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How Does Planning for a Special Needs Child Work?

Funding a Special Needs Trust is just the start of the planning process for families with a family member who has special needs. Strategically planning how to fund the trust, so the parents and child’s needs are met, is as important as the creation of the SNT, says the article “Funding Strategies for Special Needs Trusts” from Advisor Perspectives. Parents need to be mindful of the stability and security of their own financial planning, which is usually challenging.

Parents should keep careful records of their expenses for their child now and project those expenses into the future. Consider what expenses may not be covered by government programs. You should also evaluate the child’s overall health, medical conditions that may require special treatment and the possibility that government resources may not be available. This will provide a clear picture of the child’s needs and how much money will be needed for the SNT.

Ultimately, how much money can be put into the SNT, depends upon the parent’s ability to fund it.

In some cases, it may not be realistic to count on a remaining portion of the parent’s estate to fund the SNT. The parents may need the funds for their own retirement or long-term care. It is possible to fund the trust during the parent’s lifetime, but many SNTs are funded after the parents pass away. Most families care for their child with special needs while they are living. The trust is for when they are gone.

The asset mix to fund the SNT for most families is a combination of retirement assets, non-retirement assets and the family home. The parents need to understand the tax implications of the assets at the time of distribution. An estate planning attorney with experience in SNTs can help with this. The SECURE Act tax law changes no longer allow inherited IRAs to be stretched based on the child’s life expectancy, but a person with a disability may be able to stretch an inherited retirement asset.

Whole or permanent life insurance that insures the parents, allows the creation of an asset on a leveraged basis that provides tax-free death proceeds.

Since the person with a disability will typically have their assets in an SNT, a trust with the correct language—“see-through”—will be able to stretch the assets, which may be more tax efficient, depending on the individual’s income needs.

Revocable SNTs become irrevocable upon the death of both parents. Irrevocable trusts are tax-paying entities and are taxed at a higher rate. Investing assets must be managed very carefully in an irrevocable trust to achieve the maximum tax efficiency.

It takes a village to plan for the secure future of a person with a disability. An experienced elder law attorney will work closely with the parents, their financial advisor and their accountant.

Reference: Advisor Perspectives (April 29, 2020) “Funding Strategies for Special Needs Trusts”

∗ For more information about this and other similar topics, please visit: www.LambrosLawLLC.com or call us at: (401) 383-9899

Why Don’t Border National Guardsmen Receive Veteran Benefits?

Two thousand National Guard troops were ordered to the U.S.-Mexico border in April 2018 to help Homeland Security, and they work alongside U.S. Customs and Border Protection agents every day.

However, Colorado Public Radio’s recent article, “Even After Years In Uniform, Some National Guardsmen Don’t Get Veterans Benefits,” reports that some of those guard troops who worked along the border in uniform may never receive veterans benefits.

To qualify for Veterans Affairs benefits, such as health care or GI Bill education benefits, individuals are required to serve 180 days continuously on active duty. That means being requested by the federal government under specific circumstances.

National Guard troops are usually under the control of a state's governor, who can call them up to help with natural disaster;. However, there are a variety of orders that can be used to mobilize Guard members. Despite the fact that President Trump called guard troops to the border and the federal government paid for the operation, in most cases, the kind of orders they were under do not qualify those troops for benefits.

Representative Mike Levin, a California Democrat, chairs a veterans subcommittee that recently held a hearing on the issue.

"We haven't followed a very basic principle," Levin said, "which is if you're expected to be doing the same sort of thing, putting your life on the line for whatever particular mission, I believe you should be able to get the same pay and benefits."

Representative Levin said Congress has been slow to respond to the changing role of the guard, which has been used more consistently since the terrorist attacks on Sept. 11, 2001.

"The expectations and the demands placed on our national guard and reserves that perhaps weren't there previously, we have to make sure that federal policy reflects that," he said.

In 2016, Congress changed the law, so anyone who retires from the guard or reserves after 20 years has honorary veteran status, no matter the amount of time they spent in active service. However, this legislation didn’t allow them to qualify for federal benefits.

The guard troops also are not eligible for long-term mental health care in the VA health system. There were an estimated 919 suicides in 2017 among guard and reserve members. None of them qualified for care from the VA.

Reference: Colorado Public Radio (November 29, 2019) “Even After Years In Uniform, Some National Guardsmen Don’t Get Veterans Benefits”

∗ For more information about this and other similar topics, please visit: www.LambrosLawLLC.com or call us at: (401) 383-9899

“Blue Water” Benefits for Vietnam Veterans

After waiting decades for “blue water” disability benefits, there’s a real concern among lawmakers in the House that the VA won’t be able to start distributing these benefits.

Military Times reported in its recent article that asks “Will VA be ready to process new ‘blue water’ Vietnam veterans benefits next year?” VA officials have promised that they will start processing cases in January 2020. However, critics and veterans’ advocates want that to happen more quickly. Advocates have also demanded that the White House speed up the timeline for the benefits.

“These people have waited too long, and we finally have the legislation in place,” said Rep. Mike Bost, R-Ill., ranking member on the House Veterans’ Affairs committee’s panel on disability assistance. “We need to get it done.”

Last summer, President Trump signed into law a bill that finalized presumptive benefits status for “blue water” veterans who served on vessels off the coast of Vietnam during the war.

Under Veterans Administration regulations, vets who served on land in the war are presumed to have toxic exposure related to spraying of the defoliant known as Agent Orange during the Vietnam War. However, sailors on ships off the coast of Vietnam weren’t given the same concession.

However, the new law will see as many as 90,000 veterans become eligible for the new presumptive status, which will mean thousands of dollars in disability benefits each month.

This legislation let VA officials delay processing those cases until the beginning of 2020, even though some cases were already being considered, due to a federal court ruling earlier in this year.

Advocates and some members of Congress have complained that the delay has put another unfortunate burden on veterans, who have suffered from Agent Orange exposure for decades.

In an update hearing before the committee, Veterans Affairs Deputy Under Secretary for Field Operations, Willie Clark emphasized that the delay was required to get department systems prepared for the anticipated onslaught of blue water claims.

Other lawmakers said they were concerned that the VA is not including veterans who were on submarines, despite evidence that sailors on board would also have been susceptible to the same toxic exposures.

Reference: Military Times (October 31, 2019) “Will VA be ready to process new ‘blue water’ Vietnam veterans benefits next year?”

∗ For more information about this and other similar topics, please visit: www.LambrosLawLLC.com or call us at: (401) 383-9899

How Important is a Special Needs Trust?

For loved ones with disabilities or a debilitating and chronic illness, programs like Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI) and Medicaid allow them to get the services and care they need. However, these programs have income limits to ensure that those who need these funds the most receive them.

A special needs trust is a specific type of trust fund that’s created to help a beneficiary with special needs but not jeopardize their eligibility for these programs, explains KAKE’s recent article, “How a Special Needs Trust Works.”

If a family member were to leave money to an individual who is receiving help from these programs, it could put their income above the income limit, and they would lose the government funding.

A special needs trust works around this. That’s because the owner of the funds is technically the trust, not the beneficiary. You also name a trustee to be in charge of disbursing the funds in the trust. Therefore, while the beneficiary benefits from the trust, she doesn’t have control of its assets.

If you are creating a special needs trust for a beneficiary, you must do this before the beneficiary turns 65. And funds from the trust typically can’t be used to pay for food or shelter.

If a person could benefit from a special needs trust, but they themselves own the funds, you can create a first-party special needs trust in which you serve as both the beneficiary and the grantor. These can be complicated to draw up, and states have varying rules determining their validity. A first-party special needs trust has the money that belongs to its beneficiary.

With a third-party special needs trust, the trust holds funds that a beneficiary doesn’t directly own. These are generally used by grantors to allow the beneficiary to start getting money from the trust, even before their death. The funds never technically belong to the beneficiary, so they can’t be used for Medicaid payments. The trust can be used to save money for the beneficiary and future beneficiaries.

The third type of these trusts is the pooled special needs trust. Nonprofit organizations manage assets for a fee, and these organizations pool the funds of multiple trusts together and invest them. When it comes to payments, beneficiaries get an amount equal to their percentage of the pooled trust’s balance.

Through the use of a special needs trust, you can help your loved one to have funds to deal with the expenses that come with a disability or illness, without risking their ability to receive government benefits. The trust can also be very specific about how the money is to be used.

A special needs trust lets you help your beneficiary deal with the expenses that come with illness or disability, without hampering their ability to get other assistance. An attorney whose practice focuses on special needs trusts will explain that these trusts are irrevocable, which means that creditors cannot attach the funds.

Reference: KAKE (September 30, 2019) “How a Special Needs Trust Works”

∗ For more information about this and other similar topics, please visit: www.LambrosLawLLC.com or call us at: (401) 383-9899

Senior Veterans Should Apply for These Benefits

Senior budgets are part of the challenge of aging. For veterans, there’s good news from a recent article from U.S. News & World Report, “Veteran Benefits for Assisted Living,” that says some senior living companies are working to help veterans obtain benefits that can help with their costs.

Note that the VA won’t pay for a veteran’s rent in an assisted living facility. However, VA benefits may pay for some of the extra services required, like nursing assistance, help with bathing and toileting, and possibly meals.

There are a variety of benefits that may help, based on a vet’s specific service history and eligibility. The most commonly used benefits are the Aid & Attendance Pension. Another common benefit is the Survivor’s Pension for spouses of a deceased veteran with wartime service.

The VA’s Aid & Attendance and Housebound program is part of the pension benefits paid to veterans and survivors. The VA says these benefits are paid, in addition to a monthly pension. A vet must satisfy one of the potential conditions, including:

• Requiring the aid of another person to perform personal functions, like bathing, dressing, eating, toileting, or staying safe from hazards;
• Being disabled and bedridden, above what would be thought of as recovery from a course of treatment, such as surgery;
• Being a patient in a nursing home due to physical or mental incapacity; and
• Having very poor eyesight (5/200 corrected visual acuity or less in both eyes) or a field of vision limited to five degrees or less.

Vets may qualify for these benefits, which are added to the standard monthly pension, when he or she is “substantially confined to your immediate premises because of permanent disability,” the VA says. Eligibility for the program is based on a case by case basis and involves a review by the VA.

Like any other government benefit, it’s important to start the application process early, rather than waiting until a crisis hits and benefits are critical. The goal is to maximize the use of the money saved, so that the individual can afford high-quality care for as long as possible, and the hope is that the VA benefits will help to do that. An experienced estate planning or elder law attorney who routinely works with veterans and their families will be an important resource.

Reference: U.S. News & World Report (August 12, 2019) “Veteran Benefits for Assisted Living”

∗ For more information about this and other similar topics, please visit: www.LambrosLawLLC.com or call us at: (401) 383-9899

Changes are Coming to Social Security in 2020

Almost 45 million retired workers make up 70% of the people who receive benefits from Social Security every month. Sixty percent of the recipients are seniors, who rely on the program to make up at least half of their income.

Motley Fool’s recent article, “5 Social Security Changes in 2020 That Could Affect Your Take-Home Income” explains that the announcements made in the second week of October directly affect what beneficiaries are paid on a monthly basis. These changes can also affect non-retirees who aren't getting a Social Security benefit. Let’s look at some of these changes.

1. COLA. The most important figure in the October announcement from the Social Security Administration is the cost-of-living adjustment (COLA). Social Security's COLA is measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The average monthly CPI-W reading from the third quarter of the current year (July through September) is compared to the average monthly CPI-W reading from the third quarter of the previous year. If the average figure has risen from the previous year, then beneficiaries receive a "raise" that's commensurate with the percentage increase year over year, rounded to the nearest 0.1%.
2. Withholding thresholds. Early claimants who haven’t hit their full retirement age but are currently (or expected to begin) taking benefits, will be subject to the retirement earnings test. This test allows early filers to earn up to a certain amount of money, before the SSA is allowed to withhold a portion, or all, of their benefit. For those who won't reach their full retirement age in 2019, $1 in benefits can be withheld for every $2 in earnings above $17,640 ($1,470 a month). For those who’ll reach their full retirement age this year but have yet to do so, are allowed to earn $46,920 before the SSA begins withholding $1 in benefits for every $3 in earnings above the limit. Note that these withheld benefits aren't lost forever, because you get them back in the form of a higher monthly payout when you reach your full retirement age.
3. Maximum monthly payout. If you're currently claiming a retired worker benefit and have made a good deal of money on an annual basis over your working career, there's a chance that you'll be able to net more in monthly payouts in 2020. There’s a cap on the maximum monthly payout at full retirement age. In 2019, no individual at their full retirement age can take home more than $2,861 per month, even if they made millions of dollars each year throughout their working career.
4. Disability income thresholds. Even though 7 of 10 program recipients are retired workers, about 10 million people each month also get a check from Social Security Disability Insurance (SSDI). Approximately 8½ million are disabled workers, and the rest are spouses or children of these disabled workers. If the average CPI-W reading does increase on a year-over-year basis from the previous year (which appears likely), these SSDI income thresholds for the disabled and legally blind should go up a little in 2020.
5. Wealthy people will pay more. High income earners should anticipate paying more into the program, as long as inflation rises on a year-over-year basis, as measured by the CPI-W.

Reference: Motley Fool (July 28, 2019) “5 Social Security Changes in 2020 That Could Affect Your Take-Home Income”

∗ For more information about this and other similar topics, please visit: www.LambrosLawLLC.com or call us at: (401) 383-9899

Congress Addresses Bills for Veterans

An article from radio.com, “Congress introduces bills to increase veteran benefits, refund home loan fees, help women veterans,” provides a detailed list of new legislation recently introduced by Congress on behalf of veterans.

Cost of living adjustment (COLA). Senators Johnny Isakson, R-Ga., and Jon Tester, D-Mont., chairman and ranking member of the Senate Committee on Veterans Affairs, introduced the "Veterans Compensation Cost-of-Living Adjustment Act," which aims to increase veteran disability benefits from Veterans Affairs.

The COLA for veterans will mirror the increases to Social Security recipients and is decided by the Bureau of Labor Statistics' Consumer Price Index annually.

“My top priority is to ensure that veterans and their families receive the benefits they earned while serving our country,” Isakson said. “I’m proud to introduce this legislation to increase benefits for disabled veterans in keeping with rising costs of living.”

Home loan fee refunds. Tester and Sen. John Boozman, R-Ark., introduced a bill to make certain that the VA repays disabled veterans for home loan fees wrongfully charged.

An Inspector General report revealed that the VA wrongfully charged nearly 73,000 disabled veterans $286.4 million in home loan fees. The VA has been aware of the fact that it owes those veterans the money, since at least 2014.

"The (VA's) failure to uphold this responsibility has unduly burdened disabled veterans. This bill ends the VA’s practice of unlawfully charging veterans who qualify for funding fee waivers. Ensuring the VA implements a process to reimburse veterans who weren’t required to pay in the first place and prevent veterans from unfair penalties in the future must be a priority,” Boozman said.

Care for women veterans. Rep. Lauren Underwood, D-Ill., introduced the Caring for Women Veterans Act, which would create an annual VA report to make certain that women veterans receive quality healthcare from VA hospitals.

The population of women veterans will nearly double by 2043, and advocates say the VA must modernize to ensure that all VA facilities are equipped to provide comprehensive services for all veterans.

Veteran burials. Another bill from Boozman and Tester is designed to assist state cemeteries in meeting federal standards for veteran burials.

Senator Testor affirmed that as a nation, we owe it to veterans to ensure that state and tribal cemeteries are well-maintained and receive the proper care. Helping cemetery workers access the specialized training they need is another way to honor the men and women who have served our country.

Reference: radio.com (July 15, 2019) “Congress introduces bills to increase veteran benefits, refund home loan fees, help women veterans”

∗ For more information about this and other similar topics, please visit: www.LambrosLawLLC.com or call us at: (401) 383-9899

Update on Navy Veterans’ “Blue Water” Benefits

A landmark lower court ruling that “blue water” Navy veterans who served during the Vietnam War deserve to be included in the Agent Orange Act, will not be challenged by the Justice Department, which conveyed this to the U.S. Supreme Court on June 4.

According to The National Law Journal’s recent article, “Justice Department Will Not Challenge Benefits for Blue Water Navy Vets,” the decision by U.S. Solicitor General Noel Francisco ended months of uncertainty for tens of thousands of former service members or their survivors, who may now be eligible for benefits for their exposure to Agent Orange.

In January, these blue water Navy veterans, who served on ships within the 12-mile territorial sea of the Republic of Vietnam, won their case in the U.S. Court of Appeals for the Federal Circuit. The court held that the Agent Orange Act of 1991 includes those veterans. Until that ruling, these vets had been denied the presumption of Agent Orange exposure during the Vietnam War.

The Justice Department, in upholding the Department of Veterans Affairs’ interpretation, argued that the Agent Orange Act covered only those veterans who served on the ground or inland waterways of Vietnam.

The Federal Circuit rejected the Justice Department’s request to put its decision on hold while the government decided whether to appeal to the Supreme Court. Ever since, the Solicitor General has asked for several extensions from the Supreme Court, as he decided whether to appeal. A decision to appeal the Federal Circuit ruling would have brought out the Trump administration in a fight with Vietnam veterans and the head of the Veterans Administration.

The Solicitor General, consulting with federal agencies, generally makes decisions on government appeals to the Supreme Court.

Francisco’s decision not to appeal was announced in a motion to dismiss in another case in the U.S. Supreme Court—Gray v. Wilkie. That action also involved a blue water Navy veteran. The Supreme Court had scheduled February arguments in the Gray case but removed it from the docket at the request of the Solicitor General, who said this recent decision, if not appealed, would also give the relief sought by Gray.

Blue water Navy veterans in both the Federal Circuit and the Supreme Court cases had broad amicus support from veterans’ organizations and legal services groups, many of which were represented by major law firms.

Reference: The National Law Journal (June 5, 2019) “Justice Department Will Not Challenge Benefits for Blue Water Navy Vets”

∗ For more information about this and other similar topics, please visit: www.LambrosLawLLC.com or call us at: (401) 383-9899

No Need for Veterans to Pay for Help in Applying for Benefits

With some 800,000 veterans in Pennsylvania, the issue of military vets being charged for help with applying for benefits has become a problem in the state. According to The Tribune-Review’s article, “Veterans don’t need to pay for help to apply for benefits in Pa,” there are people who attempt to monetize the application process.

Veterans should never have to pay to apply.

In January, an Allegheny County company was fined $10,000 after an employee fraudulently represented that he was an accredited veteran service officer. Some of the claims handled by the Allison Park firm were from Westmoreland County.

Veterans should ask for assistance only from an accredited veteran service officer, an attorney accredited by the VA, or an accredited claims agent. These agents provide veterans and their dependents free assistance to identify, determine eligibility for and apply for a wide range of benefits on the local, state and federal levels. That benefits include the following:

• Burial allowances;
• Grave markers and headstones properly requested and placed;
• The Disabled Veterans Real Estate Tax Exemption Program;
• Veterans Emergency Assistance;
• Pensions for blind and paralyzed veterans;
• The Education Gratuity Program;
• Service connected disability and non-service connected disability pensions;
• Federal health care benefits; and
• Survivor benefits.

For a comprehensive summary of benefits, visit the Veterans Affairs website’s dedicated page about benefits: https://benefits.va.gov/BENEFITS/benefits-summary/SummaryofVABenefitsFlyer.pdf.

Who is eligible for VA benefits? Any uniformed service member, veteran or spouse, child or parent of a deceased or disabled service member or veteran are eligible.

Reference: (The Tarentum, PA) Tribune-Review (May 17, 2019) “Veterans don’t need to pay for help to apply for benefits in Pa”

∗ For more information about this and other similar topics, please visit: www.LambrosLawLLC.com or call us at: (401) 383-9899

Washington State Streamlines and Improves Guardianship Process

Among the bills passed by Washington state lawmakers this session, was one that will make the guardianship application process easier for parents, reports Public News Service in the article “Guardianship Process to Be Streamlined in WA.”

The article quotes Sterling Harders, president of Service Employees International Union 775, who says that her union represents thousands of parents who care for children with intellectual and developmental disabilities.

Harders remarked that she’s heard from members that the road to guardianship was complex and expensive, when their children turned 18.

In addition, the guardianship process also differs from county to county.

Two bills in Washington state address these issues, which will ease some of the burden for parents.

"Life is difficult enough for these folks having to take care of special needs kids,” she states. “They don't need one more thing to worry about, and so we are really hopeful that these two bills will make life just a little easier for parent providers."

The Uniform Guardianship Act, Senate Bill 5604, is designed to standardize the guardianship process through Washington’s 39 counties and create a monitoring system and model training program. The bill currently is on the governor's desk.

The bill requires a background check on an agent of a guardian who provides services to the individual subject to a guardianship or conservatorship. It also requires a court hearing to resolve allegations in a grievance against a guardian or conservator.

The second bill is House Bill 1329. It creates alternatives to full legal guardianship. The bill was signed in April and goes into effect at the end of July.

In Washington, there are professional guardians, public guardians and lay guardians. A one-size-fits-all law for guardianship does not work well for families whose children have different disabilities.

One parent described the current guardianship as being limited to a two-sided construct: being incapacitated or being a person who is not incapacitated with full legal rights. She said there needs to be room for different options within that continuum. A one-size fits-all guardianship simply doesn’t work for many families with special needs individuals.

Reference: Public News Service (May 16, 2019) “Guardianship Process to Be Streamlined in WA”

∗ For more information about this and other similar topics, please visit: www.LambrosLawLLC.com or call us at: (401) 383-9899