SNA Addresses NAMI Convention

Convention attendees learn how to use an SNT to purchase a home.

SNA member attorneys recently shared the basics of special needs planning with attendees of NAMI’s (National Alliance on Mental Illness) annual convention, held in San Antonio, Texas. Mary Alice Jackson Sarasota, Florida, and Steve Dale, Pacheco, California, began with an overview of government benefits and the role played by special needs trusts (SNTs) in protecting eligibility for means-tested public programs. “Think of an SNT as a private social system,” suggested Steve. “During the course of your loved one’s life, public benefits and social service systems will inevitably change. You need to design a trust that’s flexible enough to adjust to new circumstances.”

They also discussed the Affordable Care Act, stressing that each family’s personal situation will determine whether soon-to-be available private insurance options will be preferable to Medicaid. The group then split in two for breakout sessions on guardianship and its alternatives, and purchasing a residence with an SNT.

Guardianship and Alternatives

“Guardianship, which involves a loss of privacy and civil rights, has limited application when an individual has a mental illness,” explained Mary Alice. “Legal capacity among individuals with mental illness can fluctuate, and it’s important to balance the desire to maximize independence and the need to take protective action when health or financial well-being are threatened. Talk with your guardianship attorney about what realistic results you can expect from having a guardian appointed.”

SNA members Steve Dale and Mary Alice Jackson gave an overview of special planning basics.

She outlined the various “levels” of guardianship and powers of attorney (POA), pointing out that advance directives can be revoked at any time and that a financial POA simply adds a decision-maker to the mix; it doesn’t prevent someone from making disastrous decisions on their own behalf.

She further pointed out that none of these tools is a panacea. “You may be able to place a ward in treatment, but you can’t force-feed them medication or otherwise guarantee their active participation.” She concluded by observing that guardianships and POAs may be most effective for managing contracts and housing and for obtaining information about the status of an individual’s treatments.

Buying a Home

“Establishing a sustainable living situation for a family member with mental illness is a huge concern, and housing is the single biggest issue that my clients face,” began Steve. He then explained in detail how an SNT can be used to purchase a house and under what circumstances it can be left to a remainder beneficiary without being subject to Medicaid payback.

If the trustee of an SNT holds the title for a house serving as home to the beneficiary, the residence isn’t considered a countable resource by means-tested government benefit programs. It’s important, though, that the home be purchased outright, rather than through a mortgage. “Mortgage payments by the trust are considered disbursement to a third party and, therefore, in-kind support and maintenance in the form of shelter,” said Steve. “So each mortgage payment which would reduce the individual’s Supplemental Security Income (SSI).” Home improvements funded by the SNT are not countable, he continued, but operating expenses, such as the cost of electricity or heating fuel would be.

Stopping by the SNA Booth

Brian Rubin, Buffalo Grove, Illinois, joined Mary Alice and Steve in staffing SNA’s exhibit hall booth, which was heavily trafficked. “Many of the visitors already had legal documents in place but wanted advice on how frequently to update them. Whenever there’s a change in family situation, such as a new family member, they should be revisited. But, at the least, they should be reviewed every five years.”

“There were lots of questions concerning the Affordable Care Act,” adds Mary Alice. “Most people are still pretty confused about what it will mean to them.”

“Lots of visitors to the booth were eager to share their personal stories with us,” said Steve. “We did our best to help.”