N s t I t u t E
E thical i ssuEs in E ldEr
l aw and s pEcial n EEds
Prepared in connection with a Continuing legal Education course presented
at new York County lawyers’ association, 14 Vesey street, new York, nY
scheduled for october 4, 2011.
N Y C L A - C L E
nYCla’s Ethics institute
Bernard a. Krooks, Littman Krooks LLP
F A C u Lt Y :
sarah d. Mcshea, Law Offices of Sarah Diane McShea
ira K. Miller Esq.
Elizabeth Valentin, Littman Krooks LLP
2 TransiTional and non-TransiTional MClE CrEdiTs:
This course has been approved in accordance with the requirements of the New York State Continuing Legal Education
Board for a maximum of 2 Transitional and Non-Transitional credit hours: 2 Ethics.
Information Regarding CLE Credits and Certification
Ethical Issues in Elder Law and Special Needs Planning
October 4, 2011, 6:00PM to 8:00PM
The New York State CLE Board Regulations require all accredited CLE
providers to provide documentation that CLE course attendees are, in fact,
present during the course. Please review the following NYCLA rules for
MCLE credit allocation and certificate distribution.
i. You must sign-in and note the time of arrival to receive your
course materials and receive MCLE credit. The time will be
verified by the Program Assistant.
ii. You will receive your MCLE certificate as you exit the room at
the end of the course. The certificates will bear your name and
will be arranged in alphabetical order on the tables directly outside
iii. If you arrive after the course has begun, you must sign-in and note
the time of your arrival. The time will be verified by the Program
Assistant. If it has been determined that you will still receive
educational value by attending a portion of the program, you will
receive a pro-rated CLE certificate.
iv. Please note: We can only certify MCLE credit for the actual time
you are in attendance. If you leave before the end of the course,
you must sign-out and enter the time you are leaving. The time will
be verified by the Program Assistant. Again, if it has been
determined that you received educational value from attending a
portion of the program, your CLE credits will be pro-rated and the
certificate will be mailed to you within one week.
v. If you leave early and do not sign out, we will assume that you left
at the midpoint of the course. If it has been determined that you
received educational value from the portion of the program you
attended, we will pro-rate the credits accordingly, unless you can
provide verification of course completion. Your certificate will
be mailed to you within one week.
Thank you for choosing NYCLA as your CLE provider!
New York County Lawyers’ Association
Continuing Legal Education Institute
14 Vesey Street, New York, N.Y. 10007 • (212) 267-6646
Ethical Issues in Elder Law and Special Needs Planning
Tuesday, October 4, 2011, 6:00 PM – 8:00 PM
5:30PM – 6:00PM Registration
6:00PM – 6:10PM Introduction and Announcements
6:10PM -- 8:00PM Discussion
*** There will be a ten minute break during the program.
New York County Lawyers Association
October 4, 2011
Case Study # 1
Mr. and Mrs. Smith come to the office to speak to you about setting
up a Special Needs Trust for JORDAN, who has just turned 18. JORDAN had
a lawsuit settlement when he was injured due to an automobile accident at
age 8. The initial recovery was $67,000, the full policy of the defendant less
legal fees. The funds have been held jointly with an officer of the bank with
Mrs. Smith. They are now valued at $150,000. The banks have been calling
to tell Mrs. Smith to bring JORDAN in so that the bank accounts can be paid
to him pursuant to the Infant Compromise Order.
JORDAN has developmental delays but will graduate from high
school this year (with a local diploma) and then attend a special program at
CUNY to train him in the culinary arts. He knows how to read and passed
the English Regents. Math is his big problem.
Mr. and Mrs. Smith want JORDAN to receive the benefits for which
he is eligible. They went down to Social Security and were told that they
can’t apply for SSI because of the money.
You tell Mr. and Mrs. Smith that JORDAN can either give them all the
money and delay applying for SSI or they can set up a trust for him. They
hate the idea of the payback of the SNT, so they prefer the gifting of
They don’t want JORDAN to know how much money he has, because,
you know 18 year olds! You tell them to bring in JORDAN and that you will
then be able to implement the plan.
Whom do you represent?
Who will pay for the consultation? Who will pay for any follow‐up?
Mr. and Mrs. Smith bring JORDAN in. JORDAN is very close to them,
you can tell, and he values their opinion, you can tell. While Mr. and Mrs.
Smith are in the room, you explain to JORDAN that he has some money in
the bank that prevents him from getting his own spending money each
month. You tell him that if he lets his parents open a new bank account for
him, he will be able to get $761/month to spend as he wishes. You ask him
if this is okay with him. He says sure. Is this an ethical discussion?
You then hand JORDAN a new Power of Attorney with all imaginable
powers. You ask JORDAN if it’s okay with him if he lets his parents handle
things for him in case he ever got hurt and couldn’t make his own decisions.
He says sure. He signs all of the powers, including the Major Gifts Rider.
You serve as notary. His parents sign before you as agents. Your staff
serves as witnesses. Have you acted ethically?
All goes as planned, and JORDAN gifts the money via Power of
Attorney. Then, when he turns 21, he falls in love with someone
“unacceptable” to his parents. They forbid him from seeing her. He
decides to get married, and demands his bank book from his parents. They
refuse to give him the money. His fiancée’s brother is a lawyer and calls
you about the transactions. Are you in trouble?
Case Study #2
POPS first came to see you in 1995, when he was an active 70 year old. At that
time you prepared his Will, but he didn’t want to give a Power of Attorney to anyone.
He always wanted to stay in control. He owned a business and he employed his son.
Eventually, he advised that he assumed his son would take over the business and he
would change his will when that occurred to leave the business to him and his liquid
assets to his 2 daughters. He and MOMS executed mirror wills, providing first for each
other via disclaimer trusts and then for the children or grandchildren.
POPS called every few years to see what was happening with the estate tax laws.
In 2000, MOMS passed away. POPS was devastated. He wanted to redo his will,
but you advised that so long as his distributions to the children hadn’t changed, there
was no need to change anything in the will. He decided not to disclaim any assets to
fund the disclaimer trust, because he wanted to stay in control.
In 2005, POPS suffered a stroke and needed care at home to provide for his
activities of daily living. LOLA, someone a neighbor knew of, is the home attendant.
Under her watchful eye, POPS makes a wonderful recovery. After a few months, POPS
and LOLA are an item.
In 2007, his children come to see you because they feel that POPS is under LOLA’s
spell. SONNY is concerned that the business is not being run well. POPS still shows up
every day, but SONNY feels that he isn’t making good business decisions. SONNY feels
that he is being shut out of important decisions. He feels that POPS will run the business
into the ground. He asks you to talk to POPS and see if he wants to relinquish any
power. He doesn’t want you to tell POPS that he came to see you. May you keep the
visit confidential from POPS?
The children also want to know if there is a Power of Attorney in place. You tell
them that there is no Power of Attorney. Is this ethical? They tell you that LOLA has
taken control of POPS’ life, and that they think his considerable assets have significantly
diminished. They want to know what they can do about it. You tell them that they can
bring a Guardianship petition for POPS. Is this ethical?
They already knew about Guardianship, but they are afraid that POPS will be very
angry if they go to court. They decide to speak with him instead. You promise to call
POPS under the pretext of checking in, and you will not tell POPS about the visit. Is this
POPS is glad to hear from you and makes an appointment to meet with you. He is
thinking about getting married and even if he doesn’t, he wants to change his will. He
doesn’t want Sonny managing the business – he thinks he’s way too bossy with the staff
and is sure he’ll cause problems. LOLA has impeccable judgment and gets along well
with everyone. So he really wants to leave all of his estate to LOLA. You tell POPS that
this is not a good idea. He insists on carrying out his plan. You refuse to prepare the
documents. Is this ethical?
POPS leaves the office in a huff and tells you that he will never let you represent
You hear nothing else from the family until October 2011. The children come in to
see you. Should you have allowed the appointment to be made?
In short, POPS has had a rapid cognitive decline since 2007. He has refused to
relinquish control over the business and there is no income coming in. All the employees
have been fired. He is barely lucid and often does not recognize them or even know
what year it is. Lately, he won’t let the children into the house, and he hangs up on them
when they call. They spoke to his accountant, who told them that in 2010, the only
income was Social Security – no interest, no dividends and no withdrawals from IRAs.
They believe that LOLA must have raided the funds. The house was transferred to LOLA
via a Power of Attorney purportedly executed by him in her favor in January 2011, but
they didn’t recognize his signature. They also have hired a private investigator who has
found that LOLA had married 2 of her former patients, both of whom died shortly after
They are now ready to proceed with legal Guardianship. They feel that you are the best
person to represent them, because you understand the danger to POPS. May, should,
would you accept to represent them?
Case Study #3
Mom, 80 years of age, comes to see you with 4 of her 6 children.
Sonny lives with Mom and has assisted her by shopping, dispensing her
medicines, scheduling doctor’s appointments and providing transportation
for Mom for many years – he returned back home after Dad died 6 years
ago. Sonny is divorced and has no children. Mom appreciates the help and
knows that she couldn’t have lasted in the home without him – Mom has
post polio syndrome and now walks with a walker. Her diabetes has been
acting up and she has already suffered one stroke.
The family had a pow‐wow over the weekend, and they want to act
to make sure that the house is protected for generations to come. The
house is clearly Mom’s most valuable asset – it’s located in Sag Harbor and
appraised at $1,500,000. Most of Mom’s savings are gone, just paying the
taxes on the house. Because the steps are so steep and the living quarters
are upstairs, and because her blood pressure has been so high, Mom
believes that she may need a nursing home in the foreseeable future. Mom
is okay with this, so long as the house is protected.
Mom spoke to a social worker at the nursing home who told her that
the home could be transferred to a care giving child and Mom would not
have to wait 5 years for the Medicaid program to pay for her in a nursing
home. Mom wants to protect the house but also wants to make sure that it
will be there for all of the children, and the grandchildren and even the
great‐grandchildren. All of the children (the 4 present assure you) are
united in the effort to preserve the house.
1. Mom wants to know if you will prepare documents to transfer
the house to Sonny.
2. She wants to know how long Sonny has to own the house for it
not to count as her asset if she needs a nursing home.
3. She wants to know whether you can prepare a Deed in which she
transfers the house to Sonny and also a second Deed for him to
sign right away in which he will transfer it to his siblings.
4. She asks if Sonny won’t agree to this second Deed right away, or
if there is a waiting period before which Sonny can re‐convey the
Deed, whether you will prepare an agreement:
a. that Sonny will transfer the house to his siblings as soon as
he’s owned the house long enough for Medicaid, signed by her and
b. the same agreement, signed by Mom and Sonny and the
c. the same agreement, signed by Sonny and the siblings, but
5. She asks if you will prepare a Will for Sonny, to be executed prior
to the Deed, in which he will leave the house to his siblings upon his
death. If so, she also asks if you will prepare an agreement in which
Sonny states that he will not change that provision in his Will.
You do not prepare any of these agreements but you do
prepare a new Deed from Mom to Sonny. Two years later, Mom has
a stroke and requires nursing home care. Sonny is still living in the
house. He asks you to prepare a Medicaid application.
1. He shows you the original Deed. What investigation, if any,
do/should/would you do as to whether or not any other
agreements or Deeds have been prepared?
2. He shows you the original Deed as well as a second deed
from him to his siblings prepared a month after the first
Deed that you prepared. Do you ask him what made him
sign this second Deed?
3. He tells you that this second Deed was never recorded. He
wants to know which Deed is better to use for the Medicaid
application. How do you respond?
Mom’s Medicaid has been approved, and the family finds the
home too expensive to maintain. Mom is now mentally incapacitated.
Sonny and his siblings want to sell the home.
1. Will you represent them at the closing?
2. What if Mom is deceased?
3. What if Sonny never conveyed the home to his siblings and
he alone wants to sell the home and he is the sole owner?
What if Mom had never come to see you, but Sonny alone had come
in with a power of attorney that allowed unlimited gift‐giving. Would you
prepare the Deed without meeting Mom? What if Mom was already in a
nursing home? And Sonny told you that he was an only child, and that
Mom never had made a Will. Would you prepare the Deed? Should you do
any independent investigation?
2010: Ball of Confusion: ELdER LAW
By Bernard A. Krooks & Michael Gilfix
Navigating the System
Changes to both the Medicare and Medicaid programs, as well as recent
court rulings on eligibility, will have a major impact on seniors
dvising clients on Medicare and Medicaid Generally speaking, the Act requires most U.S.
planning and eligibility has become increas- citizens and legal residents to have qualifying health
ingly complicated. Elder law practitioners insurance. Those without coverage will pay a penalty,
must struggle to keep up with the ever-changing which will be phased in over a few years. Exemptions will
health care “wild west” and consider the impact be granted from the penalty for financial hardship and
of new laws on both the federal and state levels, as religious reasons, among others.
well as the effect of recent court rulings on program So, what does this all mean for our senior clients and
eligibility. And advisors must take into account the pos- those with special needs?
sibility that their state may withdraw from the Medicaid
program as costs to participate increase. Improved prescription drug benefit. The passage of
the Act improved Medicare prescription drug benefits.
Health Care Reform Seniors who enter the “donut hole” in 2010 receive a
Unless you’ve been living under rock, you know that $250 rebate. The donut hole, which first took effect a
in 2010, Congress passed and the president signed few years ago, is a coverage gap in Medicare Part D.
into law the Patient Protection and Affordable Care Basically it means that once your client and his pre-
Act (the Act). The Act contains numerous provisions scription drug plan have spent a certain amount of
that affect, or will affect, seniors in our country. The money for covered drugs, your client has to pay all
Act is expected to cost approximately $940 billion over costs out-of-pocket up to a certain limit. The Act plans
the next decade. To help offset the cost of health to gradually eliminate the donut hole by 2020, when
care reform, the Act imposes higher taxes, fees and it’s expected to be fully closed. In addition, the Act
reduced payments to Medicare providers. According provides that in 2011, pharmaceutical manufacturers
to the Congressional Budget Office, the Act is projected whose drugs are covered by Part D must provide a
to reduce the federal deficit by about $143 billion over 50 percent discount for brand-name drugs for those
10 years. in the donut hole. Moreover, federal subsidies are pro-
The changes to the Tax Code include restrictions on vided for generic drugs.
the use of flexible spending accounts, limitations on Payments to Medicare Advantage plans (Part C),
the deductibility of medical expenses, increases in the the private-plan part of Medicare, will be reduced
Medicare tax on wages and a new tax on unearned income to make them on par with payments made through
for certain taxpayers. In addition to these increased taxes traditional Medicare. The excess payments to Part C
for individuals, there will also be new assessments on plans have allowed these privately run plans to offer
insurance and pharmaceutical companies. more benefits than traditional Medicare. So, if your
clients participate in one of these plans, don’t be
Bernard A. Krooks, far left, is a partner in the New York surprised if some of their optional benefits such as
City, White Plains and Fishkill, N.Y. firm vision or dental are reduced. It’s hoped that these
of Littman Krooks LLP. Michael Gilfix is reductions will extend the life of the Medicare Trust
a partner in the Palo Alto, Calif. firm of Fund, which according to some estimates is expected
Gilfix & La Poll Associates LLP to go broke in 2017.
JaNuary 2011 truStS & eStateS / trustsandestates.com 39
2010: Ball of Confusion: ELdER LAW
Free preventive care services. The Act provides for income they report to the Internal Revenue Service.
free preventive care services such as mammograms, The income thresholds have historically gone up based
colon and breast cancer screenings and an annual on an inflation index. The Act freezes the Medicare
physical exam starting in 2011 for Medicare ben- Part B premium threshold from 2011 through 2019,
eficiaries. As a result, there will be no co-payment or which means that more people will be paying higher
deductible for an annual wellness visit, which includes Part B premiums. Traditionally, Medicare hasn’t been
the creation of a personalized prevention assessment a means-tested program, although that appears to be
plan. This shift in focus from treatment to prevention changing.
attempts to reduce Medicare costs in the long term.
Prevention services include referrals to education and More community-based delivery systems. The Act
preventive counseling or community-based interven- makes some changes to the way long-term care will be
tions to address risk factors. delivered in the United States. The Act attempts to shift
our health care delivery system away from the current
institutional bias to a more community-based system.
Under current law, many seniors are forced into nursing
The spouse of a nursing home homes because they don’t have the resources to stay at
home and aren’t eligible for long-term care insurance
resident is entitled to more assets due to a pre-existing condition. The Act establishes
the Community First Choice Option, whereby states
than the spouse of an at-home are given more federal money if they set up commu-
nity services for residents who would otherwise be in
patient. nursing homes. States will be able to provide commu-
nity-based services to seniors and other individuals with
disabilities who are Medicaid-eligible and who require
New advisory board. The Act creates an Independent an institutional level of care. This program ends in 2016,
Medicare Advisory Board (the Board) that will have five years after it starts in 2011.
authority to make legislative proposals with recom-
mendations to reduce the cost of Medicare. While Spousal impoverishment protections. The Act also
there are restrictions on what the Board can propose, mandates that states include spousal impoverishment
its recommendations will take effect if Congress doesn’t protections, such as the community spouse resource
enact an alternative proposal that achieves the same cost allowance, in their home-based waivered Medicaid
savings. Congress is required to re-examine the Board in programs. Since the late 1980s, spouses of nursing
2017 and has the power to terminate it. home residents have been entitled to enhanced pro-
tections under law. Although the protections vary by
Higher premiums for some. The Act ties Medicare state, the spouse of a nursing home resident gener-
Part D premiums to income and moves more Part D ally is entitled to keep more assets and income than
and Part B beneficiaries into higher income catego- a spouse of someone who is receiving care at home
ries, although the majority of Medicare beneficiaries paid for by Medicaid. This new program will apply
aren’t affected. Thus, those affected will pay higher to Medicaid waiver programs and will also end after
premiums due to a freeze on income thresholds. For five years. A Medicaid waiver program allows states
example, the Medicare Modernization Act of 2003 to provide certain services to their residents, yet still
changed how Medicare Part B premiums are calcu- receive federal matching funds.
lated for some higher income beneficiaries. This law,
which took effect in 2007, requires higher income CLASS program. The Act establishes the Community
beneficiaries to pay a higher Part B premium based on Living Assistance Services and Supports program
40 truStS & eStateS / trustsandestates.com JaNuary 2011
2010: Ball of Confusion: ELdER LAW
(CLASS). CLASS is akin to a national long-term care One of the biggest questions regarding the implemen-
insurance plan in many respects. This was the brainchild tation of CLASS is, “Who will participate?” According
of the late Sen. Edward M. Kennedy (D-Mass.) and had to some estimates, only about 5 percent of eligible
been in the works for several years. CLASS is intended employees choose to participate in employers’ private
to allow seniors and those with disabilities to maintain long-term care insurance benefit programs, and only
their independence and alleviate the burden on caregiv- about 7 million Americans own private long-term care
ers, while reducing the institutional bias in our health policies. Initially, the long-term care insurance industry
care system. Another goal is to ease the strain on the lobbied against CLASS, fearing that it would reduce
Medicaid program by attempting to get more Americans people’s incentives to purchase private long-term care
to recognize the need to plan for long-term care at an insurance. Others argue that it will heighten people’s
earlier age and to contribute towards the cost of that care. awareness about the need to plan for long-term care and
CLASS is set to take effect in 2011, although it’s unlikely actually increase sales of long-term care insurance since
to be fully implemented until the Secretary of Health the CLASS daily cash benefit may be in the $50-to-$75
and Human Services (HHS) has issued regulations, range. The average cost of long-term care in the United
since many of its provisions are subject to interpreta- States is significantly higher than that. In fact, in some
tion, such as setting the premium and benefit levels and major metropolitan areas, the cost can exceed $200,000
the disability triggers for receiving benefits. HHS isn’t per year. Perhaps long-term care insurance can be used to
expected to issue regulations until 2012; therefore, the fill in some of the gaps in the CLASS program similar to
CLASS program might not take effect until 2013. the way Medigap policies fill in the gaps in Medicare.
Under the program, employees may make vol- Under the Act, CLASS is supposed to pay for itself
untary payroll deductions as determined by HHS, through premiums; the government can’t subsidize it.
in exchange for the right to receive cash payments if During the first five years CLASS is in effect, this
they’re unable to perform daily living activities (that shouldn’t be a problem since no participants will be
is, toileting, dressing, transferring, eating and bathing) entitled to cash benefits during this time. However, after
or suffer from cognitive impairment. The cash benefits the first five years, the long-term viability of CLASS
are to be used for the purchase of community living will depend upon whether enough people participate.
assistance services and supports such as a home health Will enough young, healthy people contribute so the sys-
aide, transportation, wheelchair, lift, adult day care tem isn’t financially strained by significant payments to
and respite care or to pay for care in an assisted living people who need the benefits? We won’t know the answer
facility or a nursing home. Only working individuals to this question until CLASS develops a track record.
are eligible. Retired individuals (unless they work part- According to one government estimate, only 5 percent to
time), non-working spouses and unemployed indi- 6 percent of those eligible to participate would actually
viduals aren’t eligible to participate. The premiums sign up for the CLASS program. Other estimates predict
and benefits will be determined by age, with younger even lower participation. To attract healthy employees,
people paying less than older individuals. Participants the government is hopeful that the CLASS regulations
will be required to pay premiums for five years (the so- will provide for a streamlined sign-up process and make
called “vesting period”) before they can receive any cash it easy to have the premiums deducted from employees’
benefits. The daily benefit hasn’t been set but won’t be paychecks. One way of doing this is to offer employees
less than $50, with no lifetime limit. The Congressional the opportunity to pay their premiums through payroll
Budget Office assumed a daily cash benefit of $75 and a deductions. In that case, all employees must be automati-
monthly premium of $123 in one of its cost estimates. cally enrolled in the program unless they opt out, similar
The premiums are expected to remain constant, unless to the way some firms administer their 401(k) plans. It’s
an increase is needed to maintain the solvency of the hoped that automatic enrollment will increase participa-
program. There are no underwriting requirements and tion by employees, which in turn, would strengthen the
those with pre-existing conditions are accepted. financial condition of the CLASS program.
JaNuary 2011 truStS & eStateS / trustsandestates.com 41
2010: Ball of Confusion: ELdER LAW
Other provisions. While there are many other provisions by legislation, regulation or other state (or District of
in the voluminous Act, including insurance reforms, Columbia) Medicaid program process.
nursing home staffing, quality of care provisions and
elder abuse protections, the foregoing is a summary of Withdrawal From Medicaid
some of the more salient provisions affecting seniors Medicaid is a program funded in part by the fed-
and those with disabilities. Of course, with the mid-term eral government and in part by state governments.
elections now behind us, it’s possible that some of the The cost of the Medicaid program at the state level
provisions of the Act could be modified or even elimi- has increased consistently to the point where it con-
nated. Only time will tell. sumes enormous portions of state budgets. In Texas,
for example, Medicaid consumes 20 percent of the
State Application of dRA annual budget. This percentage is even higher in other
The Deficit Reduction Act of 2005 (DRA) was signed states. Nationally, the federal government covers only
into law on Feb. 8, 2006. It substantially changed and 57 percent of the program’s cost.
restricted planning steps that can be taken to protect Many state governors have begun expressing
assets and achieve Medicaid eligibility for skilled nursing concern about mandates contained in the Act for
Medicaid expansion, slated for 2014. States will then
be required to expand Medicaid to cover all non-elderly
Many states are considering who have family incomes below 136 percent of the fed-
eral poverty level. For three years, the federal govern-
withdrawal from the Medicaid ment will subsidize the cost of expansion. In 2017,
states will be required to contribute additional dollars
program. to cover the cost. Importantly, the federal government
won’t subsidize the cost of administering an expanded
Medicaid program at the state level.
facility services, in particular. These changes affected As a result, many states (with both Republican
the treatment of annuities, residences, the lookback and Democratic governors) are considering withdrawal
period, periods of ineligibility flowing from gifts and from the Medicaid program. Withdrawal is most seri-
contracts with continuing care retirement commu- ously being considered in Nevada, South Carolina,
nities.1 While the DRA’s provisions are relatively clear, Texas, Washington and Wyoming. The stated goal is
implementation at the state level has been sporadic to consider replacing Medicaid and its many mandates
and inconsistent. Some states implemented the DRA with state programs that are more flexible and presum-
immediately after it became law. California, the ably employ stricter eligibility criteria.
lone holdout, still hasn’t implemented it. Some states Since Medicaid is the primary source of payment
made its new terms effective as of the date specified in for nursing home care, these developments are a
implementing state legislation or regulations. Other source of worry for millions of Americans. Should
states, such as Illinois, have applied DRA restrictions Medicaid become unavailable or subject to restric-
and policies retroactive to Feb. 8, 2006, which is the ear- tions in your state, planning will be compromised
liest possible retroactive implementation date. There are and more challenging.
significant variations in how provisions relating to the Keep a careful eye on these developments, particu-
exempt residence are incorporated at the state level. larly if you practice in one of the identified states. Most
Here’s the most important lesson: Don’t assume observers agree: Something has to give.
that just because you understand the DRA’s provi-
sions, you also understand how your jurisdiction A Step in the Right direction
implements the DRA. You must be familiar with how On Aug. 15, 2010, New York Governor David Paterson
your jurisdiction interprets and applies the DRA, be it signed into law the Palliative Care Information Act.
42 truStS & eStateS / trustsandestates.com JaNuary 2011
2010: Ball of Confusion: ELdER LAW
This “right to know” legislation requires that physi- to [Shoemaker] after their deaths,” because “she’s like a
cians and nurse practitioners provide terminally ill daughter to us.” Given Donna’s incapacity to make a new
patients with information and counseling regarding will, the attorney drafted a joint trust, naming Ollie and
palliative care and end-of-life options appropriate Donna as grantors and initial primary beneficiaries, Ollie
to the patient. The information may be provided ver- as initial trustee and Shoemaker as successor trustee and
bally or in writing. If a patient lacks capacity to make remainder beneficiary. The attorney reviewed the trust
informed choices relating to palliative care, the infor- with Ollie and Donna several times over a four-month
mation will be provided to the person with health care period before the trust was executed. On Feb. 11, 2008,
decision-making authority. Ollie executed the joint trust, signing his name and
The bill was modeled after similar legislation in Donna’s name by his power of attorney.
California. It’s hoped that the legislation will result Ollie died on Dec. 26, 2008. A family friend was
in a higher quality of life for patients and increase appointed to serve as the guardian of Donna’s person
the patients’ ability to forego aggressive but unnec- and estate. The guardian filed a petition to revoke the
essary interventions, as well as result in substantial joint trust. The trial court denied the guardian’s petition,
cost savings. holding that Ollie’s creation of the joint trust was consis-
End-of-life discussions with physicians can be very tent with Donna’s intentions and its revocation wouldn’t
powerful and influential. Research published in the be in Donna’s best interests. The guardian appealed and
Oct. 8, 2008 issue of JAMA, the Journal of the American the Court of Appeals affirmed the trial court’s ruling.
Medical Association, showed that terminally ill patients Despite some indications of incapacity, further
who discuss end-of-life care with their physicians estate planning could still take place in certain cir-
are more likely to sign a do-not-resuscitate order and cumstances through the use of a durable power of
receive hospice care. The study also found that the dis- attorney. In situations in which an attorney is able to
cussion doesn’t make patients more anxious or fearful.2 establish and document an elder’s wishes, it may be pos-
sible for the attorney-in-fact to carry out those wishes.
Powers of Attorney
In Matter of Phillips,3 an Indiana appeals court affirmed Annuities and “Income First”
the validity of a joint trust that was based on a durable Much is said and written about the DRA because of
power of attorney in arguably questionable circum- its limiting impact on asset protection planning for
stances. The lessons: draft powers of attorney with individuals facing the cost of long-term care. Johnson
care and respect for their potential power; less explic- v. Lodge4 is interesting because it employs a strategy of
itly, include specific powers with purpose and avoid Medicaid planning to increase the amount of money the
simple forms. “community spouse” may retain that’s not affected by
In 1992, Donna and Ollie Phillips executed recipro- the DRA. The result, however, is disappointing.
cal wills that provided their entire estate would pass first Benjamin and Wilma Johnson applied for, and were
to the surviving spouse and the remainder to the Riley denied, Tennessee Medicaid benefits while Benjamin
Hospital for Children. The Phillips had no children. was a nursing home resident. The Johnsons had com-
They also set up durable powers of attorney naming each bined non-exempt assets of $164,694, twice the amount
other as attorney-in-fact. In 2003, the couple befriended of Wilma’s $82,347 community spouse resource allow-
Elizabeth Shoemaker, who helped manage their house- ance (CSRA). The CSRA is the amount the community
hold affairs. Donna was diagnosed with Alzheimer’s spouse may retain while the institutionalized spouse
disease in mid-2006, and by late 2007, her condition had achieves Medicaid eligibility.
deteriorated to the point that her physician deemed her The Johnsons’ combined monthly income was about
no longer able to manage her own affairs. $1,358, which fell short of the minimum monthly main-
The couple contacted their long-time attorney in tenance needs allowance (MMMNA) by $432 per month.
late 2007 and stated that they “wanted everything to go (The MMMNA is the minimum income the community
JaNuary 2011 truStS & eStateS / trustsandestates.com 43
2010: Ball of Confusion: ELdER LAW
spouse is able to retain after the institutionalized spouse transfer funds into Medicaid pooled trusts. Program
becomes Medicaid-eligible.) The Johnsons appealed the Operations Manual System, Supplemental Security
denial, arguing that Wilma’s CSRA should be raised to Income 01120.203.B.2.b provides that individuals who
account for the MMMNA income shortfall, pursuant to use Medicaid pooled trusts, including those who qual-
42 U.S.C. 1396r-5(e)(2)(C). They claimed that a CSRA of ify for supplemental security income on the basis of
$172,800 would provide Wilma with income of $432 per age, must “meet the definition of disabled.” The State
month at a 3 percent interest rate. Medicaid Manual states that, if an individual isn’t receiv-
The district court rejected their argument. The court ing disability benefits, a determination must be made
concerning the individual’s disability.5
Considering these authorities, the Wisconsin
Transfers from an institutionalized Division of Hearings and Appeals ultimately ruled
that transfers to the pooled trust by disabled persons
spouse eligible for Medicaid to age 65-and-over aren’t divestments.6 Applicants age
65-and-older must arrange a disability determination
another spouse may result in process with the Wisconsin Disability Determination
Bureau to determine whether Social Security disability
ineligibility. standards are met. If so, the elder’s transfer to the pooled
trust isn’t a divestment.
held that the couple could cover the income shortfall Post-Medicaid Eligibility
of the community spouse by liquidating the current Generally speaking, asset transfers from one spouse
CSRA and purchasing a single premium immediate to another don’t create problems with Medicaid eli-
annuity. That way, an increase in the CSRA wouldn’t gibility when one spouse is institutionalized. This
be necessary. continues to be the case when transfers are made before
This holding doesn’t bode well for asset preservation Medicaid eligibility is established, since all assets held by
for community spouses. As the court acknowledged, a non-institutionalized spouse are counted in determin-
when the person covered by the annuity dies, the ing eligibility. If eligibility has already been established,
insurance company typically keeps the remaining however, transfers from the institutionalized spouse to
principal, if any. The remaining principal is thus lost to the community spouse can result in ineligibility. This
future generations. happened in two recent cases—one in Ohio and the
other in Oklahoma.
Implications of “Self-funding” In Burkholder v. Lumpkin,7 Rex Burkholder became
Concerning Medicaid eligibility, will a transfer pen- eligible for Medicaid in October 2007. One year later,
alty be imposed on beneficiaries over age 65 who join a Rex inherited from his mother’s trust a deed to real
pooled trust? In Wisconsin, an 86-year old beneficiary property, as well as $17,810 in the form of an annu-
transferred about $5,000 into a pooled self-funded spe- ity payment. During that same month, Rex transferred
cial needs trust while applying for Medicaid. She was the real property to his wife, Linda, in the form of a
receiving Social Security retirement benefits, but had quitclaim deed and transferred the annuity payment to
never received a disability determination from any Linda’s bank account. At the time of transfer, Rex was
government program. The local agency denied her living in a nursing home, the cost of which was being
Medicaid benefits, holding that the transfer of funds by a paid for by Medicaid. In February 2009, Linda sold the
non-disabled person was a divestiture. The beneficiary’s real property and used the money to pay off her home
agent appealed on her behalf. and her car and to remodel her home.
Several authorities provide that a finding of dis- In April 2009, the Ohio Medicaid agency mailed Rex
ability is necessary for beneficiaries of any age who a notice of restricted coverage, indicating its intent to
44 truStS & eStateS / trustsandestates.com JaNuary 2011
2010: Ball of Confusion: ELdER LAW
stop paying for the nursing home from May 1, 2009 to Adjustment,” JAMA (Oct. 8, 2008), available at http://jama.ama-assn.org/con-
April 30, 2011. Rex asked the court to enjoin the agency tent/300/14/1665.full.
from continuing its suspension of Medicaid payments 3. Matter of Phillips, 926 N.E.2d 1103, 1108 (Ind. App. 2010).
to the nursing home. The court granted the agency’s 4. Johnson v. Lodge, 673 F. Supp.2d 613 (M.D. Tenn. 2009).
motion to dismiss. 5. See State Medicaid Manual 3259.7.B.
The court held that, for post-eligibility transfers, 6. DHA Case No. MDV 38/87937 (Wis. Div. Hearings & Appeals June 9, 2008).
42 U.S.C. 1396r-5(a)(1) only permits transfers for 7. Burkholder v. Lumpkin, 2010 WL 522843 (N.D. Ohio Feb. 9, 2010).
less than fair market value from the institutional- 8. Morris v. Oklahoma Department of Human Services, 2010 WL 3790596 (W.D.
ized spouse to the community spouse up to the Okla. Sept. 24, 2010).
CSRA amount. The court rejected Rex’s argument that 9. Ibid. at *4.
42 U.S.C. 1396p(c)(2)(B)(i) allows post-eligibility trans-
fers between spouses in excess of the CSRA.
In Morris v. Oklahoma Department of Human
Services,8 Glenda Morris applied for Medicaid ben-
efits for in-home care. As of the application date,
Glenda and her husband Morris’ assets equaled about
$108,000. To spend down Glenda’s $57,000 spousal
share of the assets to $2,000, Leroy used about $18,000
of Glenda’s assets to purchase an irrevocable annuity,
which provided an income stream for Leroy alone. The
Oklahoma Department of Human Services (DHS)
denied Glenda’s claim for Medicaid, finding that the
annuity exceeded Leroy’s CSRA, that the purchase of
the annuity resulted in a transfer penalty and that the
annuity’s income stream could be sold in a secondary
market, making it a countable asset. Glenda appealed
The Oklahoma federal court upheld the DHS’ deci-
sion. The court held that assets attributed to the
institutionalized spouse couldn’t be transferred, after
an initial determination of eligibility, to the commu-
nity spouse. Citing Burkholder, the court stated, “If an
institutionalized spouse can ‘spend down’ that spouse’s
share by transmogrifying spousal share resources into
community-spouse income, the provisions dividing and
limiting the spousal resources are superfluous.”9
A lesson, therefore, is the usual: “Timing is every-
Spot All Together, Now!
This Polish version of the “Zolta Lodz
Endnotes light Podwodna”(“Yellow Submarine”) (81 cm. by
1. For a discussion of the Deficit Reduction Act of 2005’s specific provisions, see 58.5 cm.) movie poster was sold at Christie’s
Michael Gilfix and Bernard A. Krooks, “Throw Momma from the Train,” Trusts Vintage Film Posters Auction in London on Dec.
& Estates (March 2006) at p. 36. 1, 2010 for $1,264. The real Beatles participated
2. Alexi A. Wright, M.D. et. al., “Associations Between End-of-Life Discussions, only in the closing scene of the film; other
Patient Mental Health, Medical Care Near Death, and Caregiver Bereavement actors voiced the rest of their lines.
JaNuary 2011 truStS & eStateS / trustsandestates.com 45
Feature: Estate Planning & Taxation
By Bernard A. Krooks
Individuals With Special Needs
A variety of options are available to help families handle the
complex planning issues they face
lthough the Tax Relief, Unemployment est possible quality of life for the individual with
Insurance Reauthorization and Job Creation special needs and other family members. Often, this
Act of 2010 reduced the importance of estate involves securing eligibility for government-financed
tax planning for many, it didn’t obviate the need for programs and supplementing those programs with
estate plans for non-tax reasons such as asset protec- private funds.
tion, guardianship, elder law and special needs planning. Although some parents are aware of the array of
For families who have members with special needs (for legal issues they must confront, many arrive at the
example, an individual who has physical or mental dis- attorney’s office concerned only about what will happen
abilities), the estate planning concerns are magnified. on their deaths and perhaps wondering about a “special
These families face many difficult and complex plan- needs” trust. Simply put: these are discretionary trusts
ning issues in addition to the typical issues faced by all drafted so that the income and assets aren’t counted
families. After all, what could be more important than as resources of the beneficiary with disabilities for
making sure the future of a family member with special purposes of establishing eligibility for means-tested
needs is secure? government benefits. Various types of these trusts exist
Planning must assure appropriate management of and each one has its advantages and disadvantages.
finances and personal decisions in the event both par-
ents become disabled or die, with a goal towards avoid- Other Considerations
ing future problems. Parents might also need to con- Before deciding on a particular planning option, practi-
tinue making decisions for an individual with special tioners should consider two issues:
needs during adulthood, provide for future residential
needs and find someone to care for the individual when 1. Using a team approach. Many support groups and
they’re no longer able. community services are available to assist families who
Unfortunately, there’s no “training manual” on how have members with special needs. But at some point,
to do things the “right way.” In fact, there’s probably no it becomes necessary to obtain help from competent
single “right” way as the needs and concerns of each professionals. In my experience, the best estate plans
individual with special needs are different. Nevertheless, developed for families who have members with special
as part of this process, all parents likely need to find needs arise from a team approach. In addition to the
necessary care and services, foster the development special needs planning attorney, it’s critical that the
of independent living skills and make sure their child family’s accountant and its insurance and financial
receives an appropriate education. In addition, they advisors be involved in the process. Of course, the
also should maximize financial resources for present family is an integral part of this process as well. If
and future expenses, which will allow for the high- appropriate, the individual with special needs should
be included in these discussions to the extent possible.
In these types of situations, practitioners must listen to
Bernard A. Krooks is a partner in the New the needs and concerns of the family and individual
York City, White Plains and Fishkill, N.Y. firm with special needs. Only after hearing these needs and
of Littman Krooks LLP concerns can they design an appropriate estate plan.
30 truStS & eStateS / trustsandestates.com july 2011
Feature: Estate Planning & Taxation
2. Applying for government benefits. When review- 93). Only an individual with special needs under age
ing the individual’s need for governmental benefits, 65 can be the beneficiary of an SNT, which must be
practitioners should distinguish between those that established by a guardian, parent or grandparent. Thus,
are means-tested and those that aren’t based on the without a living parent or grandparent, court interven-
individual’s income or assets. Means-tested benefits tion is necessary to establish an SNT. Many states have
are reduced or denied when income or assets are expedited court proceedings so that the trust can be
above certain limits. The two primary means-tested established without a plenary guardianship proceeding.
benefits that will be important in most instances are This is the preferred approach if there’s no other reason
Supplemental Security Income (SSI) and Medicaid. to appoint a guardian for the individual with special
Both have strict asset and income requirements to needs. For example, an SNT can be for a 45-year-old
qualify. If your client is eligible for Medicaid, it will who has multiple sclerosis with accompanying physical
cover long-term health care, which can be extremely disabilities but wouldn’t otherwise need a guardian. If
important for an individual with special needs. SSI is a guardian is necessary because the individual doesn’t
a federal program, which provides a monthly income have legal capacity (as would typically be true in the case
supplement to meet basic needs such as food, cloth- of a minor with special needs), then an SNT may be
ing and shelter. The various programs have different established as part of that proceeding.
rules regarding the treatment of unearned income and Although a parent, grandparent, court or guard-
in-kind support from third parties. These differences ian establishes the SNT, the trust is funded with assets
often dictate the provisions that should be included belonging to the individual with special needs. That’s
in the client’s estate planning documents. The goal is why many call this a “first-party trust”—it’s funded with
to assure that the individual with special needs isn’t the assets of the individual with special needs as opposed
disqualified from these programs because of assets to someone else such as a third party (for example, a par-
placed in his name. ent). In many cases, the individual receives these funds
as a result of a personal injury or medical malpractice
What’s in a Name? lawsuit pursued on his behalf, an inheritance or as child
First, let’s start with a little nomenclature. If the assets support payments as a result of a matrimonial action. In
used to fund the trust belong to the individual with other cases, when the disability occurs later in life, the
special needs, I’ll refer to that type of trust as a special individual may have accumulated the assets used to fund
needs trust (SNT).1 A variation of the SNT is a “pooled the trust before he had special needs.
trust.” This is an SNT in which a non-profit organiza- Pursuant to OBRA-93, the funding of an SNT doesn’t
tion typically serves as trustee. It has slightly different trigger a penalty period with respect to the individual’s
requirements than an SNT. eligibility for Medicaid or SSI. Generally, transfers of
If the assets used to fund the trust belong to any per- assets within the 60-month look-back period will result
son other than the individual with special needs, then in a period of ineligibility for Medicaid, and transfers
I’ll refer to that type of trust as a “supplemental needs within a 36-month look-back period will result in a peri-
trust.” Some practitioners refer to these types of trusts od of ineligibility for SSI. However, there’s an exception
as “third-party trusts.” Keep in mind that there’s no one for transfers to SNTs under OBRA-93. Those transfers
correct name for each of these trusts and that the ver- aren’t subject to the transfer-of-asset provisions; there-
biage may differ among advisors. The most important fore, there’s no period of ineligibility with respect to SSI
factor, as we shall discuss below, is whose assets are being or Medicaid as long as the assets are transferred into the
used to fund the trust. SNT while the individual is under age 65. In addition,
assets held in an SNT don’t count as a resource of the
SNTs individual with respect to his eligibility for Medicaid
An SNT is a discretionary trust authorized by or SSI.
42 U.S.C. Section 1396p(d)(4)(A), enacted as part of the In exchange for the foregoing exceptions, an SNT
Omnibus Budget Reconciliation Act of 1993 (OBRA- must contain a payback provision requiring that the
july 2011 truStS & eStateS / trustsandestates.com 31
Feature: Estate Planning & Taxation
trustee, upon the death (or earlier termination of the Pooled Trusts
trust) of the beneficiary, reimburse the Medicaid pro- A pooled trust also is a discretionary trust created under
gram out of trust assets the amount of Medicaid OBRA-93. It’s created and managed by a non-profit
expended on behalf of the beneficiary of the trust. The organization. Basically, there’s a master pooled trust,
Medicaid payback takes priority over other items and separate sub-accounts are set up to manage the
such as funeral expenses, claims against the trust estate finances of each particular beneficiary. To become
and residuary beneficiaries. However, trust administra- part of a pooled trust, the beneficiary typically signs an
tion expenses and taxes may be paid prior to satisfying agreement and transfers his funds to the trust. The funds
the Medicaid payback. The payback provision doesn’t are pooled together for investment and management
apply to SSI benefits. It should be noted that there’s no purposes, but each person’s assets are accounted for in
requirement that the trust have sufficient assets on the his separate sub-account.
death of the beneficiary to fully reimburse Medicaid. The Similar to SNTs, transfers of funds to a pooled trust
payback is limited to the lesser of the amount of money are exempt from the Medicaid and SSI transfer-of-asset
remaining in the trust or the amount of Medicaid paid and look-back provisions, and the assets held by the
on behalf of the beneficiary. In fact, one might argue that pooled trust aren’t considered available with respect to
in a perfectly administered SNT, the trustee spends the the beneficiary’s eligibility for Medicaid or SSI. However,
last trust dollar on behalf of the beneficiary just prior to important distinctions exist between pooled trusts
his death. and SNTs: (1) the individual with special needs may
Federal law requires that all SNTs be irrevocable establish the pooled trust himself. Thus, there’s no
and that the individual with special needs be the sole need to involve a parent, grandparent, guardian or court
beneficiary of the SNT during his lifetime. Upon the as is necessary for an SNT; (2) there’s no age require-
death of the beneficiary and the satisfaction of all claims, ment for a pooled trust. Thus, an individual age 65 or
including the Medicaid payback, residual beneficiaries over may join a pooled trust, whereas SNTs may only
may inherit trust property. Many states also impose be created by individuals under age 65. While someone
bonding and accounting requirements for the trustee over age 65 may join a pooled trust, the states have vary-
of the SNT. These requirements exist to protect the ing interpretations as to whether the exemption from
state’s interest in the remainder of the trust. For example, the Medicaid and SSI transfer-of-asset provisions apply
it isn’t uncommon for states to require the trustee to in those instances; (3) pooled trusts have a modified
notify Medicaid when substantial distributions are made payback, which allows the remaining trust funds, upon
from the trust. the death of the beneficiary, to continue to be held in
Despite the payback, an SNT makes a lot of sense in trust for the benefit of the remaining pooled trust ben-
many cases since the assets in the trust can be used to eficiaries, as opposed to being repaid to Medicaid.
improve the quality of life of the individual with special Pooled trusts are generally a good option for indi-
needs. Without an SNT, those assets would have to be viduals age 65 or over or those who aren’t transferring
spent down on the cost of his care prior to qualifying significant funds to the trust and don’t want to incur the
for Medicaid and SSI. With an SNT in place, these assets expense of setting one up and having it administered.
can be used to supplement what benefits are available With a pooled trust, these tasks are taken care of by
from the government. In addition, the money is paid the non-profit organization, which also professionally
back to Medicaid without interest. Thus, if the trustee manages the funds as trustee. Of course, the individual
purchases an item today for $5,000 and the beneficiary has more flexibility to select his own trustee when opt-
dies in 2040, when that same item would cost $20,000, ing for an SNT.
the Medicaid payback is $5,000.
Finally, some services aren’t readily available with- Supplemental Needs Trusts
out prior qualification for government benefits. For Supplemental needs trusts, like SNTs and pooled trusts,
example, there may be group homes or other residential are discretionary trusts created for the benefit of an
placement services that accept only SSI as payment. In individual with special needs. However, unlike SNTs
these cases, it may be very important for the individual and pooled trusts, supplemental needs trusts are funded
to have an SNT as that may be the only way to imme- by anyone other than the individual with special needs.
diately qualify for SSI due to excess resources in the Although there’s no federal statute authorizing the use
individual’s name. of supplemental needs trusts, many states have their
32 truStS & eStateS / trustsandestates.com july 2011
Feature: Estate Planning & Taxation
own statutes or case law authorizing them. parents or others can make contributions during their
If an individual needs—and qualifies for—means- lifetimes or at death. The inter vivos supplemental
tested benefits, an outright distribution to him or a needs trust can thus act as a receptacle for gifts from
bequest to a support trust will make him ineligible for others who won’t be required to incur the expense of
Medicaid or SSI. Property held in a properly drafted creating a supplemental needs trust as part of their
supplemental needs trust, on the other hand, won’t estate plans. Moreover, the funds available to assist the
affect the individual’s eligibility. The income and individual with special needs will all be part of a single
assets of the trust can thus be devoted to improving his trust. Many families find this to be a very attractive
quality of life and supplementing what he receives from option. Although an inter vivos supplemental needs
government benefit programs. A supplemental needs trust can be irrevocable or revocable, it should prob-
trust is a completely discretionary trust and the benefi- ably be irrevocable as other donors may be disinclined
ciary can’t have any right to compel distributions from to make gifts to a supplemental needs trust if the par-
the trust. In addition, the trust should prohibit the trust- ents can revoke it at any time.
ee from making any payments directly to the beneficiary,
as this may result in reduction or disqualification from Caveat Emptor
government benefits. Special needs planning is an extremely complex area of
If you’re working with a client who has a child with the law. Practitioners must be familiar with federal and
special needs, the client can: (1) include the child in the state statutes and regulations, as well as local practices. A
estate plan through an outright distribution, (2) disinherit lot can go wrong, resulting in grave consequences to the
the child, (3) distribute the share of the child with special family and individual with special needs. Here are two
needs to his sibling and rely on moral commitment of tips to help you avoid some minefields:
that sibling to “take care of the child,” or (4) create a sup- (1) No one other than the individual with special
plemental needs trust. Making an outright distribution to needs should ever contribute assets to an SNT. If a
the child with special needs will result in disqualification third party wants to set aside funds for an individual
for Medicaid and SSI. Disinheriting the child, while solv- with special needs, he should set up a supplemental
ing the Medicaid and SSI problem, doesn’t improve his needs trust and contribute the assets to that trust. This
quality of life, which is likely to be very important to the way, those assets aren’t subject to the Medicaid payback
parents. Leaving the share of a child with special needs contained in the SNT.
to a sibling may seem appropriate in theory, but often (2) If an individual is the beneficiary of both an
doesn’t work in practice. The best laid plans of relying SNT and a supplemental needs trust and you’re the
on “moral commitment” often go astray, especially after trustee or you’re advising the trustee, make sure that
the parents die and new parties become involved in the you spend the assets of the SNT prior to tapping into
process (for example, through marriage). Thus, the surest the supplemental needs trust. That’s because the assets
way to provide a good quality of life for the child with in the SNT are subject to the Medicaid payback while
special needs is through a supplemental needs trust. those in the supplemental needs trust aren’t.
A supplemental needs trust may be established by
any adult with capacity. Unlike an SNT, the beneficiary Rewarding Process
needn’t be under age 65. Moreover, upon the death of the While this may be a complex area of practice, it’s also
beneficiary, there’s no requirement that Medicaid be paid very rewarding. When we work with parents who are
back for the cost of care expended on behalf of the ben- raising a child with special needs, they’ve shared with
eficiary. The reason there’s no Medicaid payback required us that they feel like a huge weight has been lifted off
is that the assets used to fund the trust don’t belong to the their shoulders after they’ve gone through this process.
individual with special needs. Unlike an SNT, the parent is While parents can’t predict the future for their child with
typically not relying on an exception to the Medicaid and special needs, they take great comfort in knowing that
SSI transfer-of-asset provisions to fund the trust. they’ve done what they can do to ensure the best quality
A supplemental needs trust may be set up as a of life for their child. Te
testamentary trust in a client’s will or as an inter vivos
trust during his lifetime. A testamentary trust can be Endnote
used when gifts to the trust won’t be made until the 1. Other names for this type of trust include “first-party trust,” “self-settled
parents’ death. A benefit of an inter vivos trust is that special needs trust,” “payback trust” or “(d)(4)(A) trust.”
july 2011 truStS & eStateS / trustsandestates.com 33
BERNARD A. KROOKS
Bernard A. Krooks is a founding partner of the law firm Littman Krooks LLP and Chair
of its Elder Law and Special Needs Department. Mr. Krooks is a nationally-recognized
expert in all aspects of elder law and special needs planning. He has been accredited by
the U.S. Department of Veterans Affairs to present and prosecute claims for veterans’
Mr. Krooks is immediate-past President of the Special Needs Alliance, a national,
invitation-only, not-for-profit organization dedicated to assisting families with special
needs planning. Mr. Krooks is past President of the National Academy of Elder Law
Attorneys (NAELA), a Fellow of NAELA, past Chair of the NAELA Tax Section and
past Editor-in-Chief of the NAELA News. In addition, he is certified as an Elder Law
Attorney by the National Elder Law Foundation. He is a founding member and past
President of the New York Chapter of NAELA. In 2008, he received the Chapter’s
Outstanding Achievement Award for his lifelong work on behalf of seniors and those
Mr. Krooks is past Chair of the Elder Law Section of the New York State Bar
Association (NYSBA) and past Editor-in-Chief of the Elder Law Attorney, the newsletter
of the NYSBA Elder Law Section. Mr. Krooks is a member of the Trusts and Estates
Law Section and Tax Section of the NYSBA. In addition, he is a former member of the
NYSBA House of Delegates and he served on the NYSBA special committee on Multi-
Disciplinary Practice. Mr. Krooks co-authors (1) a chapter in the NYSBA publication
Guardianship Practice in New York State entitled “Creative Advocacy in Guardianship
Settings: Medicaid and Estate Planning, Including Transfer of Assets, Supplemental
Needs Trusts & Protection of Disabled Family Members.”; and (2) the NYSBA
publication Elder Law and Will Drafting. He serves on the Editorial Boards of
Exceptional Parent Magazine, Trusts & Estates Magazine, and Leimberg Information
Mr. Krooks, a sought-after expert on elder law, special needs planning and estate
planning matters, has been quoted in The Wall Street Journal, The New York Times,
Newsweek, Forbes, Investment News, Financial Times, Money Magazine, Smart Money,
Worth Magazine, Kiplinger’s, Bloomberg, Consumer Reports, Wealth Manager, CBS
Marketwatch.com, Lawyer’s Weekly USA, Reader’s Digest, Bottom Line, The Journal of
Financial Planning, The New York Law Journal, The Daily News, New York Post and
Newsday, among others. He has testified before the United States House of
Representatives and the New York City Council on long-term care issues. He also has
appeared on Good Morning America Now, National Public Radio, CNN, PBS, NBC, and
CBS evening news, as well as numerous cable television and radio shows.
Mr. Krooks is President of the Westchester Estate Planning Council, a member or the
Advisory Board of the National Association of Estate Planning Councils, and a member
of the New York City and Hudson Valley Estate Planning Councils. Mr. Krooks recently
received his AEP accreditation from the National Association of Estate Planners &
Councils He also is a member of the Real Property, Probate & Trust Law Section and
Tax Section of the American Bar Association; a member of the Bar of the Supreme Court
of the United States, and a member of the American Institute of CPAs. Mr. Krooks also is
a Fellow of the American College of Trust and Estate Counsel (ACTEC) and serves on
its Elder Law Committee. He is an Adjunct Professor at NYU Center for Finance, Law &
Taxation and is a member of the NYU Institute on Federal Taxation Advisory Board.
Mr. Krooks has served on the Board of Directors of the Alzheimer’s Association
Westchester/Putnam Chapter and the Bioethics Advisory Committee of New York
Hospital. He is a member of the board of directors of Westchester ARC, a member of the
Blythedale Children’s Hospital Planned Giving Professional Advisory Board, a member
of the Trusts & Estates Group of the Lawyer’s Division of the UJA-Federation of New
York, and a member of the legal advisory committee of the Evelyn Frank Legal
Resources Program of Selfhelp Community Services, Inc. He is listed in the Best
Lawyers in America, Who’s Who in America, The New York Area’s Best Lawyers, New
York Magazine and New York Times, and the Top 25 Westchester, New York Super
Mr. Krooks is married and has four children. He is an AYSO certified soccer coach and
an NYSCA certified baseball coach.
Sarah Diane McShea
Sarah Diane McShea has practiced in the “law of lawyering” field in New York since
1980. Her private practice is devoted to advising lawyers, law firms, government
agencies and corporate law departments on a wide variety of legal ethics and
professional practice issues. She represents lawyers in disciplinary matters, litigates
sanctions and disqualification motions, provides risk management and advisory ethics
opinions, consults on partnership disputes, advises lawyers and clients on billing and fee
issues, represents bar applicants and serves as an expert witness on professional
responsibility issues. McShea is a member of the Editorial Board of the ABA/BNA
Lawyers' Manual on Professional Conduct and a Trustee of the New York State Lawyer
Assistance Trust. She is Chair of the NYSBA Law Practice Continuity Committee, Co-
Chair of the NYSBA Professional Discipline Committee, and a member of the NYSBA
Committee on Standards of Attorney Conduct, which has proposed major revisions to
the New York Code of Professional Responsibility. McShea is a past President of the
Association of Professional Responsibility Lawyers. She writes regularly on legal ethics
issues and lectures frequently on professional practice issues. McShea taught
professional responsibility as an adjunct professor at Columbia University School of Law
(1989-1992), St. John’s University School of Law (1999), and Brooklyn Law School
(2001-2007). She served as Deputy Chief Counsel and staff counsel to the
Departmental Disciplinary Committee, Appellate Division, First Department (1980-1989)
and Chief of the Public Corruption Bureau, Kings County District Attorney’s Office (1990-
1993). She is a graduate of Yale College (1975) and Boston University School of Law
Ira K. Miller
1. Graduated SUNY Plattsburgh with a B.S. in 1975.
2. Received his J.D. from Brooklyn Law School in 1979.
3. Founding Chair of the Elder Law Committee of the Brooklyn Bar Association and
acted as same for 1993 and 1994.
4. Vice Chair of the Elder Law Committee of the Brooklyn Bar Association 1995, 1996
5. Executive Board of the New York State Elder Law Section from 1993 through 2010.
6. Secretary of New York State Elder Law Section elected January 2000.
7. Vice Chair of New York State Elder Law Section elected January 2001 & 2002.
8. Published articles in the New York State Bar Association Elder Law Attorney.
9. Published articles in One on One Newsletter of the General Practice Section of the
New York State Bar.
10. He has lectured frequently for the New York State Elder Law Section and the
Brooklyn Bar Association.
11. He was the Chairperson and a speaker at New York Bar CLE Basics of Elder Law.
12. He was the Chairperson at the New York State Bar Association Elder Law’s Advance
Institute for 2000, 2001 and 2002.
13. He was the Chairperson of 2002 Summer Meeting of the Elder Law Section of New
York State Bar, Toronto, Canada.
14. Mentor Attorney for New York Law School 2005.2006, 2007, 2008, 2009, 2010, and
15. Conservator, Committee and Guardian for over 100 incapacitated persons in his
career including numerous pro- bono actions.
16. He was a speaker at the Practical Skills program of the New York State Bar, May
Elizabeth Valentin | Littman Krooks LLP
Elizabeth Valentin is an attorney with the law firm of Littman Krooks LLP. Ms. Valentin’s
practice focuses on elder law, Medicaid planning, special needs planning,
guardianships, asset protection planning, real estate, trust and estate administration,
and estate planning.
Elizabeth received her undergraduate degree from the University of Pennsylvania and
her Juris Doctor degree from the City University of New York School of Law.
Ms. Valentin is admitted to practice in both New York and New Jersey. She is a member of the New York
State Bar Association (NYSBA), the Elder Law and Trusts & Estates Sections of the NYSBA, the New York
County Lawyer’s Association and Dominican Bar Association. Ms. Valentin is currently serving on the
Executive Committee of the Elder Law Section of the NYSBA as Co-Chair of the Client and Consumer Issues
Committee, Co-Chair of the Diversity Committee and as a District Delegate.
Elizabeth is a frequent presenter to consumer and professional groups as well as advocacy organizations
addressing the legal, financial and other related issues which affect our senior population.
Ms. Valentin speaks fluent Spanish.
Elizabeth is also a freelance photographer. She founded the not-for-profit organization Ojitos, which teaches
photography to inner city children who are survivors of domestic violence.