The Impacts of Trusts On Public Benefits for Disabled Persons, 1117 COBJ, Vol. 46, No. 10 Pg. 43

Author:DAVID W. KIRCH AND LINDA MOON, J.
 
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46 Colo.Law. 43

The Impacts of Trusts on Public Benefits for Disabled Persons

Vol. 46, No. 10 [Page 43]

The Colorado Lawyer

November, 2017

TRUST AND ESTATE LAW

DAVID W. KIRCH AND LINDA MOON, J.

This article discusses the impacts of various kinds of trusts on public benefits for disabled individuals.

Contrary to popular belief, establishing a trust for a disabled person does not always result in die loss of die disabled person's eligibility for public benefits. If a trust is drafted carefully and properly administered, it can provide significant benefits to a disabled person while maintaining eligibility for public benefits. Thus trusts can be a useful tool to increase a disabled person's quality of life.

This article addresses some of the most common benefits available and general considerations concerning the impacts of various types of trusts on such benefits. The appropriate use of trusts is fact-specific and practitioners must take care to consider all applicable laws and regulations, including die Social Security Administration's Program Operations Manual System (POMS).1 (See accompanying Sidebar for abbreviation/acronym key.)

Social Security Programs Based on Disability

To be eligible for Social Security based on disability, a person must be unable to engage in any substantial gainful activity (SGA) "by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months."2

SGA is determined when a person is able to work and earn at least SI,170 (2017) per month for a period of nine months (months are not required to be consecutive) after the date of disability onset.3 If this occurs, the person is no longer considered disabled by Social Security.

Social Security Disability Income

Social Security Disability Income (SSDI) is a benefit provided to adults under age 65 who have worked and paid into Social Security from earned income or self-employment income for a certain period of time before the date of disability onset.4 To qualify, a disabled person must be fully insured, which means that die person has sufficient earnings or work credits consisting of 20 full quarters (1 quarter = 3 months), or 5 years, within die full 40 quarters (10 years) preceding the date of disability.[5] Alternatively, a person can meet the quarters of coverage criteria if he earned a sufficient amount of wages or self-employment income.6 For 2017, one work credit is received for each SI,300 of income earned up to a maximum four credits per year, or S5,200.7

There is a five-month waiting period that generally begins die first of die month following die date of disability onset, but no earlier than 17 months from die date an application is filed.8 This waiting period was established to allow an individual with a short-term disability an opportunity to recover.9

ABBREVIATIONS AND ACRONYMS

ABLE Achieving a Better Life Experience Act
ACA Patient Protection and Affordable Care Act
ADL Activities of Daily Living
BI Waiver Brain Injury Waiver
COBRA Consolidated Omnibus Budget Reconciliation Act
CWA Waiver Children with Autism Waiver
DD Waiver Developmental Disabilities Waiver
DRA Deficit Reduction Act
EBD Waiver Elderly Blind and Disabled Waiver
HCBS Home and Community Based Services
ISM In-Kind Support and Maintenance
LIS Low Income Subsidy
LTC Long Term Care
Ml Waiver Mental Health Waiver
MSP Medicare Savings Program
PMV Presumed Maximum Value
POMS Program Operations Manual System for Social Security
QDWI Qualified Disabled and Working Individual
QI Qualified Individual
QMB Qualified Medicare Beneficiary
SGA Substantial Gainful Activity
SLMB Specified Low Income Medicare Beneficiary
SSDI Social Security Disability Income
SSI Supplemental Security Income
VTR Value of One-Third Reduction
SSDI is based on disability and the person's average lifetime earnings.10 It is not a needs-based program with income or asset restrictions. The monthly amount payable is based on the person's average lifetime earnings with a maximum benefit of $2,687 per month (2017).[11] A disabled adult child can qualify for SSDI based on her parent's work record, but only if the adult child was completely disabled before age 22, the parent has a qualified work record and is deceased, permanently disabled, or receiving retirement benefits.12 SSDI benefits are not available to minor children (who have no work record), but they can qualify for and receive...

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