Upload
mervyn-ray
View
215
Download
0
Embed Size (px)
Citation preview
Protect Personal Injury Settlements & Inherited Assets
Susan Anderson, Esq.
Carol R. M. Moss, Esq. Hellmuth & Johnson, PLLC8050 W. 78th StreetEdina, MN 55439
952-941-4005www.hjlawfirm.com
SPECIAL NEEDS TRUSTS
22
Susan Anderson, Attorney15+ Years Experience
• Law • CPA firm • Financial Trust Management • President & CEO of ING National Trust
Specialty: Estate tax consultant and preparationEstate planning: Wills, Power of Attorney, Health Care Directive Business SuccessionSpecial needs planning for disabled family membersCharitable planning ProbateGuardianship / ConservatorshipTrust Department Legal Litigation – Will and Trust Disputes
Wills for Heroes Volunteer – Firefighters & Police OfficersPACER (Parental Advocacy Center Educational Rights) – Children w/Disabilities
Estate Planning, Probate, and Business Succession
33
Carol R. M. Moss, Attorney
• Represents individuals who have been injured or lost a loved one
• Advocates for clients to not only have their story be told but to protect their future
• Works with clients to figure out how to get their medical bills paid
• Creates partnership with clients to not only resolve legal case but to maximize protections for the future
• Understands the need to know the client’s story in order to work toward their goals
Personal Injury and Medical Malpractice
photo
4
Coordinated Legal Approach
Good litigation attorneys consider the effects on their clients when receiving a settlement/verdict
Types of Sources of Recovery:Liability Insurance of person who caused the harm;
Workers Compensation benefits; and
No-fault Automobile Insurance.
Coordination of Benefits for Payment of Medical Expenses.
Determine who pays medical expenses.
Subrogation: The legal obligation to reimburse medical expenses paid on client’s behalf after receiving a recovery.
Special Rules for Medicare/Medicaid
5
Minnesota Medical Assistance
Two Main Criteria
Asset Test
Income Test
6
Two Types of Trusts
1. Special Needs Trust
Beneficiary’s Funds
2. Supplemental Needs Trust3rd Party Funds
Funds considered
“unavailable” for Medical
Assistance qualification
7
SPECIAL NEEDS TRUST
Self Funded trust To benefit an individual who has a disability and Is under age 65 Governing law: Federal 42 USC 1369p(d) and State
Minn.Stat. 501B
8
SPECIAL NEEDS TRUST
Requirements
Creator/Grantor: Parent, grandparent, legal guardian, conservator or court
9
SPECIAL NEEDS TRUST Requirements
Beneficiary• Under Age 65• Qualify as Disabled:
-Unable to engage in any substantial gainful activity due to medically determinable physical or mental impairment Expect result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months-Minor: medially determinable physical or mental impairment of comparable severity-Established by State Medical Reiew Team (SMRT) using criteria similar to Soc. Sec. Admin.
• Solely Benefits Individual
10
SPECIAL NEEDS TRUST
Administration – Failure to make distribution properly may result in disqualification
Distributions cannot replace, reduce or substitute public assistance
Disqualifying Distributions:
food,
shelter and
qualifying medical care
11
SPECIAL NEEDS TRUST
Administration (cont.)
Satisfactory Distributions: special medical care and equipment,
dental care,
personal supervision,
companion services
private room fees, counseling and
other treatments,
modification repair and reasonable purchase of home,
handicapped vehicle
12
SPECIAL NEEDS TRUST
Administration (cont.)
Caution: Under NO CIRCUMSTANCES should you make a direct distribution to beneficiary
Set up payments/invoicing to go directly to vendor
13
SPECIAL NEEDS TRUST
TerminationTerminates upon death of beneficiary
Government is reimbursed for accrued Medical Assistance costs
Any extra funds to beneficiary’s estate
Payments for expenses for last illness, funeral, outstanding debts & expenses not payable from trust
Administrative expenses are allowed
Recommend pre-pay funeral expenses
14
SPECIAL NEEDS TRUST
TrusteeCannot be the beneficiary
Individual or corporate fiduciaryTrustworthy, organized, time to handle matters, geographic location
Co-trustee – individual and corporate trustee option
15
SPECIAL NEEDS TRUST
Continuing court supervision required?
No - parents/grandparents are grantors
Yes – guardian or conservatorGuardian or conservator
Order approving litigation settlement, verdict amount, divorce decree
Confirm trustee
Annual Accounting
Varies by jurisdiction
16
SUPPLEMENTAL NEEDS TRUST
Funded by third party funds (someone other than the beneficiary, or beneficiary’s spouse*
InheritanceIntervivos
Testamentary
Other family members, friends can contribute during their lives
Benefits grantors by reducing their estate taxes
*Note that gifts to such a trust not Annual Exclusion for Gift Tax purposes
17
ESTATE TAXFederal Estate Tax Table
YearEstate Tax
Exemption & Portable?
Top Estate Tax Rate
Step –Up Basis
1997 $600,000 No 55% Yes
1998 $625,000 No 55% Yes
1999 $650,000 No 55% Yes
2000 $675,000 No 55% Yes
2001 $675,000 No 55% Yes
2002 - 2003
$1,000,000 No 50% Yes
2004 - 2005
$1,500,000 No 48% Yes
2006 - 2008
$2,000,000 No 46% Yes
2009 $3,500,000 No 45% Yes
2010 Unlimited 0% No
Year Estate Tax Exemption
Top Rate Step-Up Basis
2011-2012 5,000,000 Yes
35% Yes
2013 ? 55% ? ?
18
ESTATE TAXMN Estate Taxes
For amounts over $1,000,000 the following appliesRate +$
$ 0 . . . . $ 40,000 . . . . . . . . . $ 0 . . . . . . . . . . . . . . . . . .$ 0 40,000 . . . . . .90,000 . . . . . . .40,000 . . . . . .0.8% . . . . . . . . . 0 90,000 . . . . .140,000 . . . . . . . 90,000 . . . . . .1.6% . . . . . . . 400 140,000 . . . . .240,000 . . . . . . 140,000 . . . . . .2.4% . . . . . .1,200 240,000 . . . . .440,000 . . . . . . 240,000 . . . . . .3.2% . . . . . .3,600 440,000 . . . . .640,000 . . . . . . 440,000 . . . . . .4.0% . . . . .10,000 640,000 . . . . .840,000 . . . . . . 640,000 . . . . . .4.8% . . . . .18,000 840,000 . . . 1,040,000 . . . . . . 840,000 . . . . . .5.6% . . . . .27,600 1,040,000 . . . 1,540,000 . . . . .1,040,000 . . . . . .6.4% . . . . .38,800 1,540,000 . . . 2,040,000 . . . . .1,540,000 . . . . . .7.2% . . . . .70,800 2,040,000 . . . 2,540,000 . . . . .2,040,000 . . . . . .8.0% . . . .106,800 2,540,000 . . . 3,040,000 . . . . .2,540,000 . . . . . .8.8% . . . .146,800 3,040,000 . . . 3,540,000 . . . . .3,040,000 . . . . . .9.6% . . . .190,800 3,540,000 . . . 4,040,000 . . . . .3,540,000 . . . . .10.4% . . . .238,800 4,040,000 . . . 5,040,000 . . . . .4,040,000 . . . . .11.2% . . . .290,800 5,040,000 . . . 6,040,000 . . . . .5,040,000 . . . . .12.0% . . . .402,800 6,040,000 . . . 7,040,000 . . . . .6,040,000 . . . . .12.8% . . . .522,800 7,040,000 . . . 8,040,000 . . . . .7,040,000 . . . . .13.6% . . . .650,800 8,040,000 . . . 9,040,000 . . . . .8,040,000 . . . . .14.4% . . . .786,800 9,040,000 . . 10,040,000 . . . . .9,040,000 . . . . .15.2% . . . .930,800 10,040,000 . — — — — . . . .10,040,000 . . . . .16.0% . . 1,082,800
TOP RATE CAN = 16%
$1 Million
EXEMPTION
NOT PORTABLE.
Still need A/B trust.
19
SUPPLEMENTAL NEEDS TRUST
Governing law: State Minn.Stat. 501B.89
Funds in trust are not considered “available” by the county for determining program eligibility.
Beneficiary
Under Age 65
Qualify as Disabled:
Established by State Medical Reiew Team (SMRT) using criteria similar to Soc. Sec. Admin.
Unable to engage in any substantial gainful activity due to medically determinable physical or mental impairment & expect result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months
For Minors: medically determinable physical or mental impairment of comparable severity
20
SUPPLEMENTAL NEEDS TRUST
AdministrationSame/similar to Special Needs Trust
Distributions must benefit solely the beneficiary
Cannot replace, reduce or substitute any public assistance
Disqualifying Distributions: food, shelter and qualifying medical care
No direct distribution to beneficiary
21
SUPPLEMENTAL NEEDS TRUST
TerminationTerminates upon death of beneficiary
Remainder go to grantor’s choice of heirs
Payments for expenses for last illness, funeral, outstanding debts & expenses not payable from trust
Administrative expenses are allowed
Recommend pre-pay funeral expenses
22
SUPPLEMENTAL NEEDS TRUST
TrusteeCannot be the beneficiary – deemed “available”
Individual or corporate fiduciaryIf trust created for tax purposes, do not name grantor as trustee
Trustworthy, organized, time to handle matters, geographic location
Co-trustee – individual and corporate trustee option
23
TRUST OR STRUCTURED SETTLEMENT
When is a trust beneficial to a beneficiary versus a Structured Settlement?
24
CASE STUDIES
TEAM APPROACH is key!
Protect your loved one’s government benefits.
Ask questions about whether a Special Needs or Supplemental Needs Trust will benefit them. Consult with a trust attorney.
Call us for a second opinion, suggestions, etc.
25
Questions…
Susan Anderson, Esq. Carol R. M. Moss, Esq.
Hellmuth & Johnson, PLLC8050 W. 78th StreetEdina, MN 55439
952 941 4005www.hjlawfirm.com