[WSBAPT] (d)(4)(a) Supplemental Needs Trust - Establishment Issue

[James W. Spencer]

Greetings David:

As long as the beneficiary has capacity, they may create the (d)(4)(A) themselves. This was a change to the code about three years ago.

A disclaimer would trigger a period of ineligibility for the beneficiary, so do not go that route. Regarding a TEDRA agreement, if the beneficiary settles their own trust, then there is no need for an agreement.

The beneficiary may also want to consider a (d)(4)(C) trust (pooled SNT) for cost savings.

Navigating (d)(4)(A) trusts is pretty nuanced (we’re cleaning these up all the time to save clients’ benefits), so any attorney that isn’t versed in this area may want to consider referring out or seeking some mentoring.

Best wishes,
James

James W. Spencer
Attorney at Law
Brothers & Henderson, P.S.
2722 Eastlake Avenue East, Suite 200
Seattle, Washington 98102
Phone: (206) 324-4300 x106
Fax: (206) 324-3106
e-mail:  jamess at brothershenderson.com<mailto:jamess at brothershenderson.com>
www.brothershenderson.com<http://www.brothershenderson.com/>
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From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of David Faber
Sent: Thursday, October 31, 2019 12:47 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: [WSBAPT] (d)(4)(a) Supplemental Needs Trust - Establishment Issue

List:

I have been asked to prepare a (d)(4)(a) self-settled supplemental needs trust for a client who is set to inherit about $80k from a deceased parent who died intestate. The parent failed to create the proper trust structure, has no surviving parent (or grandparent), is not subject to a guardianship, and is under the age of 65. Having a court-directed (d)(4)(a) trust appears to be a cumbersome and costly proposition, but that's the only mechanism that I have been able to find to fund the trust. The PC's only public benefit that they are trying to retain is SSDI.

Is it accurate that only a parent, grandparent, guardian, or court can establish a (d)(4)(a) trust? A child would not be sufficient?

Alternatively, has anyone ever used a disclaimer to a child and then have the child establish a 3rd-party SNT?

Lastly, has anyone ever made a TEDRA Agreement to authorize the distribution of assets to an SNT? The deceased parent evidenced intentions toward an SNT in writing but the Will failed because it did not adhere to all of the formalities at law for a valid Will.

I'm trying to find the most cost-effective way to put this together for PC because it isn't a ton of money. Any recommendations would be much appreciated. Thank you.

Best,
David J. Faber
Faber Feinson PLLC
210 Polk Street, Suite 1
Port Townsend, WA 98368
(360) 379-4110

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