Special Needs Planning ("SNP") has emerged as a recognized legal practice area over the past seventeen years following the passage of the Omnibus Budget Reconciliation Act of 1993 ("OBRA"), which provided statutory authority for first-party special needs trusts ("SNTs"). SNTs have become invaluable tools for the injured, disabled, and their families in developing a comprehensive SNP to address the myriad issues arising from such injury or disability. SNP continues to be a rapidly evolving practice area due to significant changes in the laws and programs relating to persons with long-term disabilities.
SNP involves the development of a multidisciplinary comprehensive plan for a person with a disability in order to address the legal, financial, and healthcare consequences of the disability. The overriding objective of such planning is to protect the eligibility for public benefits of persons with special needs while assisting with the management of their assets. SNP includes a wide range of services, including the drafting and implementation of SNTs, public benefits planning, access to special education services, tax planning, financial planning (including access to health insurance), guardianships and conservatorships, personal injury settlement consulting, medical malpractice settlements, health care decision-making, and the administration of SNTs, guardianships, and conservatorships.
The main tenet of SNP, however, is the SNT, which is designed to preserve a disabled beneficiary's eligibility for public benefits, such as Supplemental Security Income ("SSI") and Medicaid, by excluding the SNT's assets from being considered a resource for eligibility purposes. These trusts are generally classified as one of two distinct types: first-party SNTs and third-party SNTs. A first-party SNT provides a mechanism for the retention of the disabled settlor-beneficiary's resources, such as inheritances and personal injury settlements, without disqualifying the individual from receiving public benefits. A third-party SNT can be created and funded either inter vivos or through testamentary trust by a party other than the disabled beneficiary or the beneficiary's spouse. Third-party SNTs are frequently used to provide for children or other relatives with disabilities.
In light of the significant costs of health care for persons with disabilities, the drafting, implementation, and administration of SNTs to preserve eligibility for public benefits has become an essential component of SNP. While both federal and state government agencies recognize SNTs, they have imposed rather stringent rules and regulations upon such trusts. However, because this is a relatively new and rapidly evolving practice area, there have been relatively few scholarly resources to assist the practitioner in learning and understanding the fundamentals of SNTs.
Therefore, I was pleased to be asked to review a new treatise entitled Fundamentals of Special Needs Trusts. The treatise is written by three experienced SNP practitioners and members of the Special Needs Alliance: Stuart D. Zimring, Rebecca C. Morgan, and Bradley J. Frigon. Released in December 2009, Fundamentals of Special Needs Trusts fills the need for an introductory text on the drafting, implementation, and administration of both first-party and third-party SNTs.
The treatise is well written and understandable by an attorney new to this practice area. It is heavily footnoted to provide the reader with the underlying statutory and regulatory authority for the explanatory text. In addition to a discussion of SNTs, the text includes a discussion of public benefits for persons with a disability, personal injury settlements, and financial and tax planning for persons with a disability. The treatise also includes practice notes and a generous number of templates to assist the reader in learning how to implement the use of SNTs in SNP. In addition to both first-party and third-party SNT templates, the treatise includes a sample trustee handbook and attorney-client engagement letter. An extensive table of cases and index assist the reader in using the treatise as a research tool.
The authors begin with a thorough, yet concise, overview and history of SNTs (Chapter 1). Next, they discuss ethics and liability in SNT drafting and administration (Chapter 2), an essential consideration for any practitioner wishing to enter this practice area. The authors then embark upon an insightful analysis of the essential elements of SNT planning, such as: an individual's allowable assets when using a SNT (Chapter 3); the process for establishing (Chapter 4) and administering (Chapter 6) a SNT, and the special issues present in both (Chapter 7); finding the right trustee (Chapter 5) and examining the relationship among the trustee, beneficiary, practitioner, and other potential parties (Chapter 8); issues involving income and health care (Chapter 9); and the eventual termination of a SNT (Chapter 11). The authors then conclude with a discussion of income and gift and estate tax rules as each relates specifically to SNTs (Chapter 12).
While providing a solid foundation of the essential principals and designs of SNTs, the authors readily acknowledge that the treatise is not intended as a comprehensive handbook for the advanced SNT practitioner. Rather, it is designed to provide a basic introduction to the laws, uses, and drafting strategies of SNTs. Yet, it is this refined focus on the basic principals and strategies of SNTs that sets this treatise apart from the others and immediately makes it an essential addition to the SNT literature. The complex patchwork of rules, regulations, and laws on both the federal and state levels has created a challenging legal practice area, especially for the novice SNT practitioner. This treatise clearly and effortlessly sets forth a succinct and easy-to-follow template for individuals just learning about SNTs, and will quickly become the "must read" treatise for practitioners just starting out in the SNT practice area.
I do have several suggestions, however, for improving the treatise in future supplements. First, I recommend including a discussion of:
Additionally, the inclusion of several other topics-which the authors plan to include in future updates-should greatly enhance the treatise:
These recommendations are intended only to improve an already exceptional treatise. I intend to utilize this treatise as an essential training tool for associates learning about SNTs. I recommend that other law firms looking for an introductory text on SNTs strongly consider Fundamentals of Special Needs Trusts.
Andrew H. Hook practices in the areas of elder law, estate and trust administration, estate planning, long-term care planning, asset protection planning, special needs planning and personal injury settlement consulting. Mr. Hook is certified as an Elder Law Attorney (CELA) by The National Elder Law Foundation (NELF). Mr. Hook is the past president of the Special Needs Alliance, a non-profit association of disability attorneys. Mr. Hook is a Fellow of the American College of Trust & Estate Counsel (ACTEC) and the National Academy of Elder Law Attorneys (NAELA). Mr. Hook is an accredited attorney for the preparation, presentation, and prosecution of claims for veterans benefits before the Department of Veterans Affairs (VA). Access Andrew H. Hook's complete bio and Martindale-Hubbell profile on martindale.com.