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Protect Personal Injury Settlements & Inherited Assets Susan Anderson, Esq. Carol R. M. Moss , Esq . Hellmuth &am PowerPoint Presentation
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SPECIAL NEEDS TRUSTS. Protect Personal Injury Settlements & Inherited Assets Susan Anderson, Esq. Carol R. M. Moss , Esq . Hellmuth & Johnson, PLLC 8050 W. 78 th Street Edina, MN 55439 952-941-4005 www.hjlawfirm.com. Susan Anderson, Attorney. 15+ Years Experience Law CPA firm

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SPECIAL NEEDS TRUSTS

Protect Personal Injury Settlements & Inherited Assets

Susan Anderson, Esq.

Carol R. M. Moss, Esq.

Hellmuth & Johnson, PLLC

8050 W. 78th Street

Edina, MN 55439

952-941-4005

www.hjlawfirm.com

susan anderson attorney
Susan Anderson, Attorney
  • 15+ Years Experience
    • Law
    • CPA firm
    • Financial Trust Management
    • President & CEO of ING National Trust
  • Specialty:
    • Estate tax consultant and preparation
    • Estate planning: Wills, Power of Attorney, Health Care Directive
    • Business Succession
    • Special needs planning for disabled family members
    • Charitable planning
    • Probate
    • Guardianship / Conservatorship
    • Trust Department Legal
    • Litigation – Will and Trust Disputes
  • Wills for Heroes Volunteer – Firefighters & Police Officers
  • PACER (Parental Advocacy Center Educational Rights) – Children w/Disabilities

Estate Planning, Probate, and Business Succession

2

carol r m moss attorney
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

photo

Personal Injury and Medical Malpractice

3

coordinated legal approach
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
minnesota medical assistance
Minnesota Medical Assistance

Two Main Criteria

  • Asset Test
  • Income Test
two types of trusts
Two Types of Trusts
  • Special Needs Trust

Beneficiary’s Funds

  • Supplemental Needs Trust

3rd Party Funds

Funds considered

“unavailable” for Medical

Assistance qualification

special needs trust
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

7

special needs trust1
SPECIAL NEEDS TRUST
  • Requirements
    • Creator/Grantor: Parent, grandparent, legal guardian, conservator or court

8

special needs trust2
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

9

special needs trust3
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

10

special needs trust4
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

11

special needs trust5
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

12

special needs trust6
SPECIAL NEEDS TRUST

Termination

Terminates 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

13

special needs trust7
SPECIAL NEEDS TRUST

Trustee

Cannot be the beneficiary

Individual or corporate fiduciary

Trustworthy, organized, time to handle matters, geographic location

Co-trustee – individual and corporate trustee option

14

special needs trust8
SPECIAL NEEDS TRUST

Continuing court supervision required?

No - parents/grandparents are grantors

Yes – guardian or conservator

Guardian or conservator

Order approving litigation settlement, verdict amount, divorce decree

Confirm trustee

Annual Accounting

Varies by jurisdiction

15

supplemental needs trust
SUPPLEMENTAL NEEDS TRUST

Funded by third party funds (someone other than the beneficiary, or beneficiary’s spouse*

Inheritance

Intervivos

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

16

estate tax mn estate taxes
ESTATE TAXMN Estate Taxes
    • For amounts over $1,000,000 the following applies
  • Rate +$
  • $ 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.

supplemental needs trust1
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

19

supplemental needs trust2
SUPPLEMENTAL NEEDS TRUST

Administration

Same/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

20

supplemental needs trust3
SUPPLEMENTAL NEEDS TRUST

Termination

Terminates 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

21

supplemental needs trust4
SUPPLEMENTAL NEEDS TRUST

Trustee

Cannot be the beneficiary – deemed “available”

Individual or corporate fiduciary

If 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

22

trust or structured settlement
TRUST OR STRUCTURED SETTLEMENT

When is a trust beneficial to a beneficiary versus a Structured Settlement?

23

case studies
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.

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Questions…

Susan Anderson, Esq.

Carol R. M. Moss, Esq.

Hellmuth & Johnson, PLLC

8050 W. 78th Street

Edina, MN 55439

952 941 4005

www.hjlawfirm.com