[WSBAPT] Crummey Trust conversion to SNT?

[Jacob Menashe]

Hi Wendy,

One threshold question might be whether the trust’s terms may be discretionary enough that it can serve as a special needs trust without explicit special needs trust language. Of course if the trust terminates at 25 and the child is 24, then discretionary distribution terms and a spend-thrift clause won’t help much.

But as to your question, I think your mentioning a “payback” clause is likely apt – as SSI or Medicaid will likely view this as a first party trust, which requires Medicaid payback and that it be “established” by a parent, grandparent, guardian or the court. On the other hand, there is a case, Riddell, 138 Wn. App. 485, where equitable deviation was used to revise trust terms. And, at least in the court’s view, without making the trust a first party trust.

Best,

Jacob

Jacob H. Menashe
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From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Goffe, Wendy S.
Sent: Tuesday, October 18, 2016 11:11 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: [WSBAPT] Crummey Trust conversion to SNT?

Parents set up a Crummey Trust for son who is now disabled.  Does anyone have thoughts on using TEDRA to convert the trust to a SNT?  I would remove the Crummey power, change the distribution provisions and I think I should add a payback provision.

Has anyone tried this and did it work?

I am not sure what to do about having someone sign on behalf of the son.

I would appreciate the collective wisdom of the group.

Wendy

Wendy S. Goffe | Partner
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