbursement

10. Third Party SNT Assets of anyone other than the beneficiary
No (d)(4)(A) SNT restrictions
Anyone can establish
Beneficiary can be any age
No Medicaid reimbursement
Complex Trusts
Can be a Living or Testamentary Trust
Common situations in which a Third Party SNT is created
Will and Estate Planning documents
Family or friends want to assist the beneficiary
Avoidance of multiple SNTs in wills
Control of assets after the beneficiary has passed away

11. Developmental Disabilities Life Opportunities Trust (DDLOT)
Also known as the Endowment Trust
State-run Trust that is administered by the Arc
Available only to individuals who are developmentally disabled as determined by DDD
Can be self-settled or third party
Administrative Fees & Costs
$600 enrollment fee
Tax return preparation and filing fee
Annual management fees for day-to-day management (greater of $75 or 2% of account balance with $750 cap)
Investment Board Fees (investment fees)
Trust Manager Fees (the Arc)
State Treasurer Fees

12. DDLOT Matching Funds Administrative fees currently being matched
Tax prep/filing fees
$600 enrollment fee
Administrative fees previously matched, but now on hold
Annual management fee
Match of Contributions (on hold!)
25% state match of up to $31,000 ($7,750)
Contributions cannot be withdrawn in the same year they are deposited
Only $3,100 will be matched in a single year
Vesting
Requires the accumulation of $25 per month for 3 consecutive years ($900 over three years)
Can be periodic payments or a lump sum
Can only spend “matched funds” after being vested
Matching funds are not guaranteed and have run out
2010 Legislative Session
Foundation
Proportionate Distributions

13. DDLOT Investment Strategy
Conservative Investment Strategy
23% in fixed income (bond market fund)
24% in cash equivalents (short-term investment or money market funds)
14% in US Equities
39% in Treasury Inflation Protection Securities (US inflation indexed bonds)

14. DDLOT Advantages & Disadvantages
Potential for matching funds
Professional management if no family to assist
No on-going attorney’s fees and costs for court reporting
Disadvantages
Loss of control
Timely distributions
Rejection of distribution requests
Investments
Immediate availability of funds
Terms of Trust (trustee, etc.)
Property
Conservative investments
Potential administrative fees and costs – about to find out!
Risk Aversion?

15. Disclaimer & Notice
This training and written materials are designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the presenters are not engaged in rendering legal, financial or other professional services. If legal advice or other expert assistance is required, the services of a competent professional should be sought.
Please keep in mind all written materials and power point slides are the intellectual property of the Dussault Law Group. These materials may not be distributed without the express written consent of the authors.

16. Joshua L. Brothers Barbara Byram William L.E. Dussault
Thank You!
Joshua L. Brothers Barbara Byram William L.E. Dussault