Page 52 - Senior Link Magazine Spring 2021- Online Magazine
P. 52

SENIOR RESOURCES



          Reforming a Will                                      TO KEEP A BENEFICIARY FROM

                                                                LOSING MEDICAID OR SUPPLEMENTAL

                                                 by Lee Franks  SECURITY INCOME OR BOTH

                ccasionally, someone, Dianne for example, will come   must be used to reimburse certain Medicaid benefits the
                to me with the following story.  Her widowed sister,   beneficiary received during his or her life.
          OGaye, had one child, Leonard, now 52 years old
          and disabled from birth.  Aside from Gaye’s care, Leonard   Since September 2015, Sections 255.451-455 of the Texas
          received $794 per month through the Social Security’s   Estates Code allow the personal representative of the estate
          Supplemental Security Income or SSI program, which also   of a deceased person to ask the probate court to modify or
          qualifies him for extensive medical assistance through   reform a will to prevent a beneficiary from losing public
          Medicaid.  Now Gaye has died, and her will left everything   benefits.  The statute does not specify what modifications
          to her husband, Jake, who predeceased her, and then to   or reformations the court should undertake, but the
          Leonard.  Although Gaye did not make much money at    wording of the statute is broad enough to include creating
          any time in her life, she had scrimped and saved to pay for   a testamentary SNT or simply directing a distribution
          her home and accumulate about $150,000 in savings, all of   intended for a disabled beneficiary, such as Leonard, into an
          which now goes to Leonard.  Dianne has now learned that   SNT created by someone else, perhaps Dianne in our story.
          both SSI and Medicaid have a $2,000 countable resource   Because either a testamentary SNT or an SNT created by
          limit, and Leonard soon will lose both supports until his   Dianne would be a third party SNT, neither would have to
          inheritance is spent or otherwise made ‘uncountable’.  include a claw back provision for Medicaid.  A more subtle
                                                                outcome of Sections 255.451-455 is that this statute is not
          If Gaye had known it, she could have created a        limited to beneficiaries under the age of 65; therefore, even
          supplemental needs trust, or SNT, either while she was still   a person who was too old to take advantage of a d4A SNT
          alive (an inter vivos SNT) or in her will (a testamentary   might enjoy the benefits of modifying or reforming a will
          SNT), which would have made her property available to   under this new section of the Estates Code.
          Leonard for his entire life, and then anything left after
          Leonard died would pass on to other beneficiaries
          of Gaye’s choosing.  In fact, any SNT, created by
          someone other than the beneficiary and funded with
          someone else’s property, would work in the same
          way.  Attorneys specializing in this area of law call
          these trusts “third party SNTs”.
          At this point in the story, Leonard or his agent and
          aunt, Dianne, could spend the money on just about
          anything so long as the money is spent on him.  He
          can keep the house, since neither SSI nor Medicaid
          count its value against the $2,000 limit.  He could buy
          a car, which also is not countable, but he does not
          drive, and he has no particular needs that would make
          a van or other specialized transport useful.  He could
          purchase personal items, such as clothes, furniture,
          appliances, or even a pre-need funeral contract, but
          spending so much money on mere consumer goods
          seems a waste.
          Until September 1, 2015, Leonard’s only other option
          would have been a self-settled supplemental needs
          trust created pursuant to 42 USC 1396(p)(d)(4)(A).
          People familiar with these trusts commonly refer to
          them as d4A trusts.  Only disabled persons under
          the age of 65 may transfer any amount of money
          or property into such a trust without jeopardizing
          their SSI or Medicaid, but among the required trust
          provisions is a ‘claw back’ for the state or states that
          provided assistance to Leonard.  Essentially, anything
          remaining in a d4A trust when the beneficiary dies



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