Page 30 - Amarillo Senior Link Magazine Spring 2021 - Online Magazine

SENIOR RESOURCES

Reforming a Will TO KEEP A BENEFICIARY FROM

LOSING MEDICAID OR SUPPLEMENTAL

by Lee Franks SECURITY INCOME OR BOTH

ccasionally, someone, Dianne for example, will come the beneficiary received during his or her life.
to me with the following story. Her widowed sister,
OGaye, had one child, Leonard, now 52 years old Since September 2015, Sections 255.451-455 of the Texas
and disabled from birth. Aside from Gaye’s care, Leonard Estates Code allow the personal representative of the estate
received $794 per month through the Social Security’s of a deceased person to ask the probate court to modify or
Supplemental Security Income or SSI program, which also reform a will to prevent a beneficiary from losing public
qualifies him for extensive medical assistance through benefits. The statute does not specify what modifications
Medicaid. Now Gaye has died, and her will left everything or reformations the court should undertake, but the
to her husband, Jake, who predeceased her, and then to wording of the statute is broad enough to include creating
Leonard. Although Gaye did not make much money at a testamentary SNT or simply directing a distribution
any time in her life, she had scrimped and saved to pay for intended for a disabled beneficiary, such as Leonard, into an
her home and accumulate about $150,000 in savings, all of SNT created by someone else, perhaps Dianne in our story.
which now goes to Leonard. Dianne has now learned that Because either a testamentary SNT or an SNT created by
both SSI and Medicaid have a $2,000 countable resource Dianne would be a third party SNT, neither would have to
limit, and Leonard soon will lose both supports until his include a claw back provision for Medicaid. A more subtle
inheritance is spent or otherwise made ‘uncountable’. outcome of Sections 255.451-455 is that this statute is not
limited to beneficiaries under the age of 65; therefore, even
If Gaye had known it, she could have created a a person who was too old to take advantage of a d4A SNT
supplemental needs trust, or SNT, either while she was still might enjoy the benefits of modifying or reforming a will
alive (an inter vivos SNT) or in her will (a testamentary under this new section of the Estates Code.
SNT), which would have made her property available to
Leonard for his entire life, and then anything left after
Leonard died would pass on to other beneficiaries
of Gaye’s choosing. In fact, any SNT, created by
someone other than the beneficiary and funded with
someone else’s property, would work in the same way.
Attorneys specializing in this area of law call these
trusts “third party SNTs”.
At this point in the story, Leonard or his agent and
aunt, Dianne, could spend the money on just about
anything so long as the money is spent on him. He can
keep the house, since neither SSI nor Medicaid count
its value against the $2,000 limit. He could buy a car,
which also is not countable, but he does not drive, and
he has no particular needs that would make a van or
other specialized transport useful. He could purchase
personal items, such as clothes, furniture, appliances,
or even a pre-need funeral contract, but spending so
much money on mere consumer goods seems a waste.
Until September 1, 2015, Leonard’s only other option
would have been a self-settled supplemental needs
trust created pursuant to 42 USC 1396(p)(d)(4)(A).
People familiar with these trusts commonly refer to
them as d4A trusts. Only disabled persons under
the age of 65 may transfer any amount of money
or property into such a trust without jeopardizing
their SSI or Medicaid, but among the required trust
provisions is a ‘claw back’ for the state or states that
provided assistance to Leonard. Essentially, anything
remaining in a d4A trust when the beneficiary dies
must be used to reimburse certain Medicaid benefits

30 Amarillo Senior Link