Dealing with SNT Beneficiaries with Addiction

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1 Dealing with SNT Beneficiaries with Addiction Sarah L. Siegrist, LMHC, CAP Stetson University College of Law Travis D. Finchum, Esq., Special Needs Lawyers, PA and Co-Trustee - Guardian Pooled Trust Stetson University College of Law 2017 National Conference on Special Needs Planning and Special Needs Trusts October 18, 2017 The Big Picture The common thread of all beneficiaries of Pooled Special Needs Trusts (PSNT s) is that they each must meet Social Security s definition of being disabled. Often, the similarities stop there. Some beneficiaries will be infants with birth injuries such as cerebral palsy and others may be 90+ year olds with dementia (at least here in Florida they can be). Still others will have mental illness such as schizophrenia. Many will have multiple diagnoses. Every beneficiary poses a different challenge for a SNT administrator. Perhaps none are more challenging than a beneficiary with an addiction. If you think coming between a mother bear and her cub is scary, that may be preferable to getting between an addict and their money. Many Pooled SNT non-profits administer other forms of SNT s, including third party SNT s. In the case of third party SNT s the beneficiary may not have a formal determination of disability and may not even meet the definition under Social Security s guidelines. Some beneficiaries may not be on any public benefits. This beneficiary may be highly intelligent, highly functioning, highly educated and especially clever. They will find creative ways to try to get money to feed their addiction. Some examples may include: 1

2 Asking for cash outright, asking for goods or items that can be easily sold or returned for cash, asking the trust to pay for basic necessities so they can use their Social Security check to feed their addiction, buying fictional items from a friend or paying a friend for caregiving services or other services (lawn work, home repairs) that are not necessary or never even performed at all. What do our PSNT Documents Say Most PSNT s are entirely discretionary in nature. In fact, to be excluded for Supplemental Security Income (SSI) purposes, most of us should know that the beneficiary must not be able, under the terms of the trust instrument, to revoke or terminate the trust, nor be able to use the trust funds to meet his or her food or shelter needs and may not be permitted to use the trust principal for his or her support and maintenance. (SI D.1.a. and 2.) Most PSNT s have a distribution standard that says something like: The Trustee may pay or apply for the supplemental care or supplemental needs of a Beneficiary, such amounts from the principal or income, or both, of the Trust sub account maintained for such Beneficiary, up to the whole thereof, as the Trustee, in its sole and absolute discretion, may from time to time deem necessary, advisable or desirable. They may go on to say: Distributions from this Trust should not be made to, or for the benefit of, a Beneficiary if the effect of such distribution would be to supplant, replace, or to disqualify a Beneficiary from receiving, government assistance. However, such distributions are not specifically prohibited and 2

3 may be made with the full understanding of how such distributions may affect future benefits. Often, less verbiage is better, particularly in this area of drafting. We will assume that a PSNT Trustee can pay for anything the Trustee determines is appropriate, so when it comes to dealing with a beneficiary with addiction the question is generally not whether a Trustee can pay for something, but should the trustee pay for these things. And if so: what to pay for, how do we pay for it, how often, how much? SNT Administrators need to: Understand What Addiction is Become Knowledgeable on How to Identify Addiction Learn about Treatment Options What do Addicts Need? How can we help? To answer this, we need to understand the Addiction Process. Substance Use Disorders The Disease Concept Addiction was recognized as a disease in 1951 Meets criteria of all other terminal illnesses Chronic Progressive Subject to relapse Potentially fatal 3

4 Treatable Addiction Defined Psychology Today defines Addiction as a condition that results when a person ingests a substance (e.g., alcohol, cocaine, nicotine) or engages in an activity (e.g., gambling, sex, shopping) that can be pleasurable but the continuation of which becomes compulsive and interferes with ordinary responsibilities and concerns, such as work, relationships, or health. The most recent version of Diagnostic and Statistical Manual of Mental Disorders, published by the American Psychiatric Association, formally recognizes gambling as a behavioral addiction. Most other clinical addictions are still based on some sort of substance: drugs and alcohol, including nicotine and caffeine. As we discuss characteristics of addiction you may believe that activities such as shopping, using the internet or smart phones (like Facebook), playing video games, sex, eating, work, as well as many other activities can become, and sometimes are, an addiction. Some of these addictions just may not result in the same negative consequences as some of the substance addictions. In 2016 the U.S. Surgeon General s office published a report titled Facing Addiction in America. This report focused on Alcohol, Drugs and Health. A few findings: Over 27 million Americans reported current use of illicit drugs or misuse of prescription drugs. 66 million Americans reported binge drinking in the past month. 4

5 About 10% of people with a substance use disorder receive any type of specialty treatment and over 40% of people with a substance use disorder have a mental health condition too yet fewer than half receive any treatment for either disorder. The costs to our economy annually are estimated at $249 billion for alcohol misuse and $193 billion for illicit drug use. 5

6 Stages of addiction Early, Middle and Late 6

7 7

8 Sobriety and Relapse Working a program vs. living a program- from Alcoholics Anonymous and Narcotics Anonymous Basic Text. 8

9 Recovery and Relapse are often where the SNT administrators will be dealing with beneficiaries with an addiction. The same 2016 Surgeon General s report on addiction in America discusses some of the tools for Recovery. Recovery Supports: o Mutual Aid Groups your 12 step mutual aid groups like Alcoholics Anonymous that has been adapted into narcotics and other specific drugs as well as other support groups with professional assistance o Recovery Coaching connecting with community services o Recovery Housing supportive housing o Recovery Management check ups and other case monitoring may be in person or via telephone or through other technology o Recovery Community Centers peer led centers o Recovery-based Education high schools and colleges with sober living environments The relapse process Unfortunately, according to the Journal of the American Medical Association, vol. 284 pgs , 2000, the relapse rate for drug addiction is similar to that of treatments for other chronic conditions such as diabetes, asthma and hypertension, 40-60%. So about half of all persons who enter treatment and then recovery will fail. There is a plethora of information on the why s and how s of addiction from reliable sources like: 9

10 National Institute of Health s National Institute on Drug Abuse - Surgeon General of the United States- How It Works those who do not recover 10

11 Codependency and Enabling Codependency Defined Other focused Self-worth tied to helping Lack of ego strength 11

12 The Art of Letting Go Powerlessness Natural Consequences Setting Limits 12

13 So, what are we, as SNT administrators, to do? We are sitting on a pile of money, sometimes a small pile, but money nonetheless. The money is for the sole benefit of the person with an addiction. How can we benefit them? This is one of those scenarios where we may be damned if we do and damned if we don t. When there are no other beneficiaries of that pile of money (as there would be for a third party SNT) we have an obligation to try to take care of our beneficiary. Unlike family members or friends of an addict, we can t just ignore them. We are connected, in some manner, to our beneficiaries regardless of their condition. Trustees are a fiduciary We hold a legal and ethical relationship of trust and we must prudently take care of our beneficiary s money. We have a legal obligation to our beneficiaries that family members or friends may not have. Do you pay for: Therapy with a professional? Rehabilitation Programs? o The big, well known, programs? o What about programs that you have never heard of? o What about paying friends to take care of our beneficiary? o How many times do you pay for rehab? o Is there a dollar limit, or maximum percentage of the trust, you will spend? Items that you suspect may be easy to return or sell but otherwise are perfectly allowable? 13

14 Basic necessities when you know the beneficiary is using his or her own funds for their addiction? Nothing (or almost nothing) until the beneficiary gets help? Can you use the trust assets to encourage positive behavior? Is this our role? References: Alcoholics Anonymous Basic Text Narcotics Anonymous Basic Text Diagnostic and Statistical Manual of Mental Health Disorders (DSM-5) Substance Use Disorders The New Codependency: Help and Guidance for Today s Generation Melody Beattie 14