Crowdfunding and Public Benefits: GoFundMe Campaigns May be Detrimental in the Long Term
Today there are countless crowdfunding sites (i.e. GoFundMe) which provide opportunities to raise funds online for specific purposes. Increasingly, I am sought to provide on advice with regard to how these funds affect means-tested public benefits such as SSI and Medicaid. Although I am not aware of any current case law surrounding crowdfunding campaigns, and there are no formal regulations in place from the Social Security Administration or the Department of Medical Assistance Services, there are issues that should be taken into consideration when a campaign is established for someone receiving benefits.
The first thing to asses is who setup the campaign. If the individual established their own crowdfunding campaign, they have unlimited access to the funds, and as a result, the funds received should be treated as income to the individual in the month received by the campaign, and as an asset for every month thereafter. As a result, the funds in the campaign would impact both SSI and Medicaid eligibility in the month funds are received, and every month thereafter until the funds are spent below $2,000.
If the campaign is established by another individual, I find the campaign to be analogous to a trust. Essentially, the establisher of the campaign controls the funds, similar to a Trustee, for the benefit of the individual, the Beneficiary, for the purpose detailed within the campaign. The best advice I can give to a client is that there is an affirmative duty to report a change of circumstances, and as a result, the beneficiary of the campaign must report it to avoid consequences such as long-term benefit overpayments or fraud charges.
When asked how I believe these accounts will be treated, I always indicate that without formal guidance from the agencies I cannot guarantee an answer, but that I believe the agencies will analyze the campaign to determine 1) how distributions will be made from the campaign and 2) the purpose of the campaign. Once again, this is similar to how such agencies would assess a trust established by another for an individual on benefits.
I believe that cash distributions would be treated similarly to cash distributions from the trust – as unearned income thus affecting SSI and Medicaid. In-kind distributions would result in payments to a vendor for services, and should therefore not be treated as income affecting benefits. In-kind distributions alone, however, may not be enough to satisfy agencies if the purpose of the campaign is for something benefits would otherwise cover, or if designed for “support” of the individual. Understanding that SSI and Medicaid are needs-based programs, the agencies essentially determine that if someone else is “supporting” the individual then there is no need for “support” from governmental sources. As a result, funds raised for “support” of the individual are to be used before those from the government resulting in a loss of benefits. Additionally, if the funds are for food or rental expenses, there is an in-kind support and maintenance rule in Social Security policy that would cause a reduction in the individual’s SSI. There can also be a detrimental impact if the campaign is established for the benefit of the individual’s family, and not just the individual, since many benefits look at household income and assets.
As you can see, the laws and policies surrounding crowdfunding campaigns are uncertain and complex. Before you establish a crowdfunding campaign, you should consult with an elder law attorney who may be able to discuss the impact of your intended campaign and what other options may exist to accomplish your overall objective. In many cases a better option may be to utilize a third-party special needs trust to hold the funds for the intended purposes. This will ensure that funds to be gifted to the individual do not impact an individual’s eligibility for public benefits.
Ask Kit Kat: Retired Police Dogs
Hook Law Center: Kit Kat, what’s new about how retired police dogs are handled in Texas?
Kit Kat: Well, this is a change that was long overdue. On November 5, 2019, voters in Texas voted for a constitutional amendment to allow dogs, horses, or other law enforcement animals to be adopted by their handlers or other caretakers who are considered “qualified.” Now this only makes sense, but before this change in the law, police dogs were considered to be property. Once they were no longer useful, they could be legally euthanized. Not all police units would take this extreme step, but some did. Collin County (TX) Sheriff Jim Skinner commented, “There’s been a lot of great dogs with great handlers, and right thing should have been done by them. But it’s better late than never.” It was also common practice overseas with the US Military, until 2000 when military law was changed to allow their handlers to have the first crack at adoption and, in 2016, the ability to bring the dogs home courtesy of the government. Before that time, dogs who could no longer perform as required were abandoned or euthanized.
It’s a shame it’s taken this long for dogs to distinguish themselves from being considered as property, but the practice goes back centuries. Police and other security dogs shouldn’t just be released to general animal adoption centers, complicating the adoption process. State Senator Birdwell, one of Texas law sponsors, comments that “Few people are qualified to humanely care for and properly supervise a police dog or horses, and these animals need to be cared for by a capable individual at the end of their service.”
It appears the old saying, “The wheels of justice turn slowly,” was very correct in this situation, but they did turn for the best eventually. Kudos to the Sheriffs’ Association of Texas who supported the amendment wholeheartedly! (Karen Bruillard, “Retired police dogs had to be sold or destroyed under state law. Voters just changed that,” The Washington Post, November 6, 2019)
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Shannon Laymon-Pecoraro is a Shareholder of Hook Law practicing in the areas of elder law, special needs planning, estate and trust administration, estate planning, asset protection planning, financial planning, guardianships, and conservatorships. Ms. Laymon-Pecoraro also works with plaintiffs who have been injured, and their trusted advisors, to advise on public benefits issues and developing trusts to protect settlements and verdicts. To date, she has completed over 250 personal-injury related trusts, specifically Settlement Protection Trusts and Special Needs Trusts, including those with Medicare Set-Asides.
Ms. Laymon-Pecoraro is certified as an Elder Law Attorney (CELA) by The National Elder Law Foundation (NELF). Approved by the American Bar Association and authorized by the Pennsylvania Supreme Court, the CELA certification is the legal industry’s “gold standard” for elder law and special needs practitioners. There are only about 500 CELA-certified attorneys nationwide.
Prior to joining the firm in 2012, Ms. Laymon-Pecoraro handled estate planning documents for members of the United States Department of the Army and has been involved in the legal representation of several large corporations.
- Elder Law
- Estate & Trust Administration
- Estate Planning
- Asset Protection Planning
- Guardianship & Conservatorship
- Long-Term Care Planning
- Special Needs Planning
- Financial Planning
- Personal Injury Settlement Consulting