Presenter
Karen Currie
Trust Associate at Commonwealth Community Trust MBA from Clark University
Commonwealth Community Trust (CCT)
National nonprofit pooled trust organization that administers
pooled third-party and self-funded special needs trusts for individuals with disabilities. CCT has served over 950 clients since 1990 and is currently managing over $30 million dollars in trust funds for its clients.
Charitable Fund Award Program for financially needy
Introduction
Financial planning is always challenging for families,
particularly when planning for an uncertain future. For families who have a loved one with a disability,
additional considerations should be taken into account to ensure the best possible outcomes.
In this presentation, we will cover the basics of special
Agenda
Why consider a special needs trust? SNT Terminology
Third-party funded v. self funded special needs trusts Choosing the right trustee
The Pooled Trust option How does it work?
What now…?
Why consider a special needs trust?
When might an individual receive a large sum of money?
Inheritance,
Personal injury award Other situations…?
Special concerns when that individual has a disability:
1. They may need help managing the funds
2. They may need to qualify for means tested benefits
3. You may want to leave specific instructions as to how the trust will be utilized by/for your loved one
Why consider a special needs trust?
Benefit #1. Fiduciary Oversight
If you are concerned that your loved one may need help managing funds, a special needs trust (SNT) will put into place a trustee who has responsibility over making sure funds for your loved one are: (among other things)
Why consider a special needs trust?
Benefit #2. Public Benefits Eligibility
An SNT will allow for funds to be available for supplemental needs for the benefit of your loved one that will not count as a resource for means tested benefits. SSI and Medicaid are the main benefits that will be protected by a properly drafted and administered SNT. To qualify for these benefits, an individual cannot have over $2,000 in assets. Sometimes, an SNT will also protect access to benefits such as food stamps, subsidized housing, and other similar services. Can these public benefit programs be a beneficial tool for providing
Why consider a special needs trust?
Benefit #3. Advocacy/Instructions
Establishing an SNT is an opportunity for you to seriously
SNT Terminology
Beneficiary: the trust is for the benefit of ______ Grantor: authorizes transfer of funds into the trust
Trustee: person or entity that has fiduciary responsibility.
The trustee cannot be the beneficiary
Irrevocable: cannot be revoked. The trust can be
amended or terminated only under specific circumstances provided for in the trust itself
Remainder: any funds that are left in the trust when the
Third Party funded v. Self funded SNTs
The basic difference: Whose assets are funding the trust?
Example 1: A parent wants to establish a trust for their child
with a disability that will be funded through a life insurance
policy. The parent includes language in the policy to leave funds to the special needs trust for the benefit of their child.
Funds belong to the parent: THIRD PARTY FUNDED TRUST
Example 2: An individual who was disabled due to an accident
is receiving funds from a personal injury award settlement.
Third Party funded v. Self funded SNTs
The basic difference: Whose assets are funding the trust?
Example 3: A well-meaning grandparent has left an inheritance
in their will to a grandchild who has a disability and receives SSI and Medicaid benefits. A trust needs to be established in order to retain the individual’s public benefits.
SELF-FUNDED TRUST. Why?
Funds belong to the individual - the inheritance was left directly to the
individual. Either an SNT was not set up in advance, or the
Third Party Funded SNT
Must be funded by someone other than the beneficiary Often established by the grantor in advance as a planning
tool, and funded at some later date (when the grantor passes away, for example)
Often a gift or inheritance, but the SNT must be recipient,
not the beneficiary
The beneficiary can be any age
There is no Medicaid payback clause required. The
Self-Funded SNT
The assets funding the trust are the beneficiary’s own
assets.
The grantor must be either a parent, grandparent, legal
guardian, or the Court.
Self-funded pooled trusts can be established by the beneficiary
May be subject to Medicaid payback if claims have been
paid on the beneficiary’s behalf.
Must be irrevocable.
The beneficiary must be younger than 65
Choosing the Right Trustee
The ideal trustee will:
Utilize the funds for the “sole benefit” of the beneficiary Maintain accurate accounting
Keep the best interest of the beneficiary in mind
Understand public benefits and keep up with changing
rules
Wisely invest the trust assets and follow fiduciary
requirements
Choosing the Right Trustee
What may impact this choice?
The amount of assets that will fund the SNT The type of assets that will fund the SNT
Is a family member or trusted individual willing to serve
as trustee, or would a professional trustee be a better choice?
Who provides professional trustee services?
Attorneys
Financial institutions
The Pooled Trust option
A Pooled Special Needs Trust is operated by a nonprofit
organization
Cross between a traditional SNT and a 401k
Beneficiaries do not draft their own trust documents, but
instead join the trust by completing a Joinder Agreement
Funds are pooled for investment purposes, but individual
accounting is kept for each subaccount Benefits of pooled trust:
Often have low or no minimum funding requirement and
lower administrative fees
Staff should be knowledgeable about rules regulating public
benefits and stay current on any changes
Staff are often sensitive to the needs of individuals with
How does it work?
Funds must be kept in a specific account
Any disbursements must be carefully accounted for
Any non-exempt expenditures or cash to the beneficiary
will be counted as income for SSI benefit calculation Procedure for disbursements at CCT
Advocate(s) is designated
One page payment request form Requests are evaluated
Approved disbursements are processed as a check
What now…?
Consider the future needs of your loved one and their
ability to provide for themselves after you are gone
Is a special needs trust right for your family? Determine what resources will fund the trust
Meet with an estate planning attorney familiar with
special needs planning
Establish a trust, Letter of intent
Update all beneficiary designations, notify anyone who
may leave your loved one an inheritance/monetary gift
Revisit the trust periodically or if your family situation
Additional Resources
Special Needs Alliance
http://www.specialneedsalliance.org/home
“The Voice”: Great articles about a variety of SNT topics
“Find an Attorney” tool (or call CCT to ask if we know of an
estate planning attorney in your area)
Special Needs Calculator Tool (Met Life)
http://www.metlifeiseasier.com/specialneedscalculator/index.asp
Social Security Administration Spotlight on Trusts
Questions?
Feel free to contact CCT with questions or for more
information.
CCT enrollment documents, FAQs, and fee schedules are
available at our website:
