Two Small Words Bring Meaningful Change for Special Needs Trusts

By Marty Ford

The enactment of the 21st Century Cures Act (P.L. 114-255) on December 13 brought with it a very short but meaningful provision for people with disabilities. By adding only two words (”the individual”) to an existing statute, section 5007, the Fairness in Medicaid Supplemental Needs Trusts, will allow individuals who have disabilities to set up their own self-settled trusts for purposes of the Medicaid program.   This technical fix was long needed to address a technical legislative drafting error in a 1993 federal law which was later interpreted to have Congressional intent.

Self-settled special needs trusts are an important planning tool for many individuals with disabilities who receive certain government benefits, such as Medicaid and Supplemental Security Income (SSI), and who receive funds from other sources, such as an inheritance or personal injury lawsuit. Without such a trust, these individuals would lose their government benefits that are essential for basic living and medical expenses. Prior to enactment of this new law, individuals with disabilities who didn’t have a living parent or grandparent couldn’t create their own self-settled special needs trust without going to court. This new law moves us forward in addressing the needs of many people with disabilities who can and should be able to handle their financial affairs without the need for court intervention or other obstacles that stand in the way.

From 1959 to Today, Workers Still Need Paid Leave

By Robin Shaffert, Senior Executive Officer, Individual and Family Support, The Arc 

KM_C554e-20161207133340Among my grandmother’s papers was a letter dated May 28, 1959, from her employer, the New York retailer Franklin Simon, informing her, “Due to the fact that your illness will be prolonged over a period of time, we have been forced to replace you at this time.”

“However,” the letter continues, “[W]e wish to let you know that your record with us has been good, and we will be happy to consider you for an opening when you are able to return to work again.” She received “two weeks vacation salary which is due you,” but no sick leave or notice pay.

I was shocked. My grandmother had been fired because she needed surgery. When I found the letter a few years ago, the Family and Medical Leave Act had been the law for almost 20 years. Large employers like Franklin Simon couldn’t just fire employees when they needed time off for medical care. Or, at least, they couldn’t fire many of their full time employees.

Born in Austria-Hungary in 1900, my grandmother came to this country with her husband and her son as a refugee from the Nazis in 1940. A housewife in Vienna, here she worked first in a factory sewing clothes for dolls and later as a saleswoman at Franklin Simon.

By 1959, my grandmother was living alone in a fourth floor walk-up in the Bronx. Her husband had died, and her only son was married and had a new baby. I don’t know what financial hardship my grandmother endured when she lost her job. As far as I know, she never reentered the workforce.

Being able to take time off from work for my own medical care, after the birth of my children, and to care for my parents and my sister who had congenital heart disease is only one of the many ways that life has been easier for me than it was for my grandmother. But even today many people can still be fired if they need to take time off from work. And, for many unpaid leave is an empty promise because they simply can’t afford to take time off without pay.

At The Arc, our mission is to promote and protect the human rights of people with intellectual and developmental disabilities (I/DD) and actively support their full inclusion and participation in the community throughout their lifetimes. People with disabilities and their family members are an important part of the American workforce, and like all working people, they need access to paid leave. In my work, leading the Center for Future Planning®, I focus on the needs of the over 800,000 families in which adults with I/DD live with aging caregivers 60 and over. As these parents age and continue to support their sons and daughters to build full and independent lives, the need for flexibility can be critical.

We are joining the call for a robust federal paid family and medical leave law that adheres to a core set of principles. All employees (regardless of the size of the employer, length of service, and number of hours worked) must be able to access paid leave of meaningful length. People need to take leave for different reasons, and all employees should be able to access paid leave for the full range of personal medical and family caregiving needs established in the Family and Medical Leave Act. Families come in many shapes and sizes, so “family” must be inclusively defined. We must design a program that is affordable and cost-effective for workers, employers, and the government. Finally, we must ensure that people who take the leave do not experience adverse employment consequences as a result.

In the disability community, we know how important it is to celebrate one another in good times and to provide support in harder times. An inclusive and robust paid family leave program is an important building block of that support.

White House Conference on Aging: A Critical Moment for Individuals with I/DD and Aging Americans

The White House Conference on Aging will be held on July 13, 2015, during a momentous year in which we mark the 80th anniversary of Social Security as well as the 50th anniversary of Medicare, Medicaid, and the Older Americans Act. The conference provides an opportunity to discuss these critical programs and find ways to strengthen them to continue to serve older Americans in the next decade.

These programs not only serve older Americans, but they also serve people with intellectual and developmental disabilities (I/DD). At The Arc, we are committed to advocating for people with I/DD and their families. This means ensuring that individuals with I/DD have services in place throughout their lifespan and that aging caregivers of people with I/DD have the support they need.

We spoke to advocates and caregivers to ask them what issues need to be addressed at the White House Conference on Aging. Here are their questions:

Carla Behnfeldt: I am 55 years old and live in Pennsylvania. My parents, who are in their 80s, and my 57 year old brother who has intellectual and developmental disabilities, all reside in upstate New York. My parents worked hard to find a good group home for him near their home and to get him Medicaid long term services and supports. Due to their age, my parents are in need of more and more support from me, and I would like for us all to live close together. I looked into having my brother move to Pennsylvania. I was shocked to learn that he might have to wait years to receive Medicaid services in Pennsylvania. And, there is no guarantee that Pennsylvania would provide him the services that New York does. My parents won’t move if my brother can’t move. The fact that my brother’s services can’t be transferred between states makes it very difficult for me to become my brother’s primary supporter and to provide my parents with the care they deserve as they age. What are your proposals to make Medicaid benefits portable between states?

Margaret-Lee Thompson

Margaret-Lee Thompson

Margaret-Lee Thompson

I am 70 years old.  For 21 years, I worked as a parent coordinator at The Arc of King County in Washington State. Our son Dan, who had Down syndrome, died when he was 36.  Many of the parents I worked with are in their 70s, and their children with intellectual and developmental disabilities are still living at home with them.   Their sons and daughters are middle-aged now, and when the family tries to get the government support that would enable the son or daughter to move into a new living arrangement, the families are told that they need to go on a waiting list.  These lists are often a decade or more long. The Community First Choice Option created by the Affordable Care Act, with its additional federal matching funds in 2014-15 will allow our state to be able to have the funding to move 1000 individuals onto our Basic Plus Medicaid Waiver.  But there are still 10,000 individuals and families in our state who have NO PAID SERVICES. The senior families have waited the longest. Many have simply given up asking for help. This is just wrong. It is not uncommon for the individual to lose their last parent, be moved from their home and be moved in with people they have never met – all on the same day. The parents should be able to support their sons and daughters while they transition to a new home. What are you doing to change things so these parents can live out their senior years with a sense of peace and comfort in the knowledge that their sons and daughters will live a good life after they are gone?

Pia Muro

Pia Muro

Pia Muro

I am 70 years old and live in Tustin, California. My younger daughter, Crystal, is 29 and has Down syndrome. She works at a senior center and lives at home with me. We’ve started the planning process as a family to make sure she continues to live a happy and independent life when I’m no longer able to provide support.

English is my second language and the planning process can be difficult to understand. What is being done to make sure that people from different backgrounds can get support from people who speak our language and understand where we are coming from?

Carrie Hobbs Guiden, Executive Director, The Arc of Tennessee

Carrie Hobbs-Guiden

Carrie Hobbs Guiden

There are nearly a million families in the United States in which adults with intellectual and developmental disabilities are living at home with an aging caregiver. Most do not have a plan in place for what is going to happen when these caregivers are no longer able to provide support.   There are many barriers to planning – including fear – but it is important that families make a plan for the future. They should gather information about the family’s history and wishes, and they should explore housing, employment and daily activities, decision making supports, and social connections.   What are your proposals to help these families to plan for the long term needs of their adult children with disabilities?

The Arc’s Center for Future Planning aims to support and encourage adults with intellectual and developmental disabilities (I/DD) and their families to plan for the future. The Center provides reliable information and practical assistance to individuals with I/DD, their family members and friends, professionals who support them and other members of the community on areas such as person-centered planning, decision-making, housing options, and financial planning. Visit the Center’s website at futureplanning.thearc.org for more information.

“You’re in this for the long haul” – A Lifelong Advocate’s Ask of Families To Speak Up

Graduation picture

Kandi, Ginger, Austin, and Don

Ginger Pottenger has been a member of The Arc – at either the local, state, or national level – since the early 1970s. She lives in Arizona, near her daughters, Kandi and Kristi.

How did you get involved in the disability advocacy movement?

I was an advocate before I knew it what that really meant. My daughter Kandi, who will soon turn 51, was diagnosed with “mental retardation”, as it was known then, when she was 3. The diagnosing doctor’s advice was to take her home and love her. And that’s what we did. We stumbled into inclusion. We were lucky to be in a community and at a pre-school that saw the value in her being included with kids without disabilities. When Kandi started grade school, someone asked me if we were involved in The Arc. So I went to my first meeting at my local chapter, and before long, I was serving on their board.

As a parent, what were some of the early struggles and triumphs you encountered?

I didn’t fully appreciate it then, but Kandi’s inclusion in pre-school was a triumph at that point in time. This was still the era of putting kids in institutions. But we had our ups and downs – I had to push hard to have Kandi walk at high school graduation. Then as a young adult, living a few towns away and working in the community, we had some serious issues with the staff.

You have been both a “professional advocate”, serving as an executive director of chapters of The Arc and on boards and other positions, and a parent to Kandi. How have those experiences shaped how you advocate?

I have seen the power of the personal, nitty gritty story, on public policy. People are too scared to get on the phone or get in front of their elected officials, and tell them the consequences of their policy decisions. Or people will think they don’t have time to advocate. And I understand raising a family, including a child with special needs, maintaining a career, a marriage, a life – it all takes time. But you’re in it for the long haul as a parent. Share your hopes and dreams for your family, the struggles, your fears.

What’s your biggest concern today for the future of Kandi and other people with I/DD?

What is going on at the federal level with funding and the structure of Medicaid scares me to death. And it should scare others into action. The threat to our funding is real and if we lose the supports that Kandi has, our options are bleak. Chapters of The Arc should be the place they go for training on how to advocate, for encouragement from chapter leaders and other families.

How do you suggest presenting your story?

I don’t sugarcoat it – I just met with my state senator recently, and I told her – I can’t die not knowing that the supports will be in place for Kandi. I’ve worked too hard for it to all go away when I’m not here. Right now, she’s in a good place, living in a townhome, with some supports, and has supported employment in the community. But what does the future hold for her if public policy decisions change the way the money flows?

I’ve been doing this for many years, and I still write out what I want to say, and I practice. I may only get 10 minutes with that important person, and I’m going to make an impact. I tell them about our lives and why these supports are so important. I want them to understand and remember that our lives are impacted by their policy decisions.

What else do you think makes an impact?

I’ve also dug into the dollar and cents of what Kandi receives, to demonstrate that the investment is going a long way to her independence. I contacted our Division of Developmental Disabilities office in Arizona to get the dollars for Kandi’s supports. I had them break it down between federal and state dollars and type of support. Kandi has support in her house and supported employment supports at work. I then took those numbers down to what the state and feds pay a day so Kandi can have a real life in the community. I compared the cost to more restrictive settings and it is so much less money!

What do you do to develop a relationship with your elected officials?

It begins by visiting with them. I take notes about my interactions with public officials. Thank them for what they’ve done right. The disability community is thrilled with the passage of the ABLE Act. And it was the most bipartisan thing Washington has done in a long time! You have allies where you least expect it.

Any final thoughts to share?

Families can’t wait for the crisis to think about the future. It blows my mind how many people with disabilities the same age range as Kandi, whose families haven’t considered what’s going to happen when they die. The Arc’s Center on Future Planning is going to be a great resource to them, and so will their local and state chapters of The Arc. These families need to face reality – so much has changed for people with I/DD in society. We can’t go backwards, and they’ve got to step up.

Building Financial Literacy and Building Acceptance

In April, we mark both Autism Acceptance Month and National Financial Literacy Month. Since we celebrate them together, let’s focus on how increasing financial literacy promotes acceptance and inclusion of people with autism and other intellectual and developmental disabilities (I/DD).

Economic self-sufficiency is one of the goals of the Americans with Disabilities Act (ADA), along with equality of opportunity, full participation, and independent living. As we approach the 25th anniversary of the ADA in July, we still have a long way to go to achieve the goal of economic self-sufficiency. Nearly one in three people with disabilities age 18 to 64 lives in poverty, more than twice the rate of working age people with no disability (DeNavas-Walt & Proctor, 2014). Correcting that financial disparity will require a lot of hard work on many fronts.

One step that we can take in our communities is to make training available to increase financial literacy of people with disabilities and their family members. As a part of its Real Economic Impact Network, the National Disability Institute has created the Financial Education Toolkit that includes an array of tools and resources to promote financial literacy education. These tools teach core concepts in areas such as understanding what money is, budgeting and spending responsibly, and establishing and working towards financial goals.

As we improve financial literacy, we also need to work with people with I/DD and their family members to put those concepts to work in a way that improves their individual financial situations. The Center for Future Planning provides critical information that people with I/DD and their families can use to stabilize their financial situations now and to plan for the future.  The Center provides families with resources on what public benefits are available and how to organize private funds in Special Needs Trusts and ABLE Accounts without putting public benefits at risk. ABLE accounts are not yet available, but we expect they will be soon in many states.

To participate in all aspects of community life, people with I/DD need financial resources. Even as April comes to an end, it’s important to continue developing ways to help people with I/DD and their families develop financial skills and build financial resources. Moving towards economic self-sufficiency is moving towards acceptance.

Supporting The Age Wave: Baby Boomers and Autism

Since 2010, baby boomers in the United States have been turning 65 at the rate of approximately 10,000 a day. Some of these new baby boomers are people with autism. At the same time, over 3.5 million adults with autism and other developmental disabilities are living with family members. In nearly 25 percent of these households, the family caregivers are over 60 years of age. During Autism Acceptance month, we should address the challenges that the age wave creates for people with autism and their family members.

To start, people with autism over the age of 65 should learn about benefits that may be available to them in the disability and aging service systems. Learn about what public benefits the person with autism may be eligible for and apply for the appropriate benefits. In addition, Area Agencies on Aging (AAA) can help you access services and support available to seniors. AAAs offer a variety of home and community-based services such as respite, meals on wheels, and transportation. Visit www.ncoa.org for more information about additional benefits available to seniors.

Supporting aging parents of people with autism is another critical issue that needs to be addressed. In addition to the health and financial issues that all seniors face, caregivers are often overwhelmed by concern about what the future will look like for their son or daughter once they can no longer provide support. Although planning for the future can be challenging and emotional, it is necessary and possible.

Discussing these major life transitions and putting a plan in place may actually alleviate some of the stress experienced by adults with autism, their caregivers, and other family members. The Arc’s Center for Future Planning offers information and resources to adults with I/DD, aging caregivers, and other family members.

During Autism Acceptance Month, here are some ways you can access more help:

 

The Arc’s Center for Future Planning aims to support and encourage adults with intellectual and developmental disabilities (I/DD) and their families to plan for the future. The Center provides reliable information and practical assistance to individuals with I/DD, their family members and friends, professionals who support them and other members of the community on areas such as person-centered planning, decision-making, housing options, and financial planning. Visit the Center’s website at futureplanning.thearc.org for more information.

Planning for the Future: How Does the First Party Special Needs Trust Fit in the Plan?

Third in a Three-Part Series

By Laurie Hanson, Esq., Special Needs Alliance

Special Needs Alliance LogoThere are an estimated 600,000-700,000 adults with intellectual and developmental disabilities (I/DD) in the United States who are living with aging family members and with no plan in place for their future. Below, our colleagues from the Special Needs Alliance emphasize the importance of planning and trusts.

With the launch of the Center for Future Planning, The Arc is shining a spotlight on the need to encourage and support families to create person-centered future plans. The Center provides practical assistance and resources on future planning items such as assisting the individual with daily and major life decision-making; housing and residential options and supports; financial planning; special needs trusts; and employment and other daily activities.

In the first installment of our series, we discussed the importance of planning for a person living with a disability. In our second installment, we discussed how the third party special needs trust (SNT) is currently the best tool for parents to provide for a person with a disability at the parents’ death. We defined basic trust terms, the importance of choosing a trustee wisely, how much money should be placed into the trust, and more. In this third installment, we will be discussing the first party SNT.

What is an SNT? A trust is a legal arrangement by which a person or financial institution, called the “trustee,” holds legal title and manages money for the benefit of a person called the “beneficiary.”   An SNT, if established and administered correctly, allows a person with a disability to place his or her own money in the trust and remain eligible for Supplemental Security Income (SSI) benefits and/or Medicaid. This only works if the SNT:

  • is established by a parent, grandparent, guardian, or court
    • for the benefit of a person who is living with a disability as defined by the Social Security Administration;
    • for a person who is under age 65;
    • using assets belonging to the person with a disability; and
  • is irrevocable; and
  • has a provision stating that at the death of the beneficiary, any remaining trust assets must be distributed first to the state as repayment for any Medicaid received by the beneficiary.

When is an SNT used? Individuals living with disabilities who depend on SSI and/or Medicaid to meet basic needs may have only limited assets – for instance, in most states, a person on SSI and Medicaid may have only $2,000 in cash and other “countable assets”. If a person inherits money or receives money from a lawsuit, he or she will no longer be eligible until the assets are reduced to the eligibility standard (e.g., $2,000 for the SSI program.). The SSI and Medicaid programs treat an inheritance or personal injury settlement as income in the month of receipt and an asset thereafter. Thus, upon receipt of the inheritance, the individual must either go off the program or reduce assets by the month after the month of receipt in order to remain eligible. To reduce assets without affecting eligibility, the individual may:

  • purchase assets that are not counted toward the $2,000 eligibility standard, such as a home, household goods, personal items like a computer or bicycle, an automobile, or a burial plot; and/or
  • prepay funeral expenses in a way that qualifies for an MA and/or SSI exclusion; and/or
  • fund an ABLE account if the disability was diagnosed before age 26 and the amount to be reduced is $14,000 or less – when ABLE accounts become available in his/her state of residence; and/or
  • place the assets in a special needs trust; and/or
  • place the assets in a special needs pooled trust sub-account.

Here are some examples:

Beth Jensen is a young adult living with a developmental disability who has a guardian. She lives in a group home and her support services are paid by a Medicaid waiver. She also receives SSI. Her father died without doing any planning (see installments 1 and 2!) and so she is about to inherit $300,000.   Beth qualifies to be a beneficiary of an SNT because she is under age 65 and she has a disability according to SSA criteria, as evidenced by her receipt of SSI. The trust can be established by her guardian, and the inherited money can be transferred to the trust. She will remain eligible for SSI and MA as long as the trustee distributes the funds for Beth’s sole benefit. Any money left in the SNT at her death will be paid back to the state up to the amount of Medicaid benefits paid on Beth’s behalf.

Beth’s guardian could also establish a special needs pooled trust sub-account for Beth’s benefit. A pooled SNT is a master trust established by a non-profit corporation to hold assets for the benefit of a person with a disability. Here is a link to pooled trusts run by, or affiliated with, chapters of The Arc. The funds are pooled for investment purposes, but a sub-account is maintained for each beneficiary. A sub-account can be established by the individual with the disability, a parent, grandparent, guardian, or court. The trustee makes distributions from Beth’s sub-account for her sole benefit. At Beth’s death, a portion of the remaining assets may be retained by the pooled trust for trust administration purposes or to support other people with disabilities. Beyond what remains with the pooled trust, remaining assets are to be paid back to the state to reimburse the state for Medicaid benefits paid on Beth’s behalf.   If any funds remain after payment to the state, funds may be paid to a remainder beneficiary named when the account was established. . Just how much money the pooled trust retains, and how much must be paid to the government, varies from state to state.

What can the trustee buy for the beneficiary with trust money? Guidelines are broad and, in general, the trustee may pay for goods and services that enhance the beneficiary’s quality of life. Examples of valid expenditures include extra therapy or personal assistance services, books, consumer electronics, musical instruments, travel and education, recreation and entertainment, pets, and some home maintenance, such as gardening and snow removal. In most cases, the trustee cannot give the beneficiary cash. If the beneficiary is on SSI, payment for food and/or shelter will reduce the beneficiary’s income by up to one third. Ensuring that the distributions do not jeopardize the beneficiary’s benefits is an important part of the trustee’s job.

SNTs can be complicated and state Medicaid agency requirements vary, so families should work with professionals who are experienced with the nuances of changing government regulations. The SNT can be a wonderful tool for those who rely on public benefits for basic needs to enhance their quality of life.

The Special Needs Alliance (SNA) is a national non-profit comprised of attorneys who assist individuals with special needs, their families and the professionals who serve them. SNA is partnering with The Arc to provide educational resources, build public awareness, and advocate for policies on behalf of people with intellectual/developmental disabilities and their families. This article does not constitute legal advice, and individuals should consult legal counsel concerning their specific situations.

Champions Change Lives

Become a ChampionThis year– we shared with you inspirational stories about three individuals who are working to create a better future for their families, their peers and the nation as a part of The Arc’s nationwide movement towards independence and inclusion for all people with intellectual and developmental disabilities (I/DD) and their families. Each of them are champions for The Arc’s movement.

Champions like David — creating a future for himself while helping his brother achieve his dream of sustaining employment in the community. Champions like Kim — advocating so strongly about inclusion for both of her daughters that she founded a nonprofit to foster an inclusive environment for kids in schools across the country. Champions like Joe — dedicating his life’s work to creating a better future for himself, his brother, and his peers as a selfadvocate and teaching others to be their own best advocate.

David, Kim, and Joe are a true inspiration. Looking to the future, it is clear that we need many more champions to realize the vision of individuals with I/DD getting all the supports they need to lead a fully inclusive life.

This year, The Arc engaged in groundbreaking work to innovate and address the needs of individuals with I/DD through our national initiatives including: Wings for Autism, our Center for Future Planning, and our National Center on Criminal Justice and Disability, all while continuing to aggressively pursue our legislative agenda.

Our Wings For Autism® program really took off this year. A travel training simulation for families that have a son or daughter with autism or other disabilities continues to gain traction and is being implemented by chapters of The Arc at airports across America including in North Carolina, Florida, Alaska, Oklahoma, Washington, Arizona, Virginia, Maryland, District of Columbia, Connecticut, New Hampshire and Massachusetts.

The Center for Future Planning a resource center designed by The Arc to help families and individuals with I/DD to create person-centered future plans. The center will support families by empowering person centered planning in order to help them articulate what they would like to achieve over the course of their life and then providing a concrete plan to help them do so.

We also broke ground to protect the rights of people with disabilities in the criminal justice system, through the launch of our new National Center for Criminal Justice and Disability funded by the U.S. Department of Justice.

However, these initiatives require the dedication and generosity of champions like you to ensure they become fully effective, sustainable and continue to meet community needs into the future.

It is only through your financial support that The Arc is able to continue its important work.

The collective voice of champions like you will advance and protect the human rights of individuals with I/DD and help them achieve full inclusion and participation in their communities today and into the future. Please become a champion for The Arc and Donate Today!

Planning for the Future of a Family Member with Disabilities

Second in a Three-Part Series

By Laurie Hanson, Esq., Special Needs Alliance

Special Needs Alliance LogoThere are an estimated 600,000-700,000 adults with intellectual and developmental disabilities (I/DD) in the United States who are living with aging family members and with no plan in place for their future. With the launch of the Center for Future Planning, The Arc is shining a spotlight on the need to encourage and support families to create person-centered future plans. The Center provides practical assistance and resources on future planning items such as expressing wishes for the future, supporting daily and major life decisions, and financing the future.

Below, our colleagues from the Special Needs Alliance emphasize the importance of planning and trusts.

In the first installment to our series, we discussed third party special needs trusts (SNT), also known as supplemental needs trusts, currently the best vehicles available to provide for a family member living with a disability after the parents’ death. In order to use this vehicle, parents need to understand how a trust works, how to tailor it to fit the specific needs of their family member, and how much money should be placed into the trust. Consider the following example:

Gary Smith wants Trusted Community Bank to manage his money after his death for the benefit of his daughter, Beth Smith, who is living with Down syndrome. Beth lives in a group home. Her support services are paid by a Medicaid waiver, and her room and board is paid from her Supplemental Security Income (SSI) benefit. Gary does not want the money he provides to impact Beth’s SSI or her Medicaid waiver, and he has very specific ways he wants the money to be used for her benefit. Gary is single and has three other children.

What is a trust? A trust is an instrument to manage money. A trust is established by written agreement between the person who funds the trust (the grantor) and the person or financial institution responsible for managing the money in the trust (the trustee) for the benefit of a person called the “beneficiary.”

What is a third party special needs trust? A special needs trust (SNT) is a trust established to provide for the well-being and needs of a person living with a disability. As long as the trust is established and administered correctly, neither the property in the trust nor the distributions from the trust should jeopardize the beneficiary’s Supplemental Security Income (SSI) or Medicaid. A third party SNT is a trust funded with money that does not belong to the person with a disability. In the example above, Gary (the grantor) can establish an SNT, then place his assets in the trust to be managed and administered for Beth’s benefit. He would give instructions in the trust agreement as to how the money should be used for Beth’s benefit and what happens to the money following Beth’s death.

Who should serve as trustee? Choose the trustee carefully. Often it’s advisable to select a professional or bank with experience managing special needs trusts. It is important that the trustee be familiar with complex government regulations, which change frequently. While a family member could serve as trustee, the individual should be skilled at paperwork and accounting, and able to work well with the beneficiary. Sometimes it is better to leave trust administration to the professionals. This is an issue to discuss with an attorney before making a decision.

What property is controlled by the trust? Only money or property legally given to the trust is controlled by the trust. If property is not titled in the name of the trust, it is not controlled or protected by the trust.

  • A home can be titled in the name of the trust.
  • Gary could make the trust the beneficiary of his IRA or other retirement accounts, his life insurance, or CDs and savings bonds.
  • Gary could leave money and property to the trust in his will.
  • A bank account can be opened to place money in a checking or savings account in the name of the trust.

How much money should be placed in a third party SNT? This depends upon the beneficiary with I/DD! Parents should work with a financial planner to make projections based on the family member’s living expenses, income, public benefits, caregivers, etc. For instance, say that Gary wants someone to visit Beth as often as he does – twice a week. In addition, every Friday he makes arrangements for someone (sometimes him) to go to dinner and a movie with Beth. This allows him and other people in Beth’s life to see her in her home and assess how she is doing. He very much wants this to continue following his death. He will have to project the cost of providing this service over Beth’s life expectancy to determine how much money should be placed in the trust.

What is a third party pooled SNT? A third party pooled SNT is a master trust established by a non-profit corporation to hold a third party’s assets for the benefit of a person with a disability. A parent will sign a joinder agreement to set up a sub-account within the pooled trust for the benefit of his or her family member. The funds in the sub-account are pooled with funds of other accounts for investment purposes only, but a separate sub-account is maintained for each beneficiary. Money in a sub-account of a properly established pooled trust will not jeopardize a beneficiary’s Medicaid and/or SSI benefits.

Why use a pooled trust?  Pooled trust sub-accounts are most beneficial when the amount in the trust will not be enough to justify the expense of a corporate trustee (such as a trust company or a bank). Also, the trustee of the pooled trust is professional and often has special knowledge about persons with disabilities. Pooled trusts should be expected to remain up-to-date on changing laws and regulations affecting federal benefits and their relationship to trusts. Many chapters of The Arc, for instance, have established pooled trusts for families and others to use. Some pooled trusts are run by chapters and others are independent non-profit organizations.

Why not “disinherit” a family member with a disability and rely on the siblings to care for him/her? This is very risky – siblings could move away, die, or become ill themselves. Some of them just decide to use the money for themselves. And in a divorce, the sibling’s spouse may be entitled to some of the funds intended for the person with I/DD. If that happens, the person with the disability could be left unprotected.

What happens if there is money left in the third party trust or pooled trust sub-account when the beneficiary dies? The grantor states in the third party SNT agreement what he or she wants to have happen. In this case, Gary could state that at Beth’s death, any funds left in the trust should be distributed to his other three children, his grandchildren, or a charity. In a pooled trust sub-account, the language of the pooled trust master agreement will often specify that a certain percentage remain with the master trust at the death of the beneficiaries before distribution to other remainder beneficiaries. Pooled trusts vary on this, so families should check this detail.

Third Party SNTs can be complicated and state requirements vary, so families should work with professionals who are experienced with the nuances of changing government regulations. But the effort pays dividends, and can ensure a more secure future for a loved one.

The Special Needs Alliance (SNA) is a national non-profit comprised of attorneys who assist individuals with special needs, their families and the professionals who serve them. SNA is partnering with The Arc to provide educational resources, build public awareness, and advocate for policies on behalf of people with intellectual/developmental disabilities and their families. This article does not constitute legal advice and individuals should consult legal counsel concerning their specific situations.

Plan for the Future: Your Own and Your Son’s or Daughter’s

 A three-part series

By Laurie Hanson, Esq., Special Needs Alliance

Special Needs Alliance LogoThere are an estimated 600,000-700,000 adults with intellectual and developmental disabilities (I/DD) in the United States who are living with aging family members and there is no plan in place for their future. Below, our colleagues from the Special Needs Alliance emphasize the importance of planning and trusts.

With the upcoming launch of the Center for Future Planning, The Arc is shining a spotlight on the need to encourage and support families to create person-centered future plans. The Center will provide practical assistance and resources on future planning items such as assisting the individual with daily and major life decision-making; housing and residential options and supports; financial planning; special needs trusts; and personal care and daily living supports.

The time to plan for your son’s or daughter’s future is now…and that means your future, as well. What a lot of people don’t know is that planning early, while seemingly expensive upfront, will save a lot of money and lead to better outcomes in the long run. Planning gives everyone peace of mind: you, your friends and family, and your son or daughter.

This is the first in a three-part series. This first installment is an overview of estate planning to protect your son or daughter with disabilities. The second will be an in-depth look at third party special needs trusts (SNTs) and third party pooled trusts. And the third will be an overview of first party SNTs and first party pooled trusts. You may want to read articles in The Voice, published by the Special Needs Alliance, which address these issues, as well. For instance, those articles discuss a 15-step approach to planning, guardianship, and letters of intent.

Estate Planning to Protect a Child with a Disability

The heart of a parent’s estate plan is ensuring that a son or daughter with disabilities lives in safe housing, has people supporting them, and maintains a good life after the parent is gone. The family must organize all of the son’s or daughter’s information, draft a letter of intent, and then ensure that all estate planning documents and nominations of any fiduciaries or agents are in place.

One of the most important goals of this planning is ensuring that the son’s or daughter’s public benefits are maintained after the parent dies and that there is money to provide for those things that the public benefits often do not cover (service animal expenses, therapies beyond the scope covered by the state’s health program, special foot care, assistive technology, communication devices, computers, someone to support your child, etc.).

The best way for a parent to achieve the financial goals is to establish a third party SNT or a third-party pooled trust sub-account for the son or daughter and direct all assets (retirement accounts, real property, investments, cash, etc.) to the third party special needs trust – either by beneficiary designation or in the parent’s will. If the trust is established correctly and the person or entity appointed to manage the trust or the pooled trust sub-account (called a trustee) manages the trust properly, the son or daughter will be able to maintain public benefits and still have services and supports that are not covered. Upon the son’s or daughter’s death, any money left in the third party special trust can go to other family members, a charity or wherever you want it to go.

You should also decide who will be the person who makes sure that your son or daughter still gets his or her Supplemental Security Income or Social Security Disability Insurance benefits (this is called the representative payee) and who will be the person who makes sure that your son or daughter still gets his or her Medicaid, SNAP, or housing benefits. This could be an authorized representative or, if necessary, a guardian. Different programs have different agents who can be appointed to carry this out. You should know who that person is, though!

What happens if you don’t plan?

If a son or daughter who relies on public benefits to meet daily needs – income, housing, food, and medical care – inherits money outright, the person will, in most cases, lose those benefits. If the person does not have capacity to manage his or her own money, a guardianship or conservatorship would have to be established so that the money can be managed for him or her. To maintain Medicaid and cash benefits, a first party special needs trust would have to be established – but this can be done only if the person is under age 65. Also, any money left in the trust upon the son’s or daughter’s death must be paid back to the state, up to the amount the state paid for Medicaid benefits.

SNTs can be complicated and state requirements vary, so families should work with professionals who are experienced with the nuances of changing government regulations. But the effort pays dividends, and the alternative may mean gambling with a loved one’s future.

The Special Needs Alliance (SNA), a national non-profit comprised of attorneys who assist individuals with special needs, their families and the professionals who serve them, has formed a strategic partnership with The Arc.  The relationship is intended to facilitate collaboration at the local, state and national level on issues such as providing educational resources to families, building public awareness, and advocating for legislative and regulatory change.