Act 2019-489 Impacts Future Estates
Governor Kay Ivey recently signed Act 2019-489, which requires the personal representative to serve official notice to the Alabama Medicaid Agency when filing to probate an estate or when filing to administer an estate. This Act goes into effect on September 1, 2019.
Alabama Family Trust has developed forms that will meet both the Medicaid Notice and Affidavit requirements fwhich we are providing to attorneys and judges as a free service.
Alabama Family Trust: Our View on Legal Advice
Individuals are not required to have an attorney to establish a trust with Alabama Family Trust. However, we do not provide legal advice. Our staff is happy to assist in properly completing our trust documents; however, we cannot tell individuals what they should do to qualify for Supplemental Security Income (SSI) or Medicaid benefits. We recommend that individuals seek legal counsel to guide them in properly obtaining SSI and Medicaid benefits.
For Plaintiff Attorneys:
If your client is disabled and about to receive a legal settlement or judgment, you need to consider a special needs trust. A special needs trust can hold the client’s settlement or judgment so that the client is financially eligible to continue receiving government benefits such as SSI and Medicaid. If the client is not currently receiving SSI and Medicaid; but, would be eligible if not for the settlement or judgment, a special needs trust can hold the assets so the client can obtain government benefits.
For Guardian Ad Litems And Probate Attorneys:
If you are the Guardian ad litem, you need to be ready to suggest a special needs trust so the ward can receive (or continue to receive) government benefits such as SSI and Medicaid even with these situations:
- has assets
- is receiving an inheritance
- is about to receive monetary gifts from family or friends
- is receiving a legal settlement or judgment
- is about to receive money from a previously non-countable resource (such as money from the sale of a home)
If you are the probate attorney representing someone other than the ward, you also need to be aware of special needs trusts and their use in Guardianship and Conservatorship cases, or in administering an estate when a beneficiary is a person with a disability.
For Estate Planning And Elder Law Attorneys:
Alabama Family Trust can hold and administer first-party and third-party trusts. Our pooled trust is frequently named as the Trustee to administer special needs trusts for parents or family members preparing estate plans for loved ones with disabilities.
A pooled trust such as Alabama Family Trust is the only type of Trustee that can hold a special needs trust established for a disabled individual age 65 and older.
For Family Law Attorneys:
Alimony for ex-spouses with disabilities may be placed in a special needs trust so the ex-spouse can receive any government benefits for which he or she might otherwise be eligible. This arrangement allows an ex-spouse to receive important benefits such as SSI and Medicaid while still receiving the additional support from the alimony.
Child support for a child with a disability may be placed in a special needs trust. While the receipt of benefits will still depend on parental income, placing the child support in trust, may enable a child to be eligible for benefits if parental income is limited.
Guidelines For Attorneys:
Alabama Family Trust does not provide legal advice regarding whether you should use a special needs trust in a particular situation; however, we will assist you in establishing the trust for your client. We are willing to appear in court to answer any questions a judge may have regarding the the trust and the way the trust operates at the time of establishing the trust. The trust documents are on our website for your convenience.
We also have a checklist to assist you in making sure you have everything necessary to create the trust. If you have any questions while preparing the documents, please call us. We are also happy to look at the trust documents in advance to guide you in properly preparing them.
Important Facts To Consider:
- Using a Durable Power of Attorney: If the agent under an Alabama durable power of attorney is executing the trust and the power of attorney was executed on or after January 1, 2012, then the power of attorney must include specific language that gives the agent the power to execute a trust on behalf of the principal of the power of attorney. Language that generally gives the agent the power to execute an inter vivos trust or that specifically gives the agent the power to execute a special needs trust is acceptable.
- Limited Conservatorships (One Time Transaction): When creating a first-party trust, if the individual does not have capacity to sign the trust; or, does not have an agent named in a proper durable power of attorney, then the attorney can petition the probate court for a limited conservatorship asking the court to authorize a conservator to perform the one-time act of creating the trust. Code §26-2A-137
- First-Party Trusts: must be irrevocable and must contain a pay-back provision to any Medicaid agency, in any state or the District of Columbia, that has paid benefits for the disabled beneficiary.
We do not recommend using a Special Needs Trust if the only form of government benefits the beneficiary receives is any of these programs:
- Qualified Medicare Beneficiary (QMB)
- Specified Low-income Medicare Beneficiary (SLMB)
- Qualified Individual (QI)
In the State of Alabama, Medicaid only considers the beneficiary’s income to determine eligibility for these programs and does not consider other assets. Additionally, Alabama Medicaid does not normally pursue estate recovery to recoup the QMB, SLMB, or QI benefits at the beneficiary’s death. However, Alabama Medicaid will seek to recover any benefits that have been paid for the beneficiary from a special needs trust account at the time of death. In some cases, the benefits of using a special needs trust may outweigh the possibility that Medicaid could collect for past QMB, SLMB, or QI benefits. We recommend that clients speak with an attorney to determine if a special needs trust will benefit them if they receive QMB, SLMB, or QI benefits.