[WSBAPT] Using Decanting Power Pursuant to RCW 11.107

[Nicholas Pleasants]

Hi Matt,
When you are thinking about converting a trust from a general needs trust to a special needs trust, what you are saying is that the beneficiary would like to preserve eligibility for government benefits, such as Medicaid. For Medicaid eligibility rules, we look to the Program Operations Manual System (POMS). The POMS now has an entry on trust decanting under the Early Termination Rules, SI 01120.199<https://secure.ssa.gov/apps10/poms.nsf/lnx/0501120199>. SSA has a presumption that decanting should be evaluated under the Early Termination Rules. “In such a situation, we generally evaluate the decanting provision under the instructions on early termination in this section.” For an early terminated trust to be excluded from countable resources (to get the applicant under the $2,000 threshold), it would have to include a Medicaid payback for all services rendered up until the date of decanting. So theoretically decanting works as long as the beneficiary has not received any Medicaid or agrees to reimburse the State for all Medicaid received. I had researched all of this for a client, but thankfully we were able to resolve the question before there was a need to apply for Medicaid, so I didn’t run into lookback/inclusion problems.
All that being said, I think there is a more clever way to solve the problem. The Will can simply state something like “If any beneficiary is receiving public benefits or applies for them, then the trust property allocated to such beneficiary shall be administered by the trustee of a special needs trust as follows:”. Then you include the guts of a special needs trust in the Will. Yes it is a lot of work to add this to your template the first time, but now all of the Wills that I produce can have a springing special needs trust. No messy decanting. No close reading of the POMS. I would argue this should be standard in any thorough estate plan.
Decanting is an enormous pain, so I hope this helps to know you can include language in the Will that would avoid that. It also gives the client the peace of mind to know the language is already in place in the Will.
I am not a Medicaid expert, so I would welcome feedback on this analysis. Decanting is a relatively new concept, and there have not been that many anecdotes about how DSHS is interpreting it yet.

Best,
Nick

Nicholas Pleasants
Owner

[(Logo) Pleasants Law Firm]<http://www.pleasantslaw.com/>

Pleasants Law Firm, P.S.
2300 130th Ave NE, Suite A-101
Bellevue, WA 98005-1755
(425) 615-7070 tel/fax
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From: <wsbapt-bounces at lists.wsbarppt.com> on behalf of Matt Yates <matt at yatesmarshall.com>
Reply-To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Date: Tuesday, March 2, 2021 at 5:01 PM
To: "wsbapt at lists.wsbarppt.com" <wsbapt at lists.wsbarppt.com>
Subject: [WSBAPT] Using Decanting Power Pursuant to RCW 11.107

Client’s will has testamentary trust for son.  Client is worried that son’s health may later lead to him being on disability (he is not currently).  Client wants to know if trust could be modified to become a special needs trust.  Seems like this is exactly what is intended under RCW 11.107 but I have admittedly not tread this ground before.  I’m inclined to do simply empower Trustee to exercise Decanting Powers consistent with RCW 11.107 in the event that Trustee determines a special needs would be beneficial to beneficiary.  Given the statutory requirements, I am not concerned about Trustee exercising discretion inconsistent with beneficiary’s wishes.  Anyone have any experience or language that they would be willing to share?
Matt

Matthew D. Yates
Attorney at Law
Yates Marshall, PLLC
10000 NE 7th Avenue, Suite 200
Vancouver, WA 98685
Phone: (360) 449-6100
Fax: (360) 449-6111
matt at yatesmarshall.com<mailto:matt at yatesmarshall.com> (New Email Address)
www.yatesmarshall.com

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