Footnotes

By: Martha A. Churchill and Patricia E. Kefalas Dudek

1. Some people regard the phrase "mentally retarded" as stigmatized, but it is the legally correct term, as defined by Social Security at 20 C.F.R. Part 404, Subpart P, appendix 1, Part A, Sec. 12.05. "Developmental disability" is more politically correct, but its legal meaning includes persons of high intelligence; 42 U.S.C.A. § 6001(8). Practitioners are advised to use whatever language the client feels comfortable with, but stay away from the terminology used by Oliver Wendell Holmes in Buck v. Bell, 274U.S. 200 (1927) ("imbecile").

2. Also known as a "discretionary trust," a "supplemental needs trust" or an "amenities trust."

3. Current SSI benefits is close to $500 per month, which is for rent, food, and clothing. However, clearly, no single person can live a proper life independently on that income.

4. M.C.L.A. 400.108.

5. M.C.L.A. section 330.1804; M.S.A. § 14.800(804).

6. Miller v. Dept of Mental Health, 432 Mich. 426, 442 N.W.2d 617 (1989).

7. In re Johannes Trust, 191 Mich. App. 514, 479 N.W.2d 25 (1991).

8. The parent must earn enough to obtain "insured status." Also, Freddie must remain unmarried all his life to qualify for this extra bonus. The benefits paid to Freddie do not affect the amount of Social Security the father receives. If the mother earned more than the father, her earnings will be used to calculate Freddie's SSDI benefit.

9. The car should not exceed $4,500 in fair market value. For a complete list of assets excluded from SSI's definition of"property," see 42 U.S.C.A. § 1382b(a).

10. Parents desiring to ensure a permanent home for a disabled son or daughter should avoid trying to buy a home, or donating a large endowment to any one residential institution. By funding a trust, the trustee can make sure the person has suitable living arrangements, depending on circumstances which the parents cannot predict. Another option is the use of a charitable remainder trust.

11. See the ICLE reference work, "Michigan Guardianship and Conservatorship Handbook," especially chapter 12 which explains what constitutes "income". The book is available by calling toll-free 1 877 299-4350.

12. 42 U.S.C.A. § 1382a(b)(8)

13. 42 U.S.C.A. § 1382a(a)(2)(C). However, the first $240 per year of income does not count. 42 U.S.C.A. 1382a(b)(2)(A).

14. Typical financial institutions charge about 1% per year paid monthly, plus $800. Some will not accept a trust below $500,000; others will go down to "only" $250,000. Some financial institutions prefer young beneficiaries, so the financial institution can build up the trust assets over the person's lifetime. Banks often shy away from trusts which own real estate, for fear of environmental entanglements, despite statutory protections for fiduciary owners of contaminated property, such as 42 USCA 9607(n)(1); MCLA 324.20101(y)(ii); and MCLA 700.801(1).

15. Several non-profit organizations in Michigan have established pooled accounts trusts, some of which are open to anyone in the state. A sub-account in a pooled accounts trust is economical and easy to set up. Contact Attorney Patricia E. Kefalas Dudek at (248) 586-9820, for a complete list of pooled accounts trusts.

16. Typically, a stock brokerage or a CPA will serve as financial advisor for about 1/2 percent annually, which is less expensive than a financial institution. Another alternative: state that the trust funds must be invested with Merrill Lynch (or A.G. Edwards or Paine Webber), and can only be withdrawn by the trustees acting jointly.

17. Specify that a single trustee from the committee can act alone, when dealing with third parties, and that the trustees are responsible for consulting one another about decisions. Otherwise, they will have to act unanimously on every little decision, which could get cumbersome.

18. Childs v. Nat 'l Bank of Austin, 658 F.2d 487 (7^th Cir. 1981).

19. Striegel v. South Dakota Dept. of Social Services, 515 N.W.2d 245 (S.D. 1994) (Self-settled trust vulnerable to Medicaid claim). For legal assistance in avoiding this problem, contact attorney Tom Trainer or Mary Schmitt Smith at (248) 645-9400.

20. 42 U.S.C.A. § 1382c(a)(3). If the individual is already receiving SSDI or SSI, he or she obviously has already met the statutory definition for medically disabled.

21. Application of Moretti, 606 N.Y.S.2d 543, 159 Misc. 2d 654 (1993) (Self-settled trust did not interfere with Medicaid).

22. 42 U.S.C.A. § 1396p(d)(4)(C). For more, please review 12 Mich. L.W. 1632, Trust Options for Seniors & Persons with Disabilities.

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Martha A Churchill
Milan, Michigan.

Patricia E. Kefalas Dudek
Royal Oak, Michigan.

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