Attorney Defends Using Special Needs Trusts to Preserve Medi-Cal Benefits

The Solano County Chapter of the National Alliance on Mental Illness hosts attorney Frank R. Acuña, of Acuña & Casas, P.C., to rebut claims by a member of the Solano County public conservator's office that gifting to a "trusted family member" is superior to establishing a special needs trust.

Fairfield, CA (PRWEB) June 30, 2007 -- Special needs trusts are traditionally used to continue Medicaid or Medi-Cal benefits without reduction and, to delay public agency reimbursement until the special needs consumer dies or the trust is terminated. However, at a recent meeting of the Solano County Chapter of the National Alliance on Mental Illness ("NAMI"), a member of the Solano County public conservator's office claimed that special needs trusts for disabled persons are not necessary, may lead to reductions in benefits, and may trigger claims on the funds in the "protected account" to recoup the cost of benefits previously paid. Her suggestion was to give assets to a "trusted relative" with an understanding that they are for the care of the consumer.

On June 25, 2007, attorney Frank R. Acuña spoke to the Solano County Chapter, strongly advising its members not to follow the public conservator's advice:

1.   A gift with a condition may involve the trusted family member in a fraud. The type of gift described by the public conservator is a constructive trust. Upon discovery, benefits could be terminated immediately and any persons involved in concealing the trust could be liable for fraud on a public agency.

2.   The gift may have adverse consequences for the trusted family member. The family member must pay income tax on the trust receipts each year, without the benefit of ongoing medical care deductions. The income could "bump" the family member's marginal tax rates to higher levels, disqualify the trusted family member from public assistance benefits, disqualify their children from scholarships, and complicate the trusted family member's own estate planning.

3.   The gift is completely unprotected from the trusted family member's creditors. If the trusted family member is involved in a personal injury lawsuit, creditor action or bankruptcy, or divorce, the gift is available to the trusted family member's creditors.

4.   There is no succession planning in case of death. Either the special needs consumer will die first with possible claims by other family members that they are entitled to a portion of what's left, or the trusted family member will die with his or her family claiming that the assets belonged to the trusted family member.

About Frank R. Acuña and Acuña & Casas, P.C.
Offices in Walnut Creek, Fairfield, and San Mateo, California
Frank R. Acuña and Acuña & Casas, P.C., limit their practice to estate planning, probate and trust administration, and contested estates. They have drafted countless special needs trusts for family estate plans and to protect litigation or inheritance proceedings.

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