Special Needs Estate Planning
State Reporter: Barbara S. Hughes
Education: B.A. University of Chicago 1064; M.A. University of Chicago 1968; J.D. University of Wisconsin 1986
Current Position: Attorney and partner, law firm of Hill, Glowacki, Jaeger & Hughes, LLP
Certifications: Certified as an Elder Law Attorney (CELA)
Memberships: National Academy of Elder Law Attorneys (member since 1990; currently an elected member of board of directions); State Bar of Wisconsin (Elder Law Section and Real Property, Probate & Trust Section); Dane County Bar Association; Madison Estate Council (past member of board of directors)
Community Involvement: Oakwood Village (a CCRC): member and past chair, Long Range Planning Committee; past board member of 2 of its boards. Luther Memorial Church Foundation board member.
Articles: "Special Ethical Considerations" chapter (& updates) in Advising Older Clients and Their Families (State Bar of Wisconsin 2 volume Treatise); "New Probate Code Affects Estate Planning at Divorce", Wis. Lawyer, 1999; "The Effect of C.G.F. & Section 48.925 on Grandparental Visitation Petitions", Wis. Lawyer, 1992; "Estate Planning Under Wisconsin’s Marital Property Act", Wis. Bar Bulletin, 1986. Numerous presentations for State Bar of Wisconsin CLE, PESI, NBI and NAMI on special needs trusts from 1992 to the present.
Your State's Social Security Region: Chicago
Your State's Federal Circuit: Seventh
Does your State Have a Specific Special Needs Trust Statute or Discretionary Trust Statute?
Are there State-Specific:
Resources: "ONE STEP AHEAD: Resource Planning for People with Disabilities Who Rely on Supplemental Security Income and Medical Assistance" (outstanding $3.00 booklet available through Wis. Coalition for Advocacy: 608-267-0214)
Administrative rules: Administrative Code HFS Chapters 101-109 for Medicaid; specifically HFS 103.06(7)(a): trust availability for SSI-related MA cases is determined by treatment of trusts as resources under SSI standards.
Manuals/Standardized Forms: Medicaid Eligibility Handbook, particularly Appendix 11.6.3, 11.6.4, 11.6.5 and 14.13.3
Important Case Holdings:
In the Matter of the Guardianship of Scott G.G., 2003 WI App 52, 261 Wis. 2d 679, 659 N.W.2d 438 (Wis. Ct. App. 2003): Wis. Stat. sec. 880.19(5) permits the proposed transfer "as an exchange of property of the guardianship estate ... for the purpose of ... providing for the ward’s care." (This clarifies that the court in a guardianship has authority to order funds of the ward transferred to a self-settled Medicaid payback trust.)
Will of Wright, 12 Wis. 2d 375, 107 N.W.2d 146 (Wis. 1961): held that a luxuries trust established under a parent’s will could not be counted as the beneficiary’s asset, and that the state had no right to invade this trust for payment of the beneficiary’s care by the county-operated mental health institution. Later codified at Wis. Stat. sec. 701.06(5m).
Richland County Dept. Of Social Svcs. V. DHSS, 183 Wis. 2d 61, 515 N.W.2d 272 (Wis. Ct. App. 1994): held that a third-party funded trust was not an available asset to an MA recipient beneficiary where the trustee had discretion to distribute principal for the benefit of the income beneficiary.
Interpretations/Unusual interpretations of the law:
In the Matter of Holmquist Trust, 120 Wis. 2d 588, 357 N.W.2d 7 (Wis. Ct. App. 1984): construed Wis. Stat. sec. 701.13(2) to broaden a court’s authority to aid persons in need of support. This statute must be negated in the trust instrument to prevent a court from ordering payments from trust principal for the beneficiary’s support.
Does the State run a tab? I.e., does the State track the cost of services to the beneficiary and present a bill if the individual inherits funds or otherwise acquires funds? Yes, but it is presented at death of the beneficiary if the funds belonged to a special needs trust settled with the beneficiary’s own funds. It would also be presented when a PI lawsuit reaches settlement or judgment for the beneficiary.
Does the State have specific statutes or regulations on County medical services and reimbursement of costs? We have a variety of statutes in Wis. Stat. Chapter 46 addressing community integration and community options programs. There are regulations throughout the Community Services chapters (34-99) of the Administrative Code HFS.
Have You Seen Creative Uses of Charitable Remainder Trusts and SNT Receptacle Trusts? I’m aware of this use, but have not yet seen any in Wisconsin. There may be some.
Do you have a pooled trust in your state? Yes, we will have a (d)(4)(C) trust by mid-2004: WisPACT Trust I. WisPACT Trust II is already in place and accepting third-party funded accounts, as well as self-settled Medicaid payback accounts funded by individuals with disabilities under age 65 (authorized by 42 U.S.C. sec. 1396p(d)(4)(A).
Social Security Rules: SSA POMS
When a third party (such as a parent or other individual) funds a trust for another person (the "beneficiary") with the third party’s funds, what special rules does your SSA region have on:
Distribution terms: There are no regional POMS.
Accounting/Reports/Notices: Must notify SSA by tenth day of the month following the month of any change that can affect SSI benefits. This includes but is not limited to funding of a self-settled trust. Must report to SSA distributions of food, clothing or shelter and distributions directly to the beneficiary.
Housing: See prior paragraph. If beneficiary is paying toward month rent an amount at least equal to the housing’s presumed maximum value (PMV, which is an amount equal to 1/3 of federal SSI plus $20), outside payments (including from trust) toward shelter expenses will not cause reduction in the federal SSI payment. If the beneficiary is not paying rent, but a trust pays for it, or a trust provides food, clothing or shelter, the SSI payment is reduced by the PMV amount only.
Remainder Beneficiaries: Can be anyone, provided that no funds of the SSI beneficiary have ever been transferred to the trust. The trust must be "irrevocable" by the beneficiary and have residual beneficiaries. For Wisconsin (d)(4)(A) trusts created on or after January 1, 1999, using the term "heirs at law" will meet the requirement of having "residual beneficiaries".
When an individual funds a trust with his or her own funds, using the authority provided under 42 U.S.C 1396p(d)(4)(A), what special rules does your SSA region have on:
Distribution terms: There are no regional POMS.
Accounting/Reports/Notices: Same as for SS Rules paragraph 1 above.
Housing: Same as for SS Rules paragraph 1 above.
Remainder Beneficiaries:For Wisconsin (d)(4)(A) trusts created on or after January 1, 1999, using the term "heirs at law" will meet the requirement of having "residual beneficiaries".
Are you aware of specific issues regarding housing (purchase, maintenance, utilities, gifts of housing, rentals) that have raised questions or caused problems with your state agencies or SSA office? Payment of rent and utilities and gifts are subject to the PMV rules, but this is not Wisconsin-specific.
Are you aware of certain types of distributions that are likely to raise questions or cause problems with one of your state agencies or SSA office? No
When a third party (such as a parent or other individual) funds a trust for another person (the "beneficiary") with the third party’s funds, what Medicaid related considerations are involved?
Distribution terms: With the MA - waiver programs, one has to be careful of cost-share issues so that "income" doesn’t push the individual above a threshold limit. Don’t give the individual cash.
Accounting/Reports/Notices: Provide a copy of the trust to the agency.
Remainder Beneficiaries: None, unless the remainder is designated to the beneficiary’s estate, because we do have the MA estate recovery program.
When an individual funds a trust with his or her own funds, using the authority provided under 42 U.S.C 1396p(d)(4)(A), what Medicaid related considerations are involved?
Distribution terms: Don’t give cash to the individual.
Accounting/Reports/Notices: Provide a copy of the trust to the agency. At death, full reporting will be required.
Remainder Beneficiaries: The trust must state: "Upon termination, the then remaining trust assets shall first be paid to the state of Wisconsin (or any other state from which [the beneficiary] has received public benefits) to reimburse Medical Assistance or Medicaid to the extent required by law."
Department of Mental Health and Mental Retardation Rules:
When a third party (such as a parent or other individual) funds a trust for another person (the "beneficiary") with the third party’s funds, what requirements does the Department of Mental Health and Mental Retardation have for:
Distribution terms: Include prohibition for medical care if institutionalized for mental health treatment.
Remainder Beneficiaries: None.
Are third-party trusts liable for services provided by State Schools or State Hospitals?
How does the State Mental health, Mental retardation agency treat self-settled trusts?
State Reporters are not sponsored nor endorsed by NAMI, but have volunteered to provide information. Many of the State Reporters are members of the National Academy of Elder Law Attorneys (NAELA) and the American Bar Association. Several are members of ACTEC (the American College of Trust and Estate Counsel). Many have children and other family members with disabilities. Most have been selected by other attorneys involved with this project, because of their recognized long-term involvement with special needs trusts.
NAMI does not, however, certify all information provided here is accurate. Further, the State Reporters do not certify that information provided by others is accurate. As for the State-specific information, each State Reporter has agreed to provide reasonable updates of information that they believe to be accurate.
Also, there is no coverage here of federal laws, veterans administrations rules, Section 8 housing rules, special education, or special county rules.