A to Z law is proud to announce that Dennis LaRochelle, a Partner in the Civil Litigation Group and Kendall VanConas, a Partner in the Estate Planning, Probate & Trust Administration Group were named Who’s Who in Attorneys by the Pacific Coast Business Times. The Times produces this special report once a year to highlight the Tri-Counties leading lawyers and top accounting professionals. The publication was released on October 26, 2012.
Maria Capritto, an attorney with the A to Z Law Firm, will be participating in a Financial Forum entitled “Retirement Income”. The forum panelists consist of financial, tax, and estate planning experts promoting community financial awareness through free educational presentations and open discussion of current financial, tax, economic and legal events. Capritto will be joined by Daniel Brinkman, a Certified Public Accountant and Brent Hanson, a Certified Financial Planner. There is no charge to attend. The Financial Forum will be held on September 27th from 5:00 pm to 6:30 pm at the Camarillo Health Care District, 3639 Las Posas Road Building #E117 located in Camarillo. For more information visit www.camhealth.com.
What happens to a child or adult with developmental disabilities when their parents pass away? How do you keep them from being taken advantage of or from falling through the cracks? Thankfully, there are special needs trusts, which improve the survivor’s quality of life without disqualifying them from being eligible to receive public benefits.
Generally, there are two types of special needs trusts: a self-settled trust and a third-party trust. These trust funds are held by a trustee for the benefit of the beneficiary (the individual with the disability).
A self-settled trust is created with the assets of a person with disabilities that resulted from an inheritance or proceeds from a lawsuit (usually personal injury or malpractice). After the trust beneficiary’s death, the trust has a provision directing the trustee to pay back any funds the state Medicaid program paid on behalf of the beneficiary.
A third-party special needs trust is established by someone other than the person with disabilities, such as parents or grandparents. The third-party special needs trust is funded with assets that never belonged to the person with disabilities and typically does not contain language requiring a payback to the state Medicaid program at the beneficiary’s death.
The trustee of a special needs trust is required to balance between making distributions that do not violate the income and resource rules of Supplemental Security Income and Medi-Cal and providing goods and services to the trust beneficiary for their improved quality of life. SSI is a Social Security program that pays benefits to disabled adults and children who have limited income and resources as well as people 65 and older without disabilities who meet the financial limits. Medi-Cal is California’s Medicaid program.
Distinguishing Between Income and Resources
Once a special needs trust is created, the trustee must become familiar with the SSI rules on resources and income. There is a simple way to distinguish between income and resources. Money is considered income in the month it was received. If any portion of the income is not spent during that month, the unused income on the first day of the next month becomes a resource.
Regulations for Resources
The limitation on resources for SSI eligibility is $2,000 in countable resources for a single person and $3,000 in countable resources for a couple. Some assets are not treated as available or countable resources and are exempt from the SSI and Medi-Cal resource limits. These assets include the beneficiary’s home, one automobile, household goods (furniture, furnishings, household equipment, household supplies), life insurance with a cash surrender value if its face value is less than $1,500, all term life insurance policies, a burial plot, or any other burial space of any value, and an irrevocable burial fund worth up to $1,500. The trustee should not purchase items considered countable resources that will cause the beneficiary to exceed the value of the resource limitations.
Regulations for Income
The SSI income rules are much more complicated. SSI treats distributions from the trust as follows:
- · Direct income to the beneficiary.
- · Not income to the beneficiary.
- · In-kind income to the beneficiary.
- · In-kind support and maintenance to the beneficiary.
If the trustee distributes cash from the special needs trust to an SSI benefits recipient, it is treated as direct income by the Social Security Administration. The trustee should not provide money directly to the beneficiary, nor should the trustee reimburse the beneficiary for money he or she spent, because after the first $20, each dollar given will be considered income and will reduce the beneficiary’s SSI payment dollar for dollar.
For example, the trustee should pay the department store directly for the purchase of a television (an exempt asset) and have it delivered directly to the beneficiary. A gift card that can be used to buy food or shelter is considered the same as cash and should not be given to the beneficiary.
Distributions from the trust to pay for certain kinds of medical and social services not covered by government benefits are not income because they are not cash, food or shelter.
In-kind income occurs when the trustee gives the beneficiary something other than money. In most cases, the trustee can provide in-kind income to the beneficiary without any impact on public benefits because the value of the non-cash item is not counted as income if the item is retained into the following month. Examples of such items are the purchase of household items such as household supplies, books, dishes, towels, furniture or recreational equipment.
In-kind Support and Maintenance
The trustee must also be concerned with in-kind support and maintenance. In-kind support and maintenance is any direct payment by the trustee for necessities of life such as food or shelter for the beneficiary. SSI benefits are intended to pay for the beneficiary’s food and shelter. Therefore, if a beneficiary receives food and shelter as a result of payments by the trustee, it is considered to be in-kind support and maintenance. Receipt of in-kind support and maintenance is treated as income and reduces the beneficiary’s SSI payments.
The trustee may pay for a vacation for the beneficiary and the beneficiary will maintain his or her benefits. A vacation is considered a temporary absence from a permanent living arrangement and the Social Security Administration does not count in-kind support and maintenance received during their temporary absence. However, the trustee should not provide spending cash to the beneficiary while on vacation because any amount distributed in excess of $20 will reduce the beneficiary’s benefits dollar for dollar.
As you can see from this brief discussion of special needs trusts, the rules concerning eligibility for public benefits are complex. The trustee should consult with an estate planning professional who is familiar with the administration of special needs trusts in order to avoid running afoul of the public benefit rules while ensuring they provide the most benefits allowed to the trust beneficiary.
This article was first published in Your Health Connection Magazine September 2012
Maria Capritto, an attorney with the A to Z Law Firm, will be participating in a Financial Forum entitled “The Changing Tax Environment”. The forum panelists consist of financial, tax and estate planning experts promoting community financial awareness through free educational presentations and open discussion of current financial, tax, economic and legal events. Capritto will discuss various gift tax issues and how the gift tax rules impact estate planning. She will be joined by Daniel Brinkman, a Certified Public Accountant, who will be discussing changes in the sun setting of certain tax laws. Brent Hanson, a Certified Financial Planner, will conclude with a discussion on the impacts of these changes on investment strategies. The Financial Forum will be held on July 26th from 5:00 pm to 6:30 pm at the Camarillo Health Care District, 3639 Las Posas Road Building #E117 located in Camarillo. For more information visit www.camhealth.com.
While many adults do a great job of getting their affairs in order, especially as they get on in years, few people are ever prepared emotionally for the loss of a loved one. We accept that each person’s journey through grief is individual. For children, the journey is especially difficult and often obscured, and childhood bereavement is far more common than one might realize.
A to Z Law partner Kendall VanConas will present “Legal Preparation for Aging and Incapacity: The Fundamentals of Estate Planning” at 8 a.m., March 27 at the Santa Paula Chamber of Commerce, 200 N. Tenth Street, Santa Paula. Designed as an introduction to estate planning, the free seminar will cover trusts, wills, powers of attorney for asset management, and advance health care directives. VanConas will discuss how the different ways of holding title to property can affect an estate plan, and will also give an update about current changes in the estate tax laws.
VanConas received her bachelor’s degree from the University of California, Los Angeles, law degree from Southwestern University School of Law in Los Angeles and master’s degree in taxation from Golden Gate University. She is active with the Ventura County Bar Association, serving as president in 2010, and probate and estate planning section chair from 2007-2009. She is also a member of the Trusts & Estates Section of the California State Bar and is a Certified Specialist in Estate Planning, Trust and Probate Law by the State Bar of California, Board of Legal Specialization.
For more information or to RSVP, call Santa Paula Chamber of Commerce at 805-525-5561 or 805-689-2229.
Kendall VanConas, a partner with A to Z Law, was appointed co-chairperson of the Ventura County Bar Association’s Bench-Bar Committee in January. She and co-chair Michael D. Planet, the court’s executive officer, will lead the committee, whose work is to strengthen the relationship between the judges and attorneys by opening the lines of communication. Other committee members include the presiding judge of the court, along with attorneys in both public and private practice.
VanConas is a former president of VCBA and has years of service to the organization, including work as a board and committee member. In her new role, she will inform the Bar’s general membership of pertinent bench matters and provide the committee’s feedback to the bench.
A to Z Law is happy to welcome attorney Maria L. Capritto as an associate attorney with the firm.
Admitted to the Bar in California in 1997, Ms. Capritto is a graduate of California State University, Northridge (B.S. in Business Administration/Accounting), and received her legal education from Ventura College of Law. She holds a Masters Degree in taxation from Golden State University, and practiced as a Certified Public Accountant for thirteen years prior to her practice of law.
Ms. Capritto concentrates her practice in all areas of estate planning and elder law, including the drafting of wills, trusts, property agreements and special needs trusts, administration of trusts and wills, and administration of conservatorships and guardianships.
Ms. Capritto is a member of the State Bar of California, the Ventura County Bar Association, the California Society of Certified Public Accountants, the American Society of Certified Public Accounts, and the Southern California Council of Elder Law Attorneys. She is active in the local community, having served as president of the Boys and Girls Club of Ventura and the chair of the Leadership Ventura Advisory Committee of the Ventura Chamber of Commerce. She is a past president of Elderpride, Inc., and a former member of the Board of Directors for Rotary Club of Ventura East. She currently serves as a member of the Board of Directors for the Ventura County Bar Association (VCBA), and is a member of the Executive Committee for the VCBA Probate and Estate Planning Section.
A Ventura County native, Ms. Capritto lives in Ventura with her husband, who is also an attorney, and their daughter.
Kendall A. VanConas, a Partner at A-Z and head of the firm’s Probate & Estate Planning Department, has been awarded a rating of ‘AV’ by Martindale-Hubbell, the distinguished resource for attorney peer review information worldwide. This rating indicates that Ms. VanConas has met standards that denote her as Preeminent in her field. The Martindale-Hubbell Peer Review Rating is based on the anonymous opinions of lawyers and judges familiar with the work and reputation of the attorney they are asked to review.
In order to achieve a peer review rating of ‘AV,’ an attorney must first meet a rating of “Very High” general ethical standards. A “Very High” rating means the attorney has adhered to professional standards of conduct and ethics, reliability, diligence and other criteria relevant to the discharge of professional responsibilities.
In addition to the ethical standards, an ‘AV’ attorney has been found to have the highest professional ability in a specific area of practice. The legal ability rating is based on performance in key areas, including legal knowledge, judgment, analytical capabilities, and communication ability.
Ms. VanConas joined the firm in 2003 and became a Partner in 2007. She is certified as a specialist in Estate Planning, Trust & Probate Law by the California State Bar, Board of Legal Specialization, and holds the degree of Master in Science, Taxation from Golden Gate University. Ms. VanConas practices in the areas of estate planning, conservatorship law, probate and trust administration, elder law & special needs planning. She is the 2010 President of the Ventura County Bar Association.