Re: SSI, shared expenses, fraudulent conversion and the fungibility of money

[Guest guest]

Properly funding a SNT is a complicated issue.  I'll try to expand on my

earlier email with the hope of making it clearer.  My firm offers a training

each year in the spring on how to manage a special needs trust.  If you are

still confused, you may want to watch for the announcement of the date for the

2012 seminar on " Managing  a SNT so you Don't Disqualify a Beneficiary from

Gov't. Benefits " . 

 

In order to receive the full SSI check of $674 per month, the SSI recipient must

be contributing to the expense of food and shelter s/he is recieving in his/her

parents home.  If I had not 'charged' Jen for the food and shelter I was

providing for her, she would have received $220 less in SSI.  By charging her

for the food and shelter I provided, my daughter received the full check.  I

then took the money she gave me and set it aside with the intent of using that

money to provide a better future for her.  The money she gave me for food and

shelter was now legally mine to do with as I pleased.  I could spend it on

myself, pay my own bills with it, save it for my retirement, etc.  Instead I

set it aside with the hope of providing a better future for her. 

 

It is not permissable for a special needs beneficiary to put his/her OWN money 

into a 3rd party SNT (the kind that doesn't require a payback to the state). 

If I had put the money Jen paid me for food and shelter immediately into the

Special Needs Trust, it may have been treated as a " step transfer " . 

It would have looked like Jen was giving me money from her SSI and I was

immediately placing 'her SSI money " in the trust which could have been

interpreted as a step transfer.  Welfare may have tried to collapse the step

transfer from Jen to me and from me to the SNT and treated the deposit in the

trust as if it came directly from Jen.  This could sabotage an otherwise

properly written SNT.  I feel I could have defended the transfer but why take a

chance on having to deal with an SSI appeal when the easier solution is just to

set aside the funds, which were now mine to do with as I pleased, for Jen's

future.

 

Another reason for holding the money(which is now legally ours and no longer

Jen's)  in our own name is that  we were young parents (younger anyway) and I

did not know if I would need this money for an emergency situation for

ourselves.  By setting it aside in a savings account in my husband and my names

and SS#, we had access to the money in the future if we needed it.  If we never

needed it, and it was there at our deaths, it would flow immediately to the SNT

as I added a Payable on Death clause beneficiary designation on the savings

account. 

 

Yet another reason for holding the money (which was now legally ours) in our own

name and not immediately depositing into the SNT is the fact that lifetime

gifting of a SNT creates gift tax issues which I did not want to be bothered

with.  The gift tax issues are too complicated to try to discuss in an email

but if a parent wants to fund a trust with lifetime gifts, s/he needs to discuss

the estate/gift tax issues in detail with their attorney.

 

I hope this clarifies my earlier email.  Terrie

From: jbergman51 <jbergman51@...>

IPADDUnite

Sent: Saturday, September 10, 2011 9:23 PM

Subject: SSI, shared expenses, fraudulent conversion and the

fungibility of money

 

Not long ago, Theresa described how she kept SSI money separate for her daughter

- see below. I didn't see any response posts, but this seems to need some

clarification. Since money is fungible, what's the difference if the shared

expense money is placed in an account that is inherited, or the parents, having

taken that money as intended then place an annual gift into a Sp. Needs Trust --

or for that matter, spend or give any other money for the benefit of the

daughter. This analysis suggests that if we get SSI, we can no longer add to the

trust, but then the spending on separate living arrangements looks no different

to me.

Original post: " When my daughter was living at home, I 'charged' her

fair share of household expenses which was 1/3rd of the basic costs in

maintaining our home. I took that money and placed it in a savings account in my

and my husband's name

and social security, payable on death to Jen's special needs trust. I did not

place the money directly into her special needs trust as that could be

considered a 'fraudulent conversion' and I didn't want to have to get into

defending the transfer or risk sabotaging an otherwise properly written special

needs trust....

When moved out of our home many years later, I had saved enough money

to completely furnish her new home. was not able to save the money but

by charging' her for the food and shelter she received in my home, I was able to

set aside this money for Jen's future. I also used a portion of the money Jen

paid me for 'rent' to pay the premium on a 2nd to die life insurance policy. The

2nd to die policy is an excellent method of funding a special needs trust.

Now that Jen is living separately, I have to pay the premium on the policy with

my own funds but for many years, I was able to use Jen's rent money for this

purpose. "

[Guest guest]

Terrie, thank you for sharing this with us. My daughter receives a small

paycheck each month (ten hours). Could I increase her food and lodging payments

to me to include this amount and do as you described?

Thanks

>

> Properly funding a SNT is a complicated issue.  I'll try to expand on my

earlier email with the hope of making it clearer.  My firm offers a training

each year in the spring on how to manage a special needs trust.  If you are

still confused, you may want to watch for the announcement of the date for the

2012 seminar on " Managing  a SNT so you Don't Disqualify a Beneficiary from

Gov't. Benefits " . 

>  

> In order to receive the full SSI check of $674 per month, the SSI recipient

must be contributing to the expense of food and shelter s/he is recieving in

his/her parents home.  If I had not 'charged' Jen for the food and shelter I

was providing for her, she would have received $220 less in SSI.  By charging

her for the food and shelter I provided, my daughter received the full check. 

I then took the money she gave me and set it aside with the intent of using that

money to provide a better future for her.  The money she gave me for food and

shelter was now legally mine to do with as I pleased.  I could spend it on

myself, pay my own bills with it, save it for my retirement, etc.  Instead I

set it aside with the hope of providing a better future for her. 

>  

> It is not permissable for a special needs beneficiary to put his/her OWN

money  into a 3rd party SNT (the kind that doesn't require a payback to the

state).  If I had put the money Jen paid me for food and shelter immediately

into the Special Needs Trust, it may have been treated as a " step transfer " . 

> It would have looked like Jen was giving me money from her SSI and I was

immediately placing 'her SSI money " in the trust which could have been

interpreted as a step transfer.  Welfare may have tried to collapse the step

transfer from Jen to me and from me to the SNT and treated the deposit in the

trust as if it came directly from Jen.  This could sabotage an otherwise

properly written SNT.  I feel I could have defended the transfer but why take a

chance on having to deal with an SSI appeal when the easier solution is just to

set aside the funds, which were now mine to do with as I pleased, for Jen's

future.

>  

> Another reason for holding the money(which is now legally ours and no longer

Jen's)  in our own name is that  we were young parents (younger anyway) and I

did not know if I would need this money for an emergency situation for

ourselves.  By setting it aside in a savings account in my husband and my names

and SS#, we had access to the money in the future if we needed it.  If we never

needed it, and it was there at our deaths, it would flow immediately to the SNT

as I added a Payable on Death clause beneficiary designation on the savings

account. 

>  

> Yet another reason for holding the money (which was now legally ours) in our

own name and not immediately depositing into the SNT is the fact that lifetime

gifting of a SNT creates gift tax issues which I did not want to be bothered

with.  The gift tax issues are too complicated to try to discuss in an email

but if a parent wants to fund a trust with lifetime gifts, s/he needs to discuss

the estate/gift tax issues in detail with their attorney.

>  

> I hope this clarifies my earlier email.  Terrie

> From: jbergman51 <jbergman51@...>

> IPADDUnite

> Sent: Saturday, September 10, 2011 9:23 PM

> Subject: SSI, shared expenses, fraudulent conversion and the

fungibility of money

>

>

>  

> Not long ago, Theresa described how she kept SSI money separate for her

daughter - see below. I didn't see any response posts, but this seems to need

some clarification. Since money is fungible, what's the difference if the shared

expense money is placed in an account that is inherited, or the parents, having

taken that money as intended then place an annual gift into a Sp. Needs Trust --

or for that matter, spend or give any other money for the benefit of the

daughter. This analysis suggests that if we get SSI, we can no longer add to the

trust, but then the spending on separate living arrangements looks no different

to me.

>

> Original post: " When my daughter was living at home, I 'charged' her

fair share of household expenses which was 1/3rd of the basic costs in

maintaining our home. I took that money and placed it in a savings account in my

and my husband's name

> and social security, payable on death to Jen's special needs trust. I did

not place the money directly into her special needs trust as that could be

considered a 'fraudulent conversion' and I didn't want to have to get into

defending the transfer or risk sabotaging an otherwise properly written special

needs trust....

>

> When moved out of our home many years later, I had saved enough money

to completely furnish her new home. was not able to save the money but

by charging' her for the food and shelter she received in my home, I was able to

set aside this money for Jen's future. I also used a portion of the money Jen

paid me for 'rent' to pay the premium on a 2nd to die life insurance policy. The

2nd to die policy is an excellent method of funding a special needs trust.

>

> Now that Jen is living separately, I have to pay the premium on the policy

with my own funds but for many years, I was able to use Jen's rent money for

this purpose. "

>

>

>

>

>

[Guest guest]

It is difficult to answer a specific question about a specific situation when I

do not have more facts.  The general rule is you can charge your child a

fraction of 1/over the number of people who live in your home (in my case it was

1/3rd) for basic food and shelter expenses.  If what you are charging your

daughter from her SSI, is less than 1/? then I assume you could charge her

more.  Sorry this is not specific but so much of these depends on circumstances

so not able to definitely say yes or no.  Just important to remember the

general rule of no more than fair share costs.

From: cmfinato <cmfinato@...>

IPADDUnite

Sent: Sunday, September 11, 2011 8:53 AM

Subject: Re: SSI, shared expenses, fraudulent conversion and the

fungibility of money

 

Terrie, thank you for sharing this with us. My daughter receives a small

paycheck each month (ten hours). Could I increase her food and lodging payments

to me to include this amount and do as you described?

Thanks

>

> Properly funding a SNT is a complicated issue.  I'll try to expand on my

earlier email with the hope of making it clearer.  My firm offers a training

each year in the spring on how to manage a special needs trust.  If you are

still confused, you may want to watch for the announcement of the date for the

2012 seminar on " Managing  a SNT so you Don't Disqualify a Beneficiary from

Gov't. Benefits " . 

>  

> In order to receive the full SSI check of $674 per month, the SSI recipient

must be contributing to the expense of food and shelter s/he is recieving in

his/her parents home.  If I had not 'charged' Jen for the food and shelter I

was providing for her, she would have received $220 less in SSI.  By charging

her for the food and shelter I provided, my daughter received the full

check.  I then took the money she gave me and set it aside with the intent of

using that money to provide a better future for her.  The money she gave me

for food and shelter was now legally mine to do with as I pleased.  I could

spend it on myself, pay my own bills with it, save it for my retirement,

etc.  Instead I set it aside with the hope of providing a better future

for her. 

>  

> It is not permissable for a special needs beneficiary to put his/her OWN

money  into a 3rd party SNT (the kind that doesn't require a payback to the

state).  If I had put the money Jen paid me for food and shelter immediately

into the Special Needs Trust, it may have been treated as a " step transfer " . 

> It would have looked like Jen was giving me money from her SSI and I was

immediately placing 'her SSI money " in the trust which could have been

interpreted as a step transfer.  Welfare may have tried to collapse the

step transfer from Jen to me and from me to the SNT and treated the deposit in

the trust as if it came directly from Jen.  This could sabotage an otherwise

properly written SNT.  I feel I could have defended the transfer but why take

a chance on having to deal with an SSI appeal when the easier solution is just

to set aside the funds, which were now mine to do with as I pleased, for Jen's

future.

>  

> Another reason for holding the money(which is now legally ours and no longer

Jen's)  in our own name is that  we were young parents (younger anyway)

and I did not know if I would need this money for an emergency situation for

ourselves.  By setting it aside in a savings account in my husband and my

names and SS#, we had access to the money in the future if we needed it.  If

we never needed it, and it was there at our deaths, it would flow immediately to

the SNT as I added a Payable on Death clause beneficiary designation on the

savings account. 

>  

> Yet another reason for holding the money (which was now legally ours) in our

own name and not immediately depositing into the SNT is the fact that lifetime

gifting of a SNT creates gift tax issues which I did not want to be

bothered with.  The gift tax issues are too complicated to try to discuss in

an email but if a parent wants to fund a trust with lifetime gifts, s/he needs

to discuss the estate/gift tax issues in detail with their attorney.

>  

> I hope this clarifies my earlier email.  Terrie

> From: jbergman51 <jbergman51@...>

> IPADDUnite

> Sent: Saturday, September 10, 2011 9:23 PM

> Subject: SSI, shared expenses, fraudulent conversion and the

fungibility of money

>

>

>  

> Not long ago, Theresa described how she kept SSI money separate for her

daughter - see below. I didn't see any response posts, but this seems to need

some clarification. Since money is fungible, what's the difference if the shared

expense money is placed in an account that is inherited, or the parents, having

taken that money as intended then place an annual gift into a Sp. Needs Trust --

or for that matter, spend or give any other money for the benefit of the

daughter. This analysis suggests that if we get SSI, we can no longer add to the

trust, but then the spending on separate living arrangements looks no different

to me.

>

> Original post: " When my daughter was living at home, I 'charged' her

fair share of household expenses which was 1/3rd of the basic costs in

maintaining our home. I took that money and placed it in a savings account in my

and my husband's name

> and social security, payable on death to Jen's special needs trust. I did

not place the money directly into her special needs trust as that could be

considered a 'fraudulent conversion' and I didn't want to have to get into

defending the transfer or risk sabotaging an otherwise properly written special

needs trust....

>

> When moved out of our home many years later, I had saved enough money

to completely furnish her new home. was not able to save the money but

by charging' her for the food and shelter she received in my home, I was able to

set aside this money for Jen's future. I also used a portion of the money Jen

paid me for 'rent' to pay the premium on a 2nd to die life insurance policy. The

2nd to die policy is an excellent method of funding a special needs trust.

>

> Now that Jen is living separately, I have to pay the premium on the policy

with my own funds but for many years, I was able to use Jen's rent money for

this purpose. "

>

>

>

>

>

[Guest guest]

Thank you Terrie, you did answer my question. We charge our daughter a lot less

than 1/3 of the household expenses. The smaller the family, the larger the

share. If we took our daughter's actual share, her SSI would be a negative.

> >

> > Properly funding a SNT is a complicated issue.  I'll try to expand on my

earlier email with the hope of making it clearer.  My firm offers a training

each year in the spring on how to manage a special needs trust.  If you are

still confused, you may want to watch for the announcement of the date for the

2012 seminar on " Managing  a SNT so you Don't Disqualify a Beneficiary from

Gov't. Benefits " . 

> >  

> > In order to receive the full SSI check of $674 per month, the SSI recipient

must be contributing to the expense of food and shelter s/he is recieving in

his/her parents home.  If I had not 'charged' Jen for the food and shelter I

was providing for her, she would have received $220 less in SSI.  By charging

her for the food and shelter I provided, my daughter received the full

check.  I then took the money she gave me and set it aside with the intent of

using that money to provide a better future for her.  The money she gave me

for food and shelter was now legally mine to do with as I pleased.  I could

spend it on myself, pay my own bills with it, save it for my retirement,

etc.  Instead I set it aside with the hope of providing a better future

for her. 

> >  

> > It is not permissable for a special needs beneficiary to put his/her OWN

money  into a 3rd party SNT (the kind that doesn't require a payback to the

state).  If I had put the money Jen paid me for food and shelter immediately

into the Special Needs Trust, it may have been treated as a " step transfer " . 

> > It would have looked like Jen was giving me money from her SSI and I was

immediately placing 'her SSI money " in the trust which could have been

interpreted as a step transfer.  Welfare may have tried to collapse the

step transfer from Jen to me and from me to the SNT and treated the deposit in

the trust as if it came directly from Jen.  This could sabotage an otherwise

properly written SNT.  I feel I could have defended the transfer but why take

a chance on having to deal with an SSI appeal when the easier solution is just

to set aside the funds, which were now mine to do with as I pleased, for Jen's

future.

> >  

> > Another reason for holding the money(which is now legally ours and no longer

Jen's)  in our own name is that  we were young parents (younger anyway)

and I did not know if I would need this money for an emergency situation for

ourselves.  By setting it aside in a savings account in my husband and my

names and SS#, we had access to the money in the future if we needed it.  If

we never needed it, and it was there at our deaths, it would flow immediately to

the SNT as I added a Payable on Death clause beneficiary designation on the

savings account. 

> >  

> > Yet another reason for holding the money (which was now legally ours) in our

own name and not immediately depositing into the SNT is the fact that lifetime

gifting of a SNT creates gift tax issues which I did not want to be

bothered with.  The gift tax issues are too complicated to try to discuss in

an email but if a parent wants to fund a trust with lifetime gifts, s/he needs

to discuss the estate/gift tax issues in detail with their attorney.

> >  

> > I hope this clarifies my earlier email.  Terrie

> > From: jbergman51 <jbergman51@>

> > IPADDUnite

> > Sent: Saturday, September 10, 2011 9:23 PM

> > Subject: SSI, shared expenses, fraudulent conversion and the

fungibility of money

> >

> >

> >  

> > Not long ago, Theresa described how she kept SSI money separate for her

daughter - see below. I didn't see any response posts, but this seems to need

some clarification. Since money is fungible, what's the difference if the shared

expense money is placed in an account that is inherited, or the parents, having

taken that money as intended then place an annual gift into a Sp. Needs Trust --

or for that matter, spend or give any other money for the benefit of the

daughter. This analysis suggests that if we get SSI, we can no longer add to the

trust, but then the spending on separate living arrangements looks no different

to me.

> >

> > Original post: " When my daughter was living at home, I 'charged'

her fair share of household expenses which was 1/3rd of the basic costs in

maintaining our home. I took that money and placed it in a savings account in my

and my husband's name

> > and social security, payable on death to Jen's special needs trust. I

did not place the money directly into her special needs trust as that could be

considered a 'fraudulent conversion' and I didn't want to have to get into

defending the transfer or risk sabotaging an otherwise properly written special

needs trust....

> >

> > When moved out of our home many years later, I had saved enough

money to completely furnish her new home. was not able to save the

money but by charging' her for the food and shelter she received in my home, I

was able to set aside this money for Jen's future. I also used a portion of the

money Jen paid me for 'rent' to pay the premium on a 2nd to die life insurance

policy. The 2nd to die policy is an excellent method of funding a special needs

trust.

> >

> > Now that Jen is living separately, I have to pay the premium on the policy

with my own funds but for many years, I was able to use Jen's rent money for

this purpose. "

> >

> >

> >

> >

> >

[Guest guest]

Thanks for the quick and extensive reply. Actually, that part of the

explanation was clear to me. I was just wondering what's the difference between

-- taking the shared expense money, " which is now legally mine " and saving it

until death (as you originally planned) or -- saving it for several years (as

you ended up doing) or -- simply adding it to my own savings and deciding every

year or so that, well I won't need all this, so I'll give some more (less than

$12,000 tax limit) to the trust. It seems to me it's all in the intent

(supported by the timing).

>

> Properly funding a SNT is a complicated issue.  I'll try to expand on my

earlier email with the hope of making it clearer.  My firm offers a training

each year in the spring on how to manage a special needs trust.  If you are

still confused, you may want to watch for the announcement of the date for the

2012 seminar on " Managing  a SNT so you Don't Disqualify a Beneficiary from

Gov't. Benefits " . 

>  

> In order to receive the full SSI check of $674 per month, the SSI recipient

must be contributing to the expense of food and shelter s/he is recieving in

his/her parents home.  If I had not 'charged' Jen for the food and shelter I

was providing for her, she would have received $220 less in SSI.  By charging

her for the food and shelter I provided, my daughter received the full check. 

I then took the money she gave me and set it aside with the intent of using that

money to provide a better future for her.  The money she gave me for food and

shelter was now legally mine to do with as I pleased.  I could spend it on

myself, pay my own bills with it, save it for my retirement, etc.  Instead I

set it aside with the hope of providing a better future for her. 

>  

> It is not permissable for a special needs beneficiary to put his/her OWN

money  into a 3rd party SNT (the kind that doesn't require a payback to the

state).  If I had put the money Jen paid me for food and shelter immediately

into the Special Needs Trust, it may have been treated as a " step transfer " . 

> It would have looked like Jen was giving me money from her SSI and I was

immediately placing 'her SSI money " in the trust which could have been

interpreted as a step transfer.  Welfare may have tried to collapse the step

transfer from Jen to me and from me to the SNT and treated the deposit in the

trust as if it came directly from Jen.  This could sabotage an otherwise

properly written SNT.  I feel I could have defended the transfer but why take a

chance on having to deal with an SSI appeal when the easier solution is just to

set aside the funds, which were now mine to do with as I pleased, for Jen's

future.

>  

> Another reason for holding the money(which is now legally ours and no longer

Jen's)  in our own name is that  we were young parents (younger anyway) and I

did not know if I would need this money for an emergency situation for

ourselves.  By setting it aside in a savings account in my husband and my names

and SS#, we had access to the money in the future if we needed it.  If we never

needed it, and it was there at our deaths, it would flow immediately to the SNT

as I added a Payable on Death clause beneficiary designation on the savings

account. 

>  

> Yet another reason for holding the money (which was now legally ours) in our

own name and not immediately depositing into the SNT is the fact that lifetime

gifting of a SNT creates gift tax issues which I did not want to be bothered

with.  The gift tax issues are too complicated to try to discuss in an email

but if a parent wants to fund a trust with lifetime gifts, s/he needs to discuss

the estate/gift tax issues in detail with their attorney.

>  

> I hope this clarifies my earlier email.  Terrie

> From: jbergman51 <jbergman51@...>

> IPADDUnite

> Sent: Saturday, September 10, 2011 9:23 PM

> Subject: SSI, shared expenses, fraudulent conversion and the

fungibility of money

>

>

>  

> Not long ago, Theresa described how she kept SSI money separate for her

daughter - see below. I didn't see any response posts, but this seems to need

some clarification. Since money is fungible, what's the difference if the shared

expense money is placed in an account that is inherited, or the parents, having

taken that money as intended then place an annual gift into a Sp. Needs Trust --

or for that matter, spend or give any other money for the benefit of the

daughter. This analysis suggests that if we get SSI, we can no longer add to the

trust, but then the spending on separate living arrangements looks no different

to me.

>

> Original post: " When my daughter was living at home, I 'charged' her

fair share of household expenses which was 1/3rd of the basic costs in

maintaining our home. I took that money and placed it in a savings account in my

and my husband's name

> and social security, payable on death to Jen's special needs trust. I did

not place the money directly into her special needs trust as that could be

considered a 'fraudulent conversion' and I didn't want to have to get into

defending the transfer or risk sabotaging an otherwise properly written special

needs trust....

>

> When moved out of our home many years later, I had saved enough money

to completely furnish her new home. was not able to save the money but

by charging' her for the food and shelter she received in my home, I was able to

set aside this money for Jen's future. I also used a portion of the money Jen

paid me for 'rent' to pay the premium on a 2nd to die life insurance policy. The

2nd to die policy is an excellent method of funding a special needs trust.

>

> Now that Jen is living separately, I have to pay the premium on the policy

with my own funds but for many years, I was able to use Jen's rent money for

this purpose. "

>

>

>

>

>

[Guest guest]

The $13,000 (not $12,000) annual gift tax exclusion does not apply to an

irrevocable 3rd party special needs trust. The trust can be drafted as a Grantor

Trust for the parents so that it is not deemed a gift.

Sent from my iPhone

Rubin J.D.

SPECIAL NEEDS FUTURE PLANNING

Law Offices of Rubin & Associates

@...<mailto:@...>

office 847.279.7999

toll free 866.to.rubin

fax 847.279.0090

visit <http://www.SNFP.net> www.SNFP.net<http://www.SNFP.net>

Member of The Special Needs Alliance - <http://www.specialneedsalliance.org>

www.specialneedsalliance.org<http://www.specialneedsalliance.org>

On Sep 11, 2011, at 4:01 PM, " jbergman51 "

<jbergman51@...<mailto:jbergman51@...>> wrote:

Thanks for the quick and extensive reply. Actually, that part of the explanation

was clear to me. I was just wondering what's the difference between -- taking

the shared expense money, " which is now legally mine " and saving it until death

(as you originally planned) or -- saving it for several years (as you ended up

doing) or -- simply adding it to my own savings and deciding every year or so

that, well I won't need all this, so I'll give some more (less than $12,000 tax

limit) to the trust. It seems to me it's all in the intent (supported by the

timing).

>

> Properly funding a SNT is a complicated issue. I'll try to expand on my

earlier email with the hope of making it clearer. My firm offers a training

each year in the spring on how to manage a special needs trust. If you are

still confused, you may want to watch for the announcement of the date for the

2012 seminar on " Managing a SNT so you Don't Disqualify a Beneficiary from

Gov't. Benefits " .Â

> Â

> In order to receive the full SSI check of $674 per month, the SSI recipient

must be contributing to the expense of food and shelter s/he is recieving in

his/her parents home. If I had not 'charged' Jen for the food and shelter I

was providing for her, she would have received $220 less in SSI. By charging

her for the food and shelter I provided, my daughter received the full

check. I then took the money she gave me and set it aside with the intent of

using that money to provide a better future for her. The money she gave me

for food and shelter was now legally mine to do with as I pleased. I could

spend it on myself, pay my own bills with it, save it for my retirement,

etc. Instead I set it aside with the hope of providing a better future for

her.Â

> Â

> It is not permissable for a special needs beneficiary to put his/her OWN

money into a 3rd party SNT (the kind that doesn't require a payback to the

state). If I had put the money Jen paid me for food and shelter immediately

into the Special Needs Trust, it may have been treated as a " step transfer " .Â

> It would have looked like Jen was giving me money from her SSI and I was

immediately placing 'her SSI money " in the trust which could have been

interpreted as a step transfer. Welfare may have tried to collapse the

step transfer from Jen to me and from me to the SNT and treated the deposit in

the trust as if it came directly from Jen. This could sabotage an otherwise

properly written SNT. I feel I could have defended the transfer but why take

a chance on having to deal with an SSI appeal when the easier solution is just

to set aside the funds, which were now mine to do with as I pleased, for Jen's

future.

> Â

> Another reason for holding the money(which is now legally ours and no longer

Jen's)  in our own name is that we were young parents (younger anyway)

and I did not know if I would need this money for an emergency situation for

ourselves. By setting it aside in a savings account in my husband and my

names and SS#, we had access to the money in the future if we needed it. If

we never needed it, and it was there at our deaths, it would flow immediately to

the SNT as I added a Payable on Death clause beneficiary designation on the

savings account.Â

> Â

> Yet another reason for holding the money (which was now legally ours) in our

own name and not immediately depositing into the SNT is the fact that lifetime

gifting of a SNT creates gift tax issues which I did not want to be bothered

with. The gift tax issues are too complicated to try to discuss in an email

but if a parent wants to fund a trust with lifetime gifts, s/he needs to discuss

the estate/gift tax issues in detail with their attorney.

> Â

> I hope this clarifies my earlier email. Terrie

> From: jbergman51 <jbergman51@...>

> <mailto:IPADDUnite%40>

IPADDUnite <mailto:IPADDUnite >

> Sent: Saturday, September 10, 2011 9:23 PM

> Subject: SSI, shared expenses, fraudulent conversion and the

fungibility of money

>

>

> Â

> Not long ago, Theresa described how she kept SSI money separate for her

daughter - see below. I didn't see any response posts, but this seems to need

some clarification. Since money is fungible, what's the difference if the shared

expense money is placed in an account that is inherited, or the parents, having

taken that money as intended then place an annual gift into a Sp. Needs Trust --

or for that matter, spend or give any other money for the benefit of the

daughter. This analysis suggests that if we get SSI, we can no longer add to the

trust, but then the spending on separate living arrangements looks no different

to me.

>

> Original post: " When my daughter was living at home, I 'charged' her

fair share of household expenses which was 1/3rd of the basic costs in

maintaining our home. I took that money and placed it in a savings account in my

and my husband's name

> and social security, payable on death to Jen's special needs trust. I did

not place the money directly into her special needs trust as that could be

considered a 'fraudulent conversion' and I didn't want to have to get into

defending the transfer or risk sabotaging an otherwise properly written special

needs trust....

>

> When moved out of our home many years later, I had saved enough money

to completely furnish her new home. was not able to save the money but

by charging' her for the food and shelter she received in my home, I was able to

set aside this money for Jen's future. I also used a portion of the money Jen

paid me for 'rent' to pay the premium on a 2nd to die life insurance policy. The

2nd to die policy is an excellent method of funding a special needs trust.

>

> Now that Jen is living separately, I have to pay the premium on the policy

with my own funds but for many years, I was able to use Jen's rent money for

this purpose. "

>

>

>

>

>

[Guest guest]

As I mentioned in earlier email, lifetime gifting creates a number of estate tax

and gift tax issues which vary for different families. You cannot give annual

gift exclusions of $13,000 per year to a typical SNT. During lifetime gifting

to a SNT is complicated and in most cases not needed. Every case is different of

course, but for my needs holding funds in a separate account met our needs with

the least amount of complexity.

I suggest you discuss your tax situation, estate plan needs and long term goals

with an estate planner familiar with SNTs and make a decision that is right for

you.

Sent from my iPhone

On Sep 11, 2011, at 4:01 PM, " jbergman51 " <jbergman51@...> wrote:

> Thanks for the quick and extensive reply. Actually, that part of the

explanation was clear to me. I was just wondering what's the difference between

-- taking the shared expense money, " which is now legally mine " and saving it

until death (as you originally planned) or -- saving it for several years (as

you ended up doing) or -- simply adding it to my own savings and deciding every

year or so that, well I won't need all this, so I'll give some more (less than

$12,000 tax limit) to the trust. It seems to me it's all in the intent

(supported by the timing).

>

>

>

>

>

> >

> > Properly funding a SNT is a complicated issue. I'll try to expand on my

earlier email with the hope of making it clearer. My firm offers a training

each year in the spring on how to manage a special needs trust. If you are

still confused, you may want to watch for the announcement of the date for the

2012 seminar on " Managing a SNT so you Don't Disqualify a Beneficiary from

Gov't. Benefits " .Â

> > Â

> > In order to receive the full SSI check of $674 per month, the SSI recipient

must be contributing to the expense of food and shelter s/he is recieving in

his/her parents home. If I had not 'charged' Jen for the food and shelter I

was providing for her, she would have received $220 less in SSI. By charging

her for the food and shelter I provided, my daughter received the full

check. I then took the money she gave me and set it aside with the intent of

using that money to provide a better future for her. The money she gave me

for food and shelter was now legally mine to do with as I pleased. I could

spend it on myself, pay my own bills with it, save it for my retirement,

etc. Instead I set it aside with the hope of providing a better future for

her.Â

> > Â

> > It is not permissable for a special needs beneficiary to put his/her OWN

money into a 3rd party SNT (the kind that doesn't require a payback to the

state). If I had put the money Jen paid me for food and shelter immediately

into the Special Needs Trust, it may have been treated as a " step transfer " .Â

> > It would have looked like Jen was giving me money from her SSI and I was

immediately placing 'her SSI money " in the trust which could have been

interpreted as a step transfer. Welfare may have tried to collapse the

step transfer from Jen to me and from me to the SNT and treated the deposit in

the trust as if it came directly from Jen. This could sabotage an otherwise

properly written SNT. I feel I could have defended the transfer but why take

a chance on having to deal with an SSI appeal when the easier solution is just

to set aside the funds, which were now mine to do with as I pleased, for Jen's

future.

> > Â

> > Another reason for holding the money(which is now legally ours and no longer

Jen's)  in our own name is that we were young parents (younger anyway)

and I did not know if I would need this money for an emergency situation for

ourselves. By setting it aside in a savings account in my husband and my

names and SS#, we had access to the money in the future if we needed it. If

we never needed it, and it was there at our deaths, it would flow immediately to

the SNT as I added a Payable on Death clause beneficiary designation on the

savings account.Â

> > Â

> > Yet another reason for holding the money (which was now legally ours) in our

own name and not immediately depositing into the SNT is the fact that lifetime

gifting of a SNT creates gift tax issues which I did not want to be bothered

with. The gift tax issues are too complicated to try to discuss in an email

but if a parent wants to fund a trust with lifetime gifts, s/he needs to discuss

the estate/gift tax issues in detail with their attorney.

> > Â

> > I hope this clarifies my earlier email. Terrie

> > From: jbergman51 <jbergman51@...>

> > IPADDUnite

> > Sent: Saturday, September 10, 2011 9:23 PM

> > Subject: SSI, shared expenses, fraudulent conversion and the

fungibility of money

> >

> >

> > Â

> > Not long ago, Theresa described how she kept SSI money separate for her

daughter - see below. I didn't see any response posts, but this seems to need

some clarification. Since money is fungible, what's the difference if the shared

expense money is placed in an account that is inherited, or the parents, having

taken that money as intended then place an annual gift into a Sp. Needs Trust --

or for that matter, spend or give any other money for the benefit of the

daughter. This analysis suggests that if we get SSI, we can no longer add to the

trust, but then the spending on separate living arrangements looks no different

to me.

> >

> > Original post: " When my daughter was living at home, I 'charged'

her fair share of household expenses which was 1/3rd of the basic costs in

maintaining our home. I took that money and placed it in a savings account in my

and my husband's name

> > and social security, payable on death to Jen's special needs trust. I

did not place the money directly into her special needs trust as that could be

considered a 'fraudulent conversion' and I didn't want to have to get into

defending the transfer or risk sabotaging an otherwise properly written special

needs trust....

> >

> > When moved out of our home many years later, I had saved enough

money to completely furnish her new home. was not able to save the

money but by charging' her for the food and shelter she received in my home, I

was able to set aside this money for Jen's future. I also used a portion of the

money Jen paid me for 'rent' to pay the premium on a 2nd to die life insurance

policy. The 2nd to die policy is an excellent method of funding a special needs

trust.

> >

> > Now that Jen is living separately, I have to pay the premium on the policy

with my own funds but for many years, I was able to use Jen's rent money for

this purpose. "

> >

> >

> >

> >

> >