The Bench & Bar magazine is published to provide members of the KBA with information that will increase their knowledge of the law, improve the practice of law, and assist in improving the quality of legal services for the citizenry.
Issue link: https://kentuckybenchandbar.epubxp.com/i/132126
In Ky. Rev. Stat. § 387.870, the contents of the petition are specified. The petitioner is required to advise the court of the particulars of the case. First, the petitioner is to apprise the court of the circumstances of the disabled individual: who is the disabled individual, and what is the nature of the disability. The new Kentucky statute Counsel should set provides a reassuring reso- forth suffilution to this quandary: it cient facts with a case greatly broadens the open- history to ing of the needle and thus inform the court how – within the scope of the the trust federal law – allows many will be in the dismore camels to pass abled indithrough to bring relief to vidual's best interthe disabled individual. est. Background information about the disabled individual's situation should indicate the benefits to be obtained: is the disabled individual applying for Medicaid, or about to lose Medicaid but for the creation of the trust? The court should be advised as to the disabled individual's current living arrangements – is he or she in a nursing home, group home, residing in a structured living community? Though not specifically required under the statute, at least where the disabled individual is not already before the court and known to the court, prudence would suggest that along with the petition, counsel may wish to attach a narrative from a physician, social worker, care provider or someone familiar with the long-term care needs of the individual. The court should be informed of the nature of the relationship of the grantor and trustee to the disabled individual, along with whomever else has a familial or other significant relationship with the individual,5 including other fiduciaries – even potential lienholders if there may be a Medicare or Medicaid lien.6 The petitioner must allege the facts specific to the disabled individual and must demonstrate to the court that the establishment of the trust is proper.7 In other words, the court will want assurances that the plan is being submitted in good faith and consistent with the rationale for asset protection under 42 U.S.C. § 1396p. A draft of the SNT agreement and specific information about any litigation and the expected benefits should be included with the petition.8 Under Ky. Rev. Stat. § 387.880, the matter will be set for a hearing 14 days in advance with notice – unless waived – given to interested parties in accordance with section 386.665. In my practice, I like to highlight for the Court's easy reference the important substantive provisions of the trust to show that it complies with the requirements of the federal statute. These essential requirements are that: (1) the trust is for the sole benefit of the disabled individual who must be under age 65;9 (2) it is irrevocable; and (3) it specifically requires reimbursement to the state for medical expenses upon the death of the disabled individual or termination of the trust during the disabled individual's lifetime in the event the individual were to recover and no longer be permanently disabled.10 I also include provisions that make it clear that while the disabled individual is receiving benefits, the trust is limited to providing only for the disabled individual's supplemental support and will not supplant available public assistance benefits. Which court? For purposes of the SNT statute, jurisdiction depends upon the type of case. Under Ky. Rev. Stat. § 387.860(4), if there are judicial proceedings pending where the disabled individual has or will be acquiring assets, then the court presiding over that case has jurisdiction over the SNT petition. The statute not only vests jurisdiction in open cases, but also addresses the situation where the need for a SNT becomes apparent after the underlying action has closed, and allows the disabled individual or other authorized petitioner to reopen the case.11 The term "District Court" may have different applications in different counties. In Jefferson County, for example, which has a separate division for Disability and Probate, it appears to be at the judge's discretion whether the case should be brought in a particular division. Since typically the Probate Division hears matters involving trusts when there is no guardian, and it is in the Probate Clerk's Office where trusts are registered, Probate may be best suited to adjudicate the petition.12 COURT-ORDERED TRUST Section 387.885 authorizes relief to be granted in the form of a court-ordered SNT. To obtain this relief, counsel is well advised to draft an order creating the trust for the judge's signature. The court is actually creating the trust, which the new statute allows the court to do. Whereas those individuals referred to in section 387.865 now have standing to get in the courthouse doors, under section 387.885, the court effectively creates the trust.13 At the time the order is entered, the court's attention is directed to various matters requiring resolution. Pursuant to section 387.885, the court may order that the proposed trustee be joined with other trustees, may designate another trustee, other than the one requested in the petition, who is better suited to serve, and may determine what assets – if not all –should be placed in the trust.14 At the hearing the court should be provided with sufficient information pertaining to any liens and claims against the funds before the trust is established. The court should also consider whether surety can be excused, and whether – under section 387.900 –any ongoing periodic settlements should be submitted to the court. SUBSEQUENT PROCEEDINGS AND ADDITIONAL MATTERS The statute addresses the possible need for subsequent judicial proceedings with respect to an existing SNT trust, whether created by a court or otherwise, in Ky. Rev. Stat. § 387.890. The procedure for doing so cross-references the normal procedure for bringing a new petition as discussed for SNT cases de novo under section 387.865. Further, pursuant to section 387.895, the court may permit, B&B; • 05.13 15 What is required