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Master Pooled Trust

Inclusion is … Our Passion, Our Priority, Our Promise. The Arc of Minnesota. Master Pooled Trust. A service of The Arc of Minnesota and affiliated chapters throughout Minnesota www.TheArcOfMinnesota.org Dennis Collins Trust Director Rob Arnold Trust Officer

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Master Pooled Trust

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  1. Inclusion is … Our Passion, Our Priority, Our Promise The Arc of Minnesota Master Pooled Trust A service of The Arc of Minnesota andaffiliated chapters throughout Minnesota www.TheArcOfMinnesota.org Dennis Collins Trust Director Rob Arnold Trust Officer Marlene Johnson Trust Account Mgr. 651-523-0823 or 1-800-582-5256

  2. Inclusion is … Our Passion, Our Priority, Our Promise The Arc of Minnesota Master Trust History of The Arc of Minnesota Contents: Trusts >Background >SNT Arc>About Arc’s “Master Pooled Trust” (MPT) > Description > Applications > Why Our workshop terms – get comfortable, Q&A at end, cells off please

  3. Inclusion is … Our Passion, Our Priority, Our Promise Definitions for a Disability Trusts Trust – an entity, created in law, having duties & obligations. “One party accepting, managing, and using property for the benefit of another party”. 3-2-1 Grantor (Settlor, Trustor, Creator) – creates trust (3) Trustee – manages the trust and it’s funds (2) Beneficiary – person w/ the disability, and benefits by the trust (1) Donor – funds the trust Fiduciary – a duty to act in best interest of beneficiary Trust Agreement & Joinder (details) – contract Trustee & Grantor. Corpus – principle, $, trust funds Trust Funds Manager – holds and manages trust funds (Associated Bank) Means Tested benefits – benefits with a cap on assets or income - SSI, MA Sub-Account – account designated to beneficiary in pool with funds info Key Person – contact person, assists & provides guidance to Trustee Remainderman – heir to any remaining trust $ upon death of beneficiary Testamentary – after death Inter Vivos – during life

  4. Inclusion is … Our Passion, Our Priority, Our Promise Dilemma Estate Planning choice?? What proportion of your estate should you leave to your child (person) w/ disabilities =More?, Same?, Less? or Disinherit? How to maximize the inheritance benefit? -------------------------------------------------------------------------------------------------------- Funds of the person with a disability Unexpected windfall (gift, inheritance, court award or settlement) or Pre-existing wealth How to get a greater benefit for a longer period?

  5. Inclusion is … Our Passion, Our Priority, Our Promise SNT Trusts SNT (Special Needs Trusts ---- Supplemental Needs Trusts) SNT = a category of trusts supporting persons with disabilities. Supplemental Needs Trust Special Needs Trust (1993) Master Pooled Trust “

  6. SNT What they have in common Inclusion is … Our Passion, Our Priority, Our Promise Designed to improve the beneficiary’s material quality of life by supplementing (not supplanting) government benefits. Can pay for items that governmental benefits don’t, such as: vacations, pet, internet, gifts, games, furniture, cell phone, medical, etc. Can improved beneficiary’s quality of life without jeopardizing eligibility for ‘means tested’ governmental benefits i.e. SSI, MA, HUD, etc. Allows families to provide financial support for their loved ones, and generally implemented after the death of Grantor(s) (or their inability to continue financial support). SNTs are tools in the broader picture of Life Planning for persons with disabilities. Money placed in an SNT is irrevocable.

  7. Inclusion is … Our Passion, Our Priority, Our Promise SNT Similar & Different 1. Supplemental Needs Trust (private)------------3rd Party Trust Drafted by attorney, Grantor- typically Mom & Dad, funds are anyone’s other than Beneficiary’s, trustee is selected. 2. Special Needs Trust (private)---------------------1st Party Trust Drafted by attorney, Grantor-family/legal representative, not beneficiary, uses beneficiary’s funds, trustee is selected, age limits on starting & funding. 3. Master Pooled Trust (MPT) ---------------1st & 3rd Party Trust “Master” --All clients use the same Trust legal document, Trustee is non-profit, Grantor can be Beneficiary, no age limitation on starting or funding. “Pooled” --Funds are “pooled” for improved investment and management, each beneficiary has own sub-account. Getting advantages of private Bank managed trusts where they typically must be large, often starting at $250,000.

  8. Inclusion is … Our Passion, Our Priority, Our Promise SNT Who can Benefit? Not Just persons with Developmental Disabilities Elderly who become infirmed. Nursing home resident or soon to be resident. Anyone receiving or applying for ‘means tested’ governmental programs SSI, MA, HUD. Recipients of court awards of personal injury, malpractice, etc.

  9. Inclusion is … Our Passion, Our Priority, Our Promise Supplemental Needs Trust (Private 3rd Party Trust) Key features: Private trusts (attorney drafted) start up cost from $1000 & up. Grantor generally is Mom & Dad, Grandma & Grandpa, sibling, etc. Typically funded by the Grantor & possibly other Donors. Often funded after Grantor’s death, through a Will or Life Insurance. Grantor selects Trustee, usually a sibling, family member or contractor. Trustee must act in fiduciary manor, understand the system, manage funds, handle disbursement, governmental reports, taxes, and select successor trustees. Any remainder $ upon death of the beneficiary go to recipients' named in trust (Remaindermen).

  10. Inclusion is … Our Passion, Our Priority, Our Promise SPECIAL Needs Trust (Private 1st Party Trust) Also called: Self-Funded, Self-Settled or Medicaid Payback Trusts Key features: Authorized by OBRA 93 Private (created by an attorney) start up cost $1000 & up. Beneficiary under 65 to start and deposits over 65 subject to big penalty. Grantor is parent, grandparent, Power of Attorney, or the court (not beneficiary). Funded with the money belonging to the beneficiary. Source of funds, inheritance, SSI back payments, court awards, previous wealth. Grantor selects Trustee. Trustee duties: perform in fiduciary manor, understand the system, manage funds, disbursement, reports, taxes, selection of successor trustees. Any remainder $ upon death of the beneficiary goes to the state for repayment of any MA lien. Any excess (unlikely) to heirs.

  11. Inclusion is … Our Passion, Our Priority, Our Promise About The Arc of Minnesota History of The Arc of Minnesota Public Policy – Arc’s program is committed to progressive legislation to protect the rights and improve services for people with developmental disabilities. Advocacy- The Arc of Minnesota is the leading organization for persons with developmental disabilities and their families. Public education- the Arc changes minds and proves that people with disabilities can and do live as our neighbors, work, learn and play in the community. Programs - Assisting families: Housing Access, Quality Assurance, Life Planning, & Master Trust.

  12. Inclusion is … Our Passion, Our Priority, Our Promise About Arc continued … Arc was established in 1946 by parents of children with developmental disabilities. With the Arc of Minnesota are 12 Minnesota Arc chapters and all are affiliated with The Arc of The United States. Arc worked to close state institutions, permitting former residents to live in the community. Arc lead the fight to allow all children to attend public school. Ensured that infants and toddlers with disabilities receive early intervention services. Fighting for legislation and funding to provide Medicaid waivers for home and community based services Arc is a resource for families to come together to and advocate for a better life for their loved ones.

  13. Inclusion is … Our Passion, Our Priority, Our Promise Arc of Minnesota’s Master Pooled Trust (MPT) Arc Minnesota’s MPT began May 2009 Our Team: Three Arc Minnesota staff in Trust Department & supported by other Arc staff The Arc of Indiana Trust Funds Manager = Associated Trust Co. (Bank), Associated Wealth Management Nearly a decade of experience with WisPACT (Wisc. Pooled & Community Trust). Legal Counselor,= Allen Thiel of: Thiel, Campbell, Gunderson & Anderson P.L.L.P. Many others involved w/, development, operations, advisory and oversight : Parents, Financial Planners, Bankers, Business Executives, Lawyers, Arc staff, IT consultants, State and National Arc’s.

  14. Inclusion is … Our Passion, Our Priority, Our Promise Master Pooled Trusts (MPT) History The Arc of Minnesota Master Trust follows the model perfected by the Arc of Indiana The Arc of Indiana, the oldest (20+yrs) and largest Master Pooled Trust in the US. Arc of Indiana has1500 + clients, $30+ million in sub-accounts, 7+ million in Remainder funds, and growing at 100-200 new clients a year. Most states have a few MPTs (65 nationwide in 2007), Minnesota has 4. .

  15. Inclusion is … Our Passion, Our Priority, Our Promise Arc Master Trust MPT Offers: Two Master Trusts: 1. “Their Heritage Trust” -3rd Party 2. “Safe Harbor Trust” - 1st Party Four Fund Pools: Invested Pool - Conservatively invested - 80/20, 5% income goal. EE Bond Pool - Long holding periods – inexpensive, limited tax. Entrusted Pool - Non-invested, non-interest bearing. 3. Remainder Pool - Used for 3rd party beneficiaries outliving their funds. Arc Trust funds are held by and managed by Associated Trust Company

  16. Inclusion is … Our Passion, Our Priority, Our Promise Arc 3rd Party MPT “Their Heritage Trust” FUNDING Often funded upon the death of the parents – by their Will, Living Trust, or Life insurance policy. Some 3rd Party Trusts are funded during the Donor’s lifetime in whole, or in part i.e. by grandparents. There is no funding minimum or maximum. How much money should be placed into a trust ? This is a private decision based on the best judgment, and the resources availability of the Donor.

  17. Arc 3rd Party MPT ‘Annuitization’ ‘Spending Target’‘Remaindermen’ Inclusion is … Our Passion, Our Priority, Our Promise GOAL: 1) The trust funds of a beneficiary will be 100% spent during a beneficiary’s lifetime, and 2) funds will last the beneficiary’s lifetime. Trust will be annuitized ($ spent equally over the beneficiary’s projected lifetime), which creates a flexible “Annual Spending Target”. (Options are available to opt in, out, or change the annuity program over time) ------------------------------------------------------------------------------------------------- If any funds remain in a beneficiary’s sub-account after their death, are disbursed to recipients designated in the Joinder by the Grantor. Legally recipients are called “Remaindermen” (heirs).

  18. Inclusion is … Our Passion, Our Priority, Our Promise 3rd Party MPT “What happens if my child lives beyond their life expectancy, and all the trust funds are spent?” ‘Lifetime Funds’. A goal forHeritage (3rd Party) Trusts is to continue providing funds to beneficiaries with annuitized sub-accounts that outlive the projections and have depleted their trusts. Maximum ‘LifeTime’ continued funding = the level of previous annual spending target. Minimum = dictated by the availability of funds in the Remainder Pool.

  19. Inclusion is … Our Passion, Our Priority, Our Promise 3rd Party MPT “Does the 3rd Party Account require any funds that remain after the death of the beneficiary to go to The Arc?” Yes – 10% from every sub-account. This retainage is one of the funding sources for the Remainder Pool used to fund the “LifeTime Funds” goal. The Donor can also designate additional Remainder funds to: Your local Arc Chapter The Remainder Pool Arc of Minnesota ---but remember this is not a requirement.

  20. Inclusion is … Our Passion, Our Priority, Our Promise 1st Party MPT “Safe Harbor” Trust Thanks in part to the leadership of The Arc of The United States, Congress passed legislation in 1993 (Obra93) that made it possible for a person with a disability to fund their own trust, and remain eligible for government benefits. If a person with a disability receives an inheritance, or a lump sum back payment from say, social security, a personal injury or medical malpractice legal settlement, etc, these funds may make them ineligible for means-tested government benefits requiring a spend-down. Funds can be placed in a 1st Party MPT to keep their government benefits, and allowing the funds to be spent wisely over time.

  21. Inclusion is … Our Passion, Our Priority, Our Promise 1st Party Trust MPT What happens to money in a 1st Party trust upon death of the beneficiary? Federal law requires that any funds left in a SNT funded by a person with a disability must go back to the state to reimburse the state for all Medicaid funds spent on that person (the MA lien). If any funds remain after MA lien has been reimbursed, those funds can then be distributed to designated heirs. This is very rare. The same Federal law states that if the Trust is administered by a not-for-profit (like The Arc), the non-profit can retain any portion of the remainder funds, before repayment to the state. The Arc Master Trust retains only 10% and 90% is returned to the state to repay Medicaid funds spent for that person.

  22. Inclusion is … Our Passion, Our Priority, Our Promise How can SNT $$ be used? : SNT can pay for: dental care, eye care, or medical expenses not covered by Medicaid or other insurance, school tuition, communication aids, cable television, cell phone and Internet service, transportation, clothing, household items, furniture, vacations, entertainment, and many other items. For more items see page 28 of our Trust booklet found on our website for more. If the beneficiary is receiving SSI it can’t be used for food or shelter, if Section 8 – shelter & utilities, if MA – services.

  23. Inclusion is … Our Passion, Our Priority, Our Promise “How often can Arc MPT funds be used?” The Arc Trust allows for 5 disbursement checks per month, additional checks are $10.00 each. Reimbursements count as only 1 check. Minimum check amount $10.00. Requests are easy to make, usually made by phone, and payments sent in as little a 3 days.

  24. The Arc Trust MPT General use info Inclusion is … Our Passion, Our Priority, Our Promise The Arc trust can never give money directly to a beneficiary. Money placed in a SNT is irrevocable. Money designated for future deposit into a SNT is revocable. Beneficiary may open, and place $ in an Arc 1st Party trust even after beneficiary is 65. Donor can place money in a 3rd Party MPT and not be subject to a look-back provision for MA eligibility. Trust money can not be used for funeral expenses after death. At death money belongs to the state or heirs

  25. Inclusion is … Our Passion, Our Priority, Our Promise The Arc Trust MPT Expertise The Arc staff know what expenditures are permissible, and will report all Trust disbursements as required, will provide periodic reports to governmental agencies as required, file taxes, and comply with all requirements to lessen the risk of loss of governmental benefits. Arc will report Trust sub-account information to Donors, Key Persons and Beneficiaries. Arc will archive and maintain records as required. Associated Bank will provide professional financial management of invested funds. **Sub-accounts are available on-line to authorized clients.

  26. Inclusion is … Our Passion, Our Priority, Our Promise What are the MPT Fees? Enrollment (one time only fee) $800*1 Renewal Fee (Unfunded & Bond sub-accounts) $100 every 2 years *2 Trustee Fee (Bank & Arc fees combined Funded sub-accounts only) Invested & Active $108/mo or 1.6%/Yr Invested & In-Active $ 53/mo or 1.25%/Yr Entrusted & Active $ 92/mo Entrusted & In-Active $ 40/mo Bond $ 5/mo pay every 2 yrs Tax Preparation (Invested accounts) $ tba Tandem $ discuss *1 – Inter Vivos, Testamentary enrollment fee $2400 *2 - Fee is “0” if enrolled in LAP or PLAN.

  27. Inclusion is … Our Passion, Our Priority, Our Promise The Arc Trust Example #1 #1 Mom & Dad decide they want to create a SNT for their 10 year old child with Down Syndrome. They want to insure their child has money to access extras that they now supply after they are gone. They know that their 10 years olds siblings will be involved, but they don’t want to burden those siblings with the management details of a trust, they want the siblings involved the Key persons. They set up an Arc 3rd Party MPT, and designate in their Will to disinherit the child with the disability, and direct a chosen amount of their estate to the MPT. They also tell grandparents and family to disinherit the 10 year old in their wills as well and direct his/her portion to the MPT. This avoids the possible need for a spend down situation or 1st Party trust later.

  28. The Arc Trust MPT Example #2 Inclusion is … Our Passion, Our Priority, Our Promise An adult with a disability is receiving SSI and MA and receives an unexpected inheritance from a deceased relative. The adult is informed by the county that they have a short period of time in which to use the money or become ineligible for SSI & MA and enter a spend-down mode. An Arc 1st Party “Safe Harbor” MPT is established quickly. The adult remains eligible for SSI & MA benefits and the funds are used more wisely, and over a longer period of time.

  29. Top 10 Reasons to select the Arc Master Trust MPT Inclusion is … Our Passion, Our Priority, Our Promise Why is Arc Master Trust a wise decision for your child’s security and your piece of mind? 10. Arc is a well known and trusted disability organization. 9. Arc has a 60+year history & you can rely on it for generations more. 8. Arc improves security with many eyes on a beneficiary’s sub-account. 7. Arc is insured. 6. Arc intends to fund exhausted accounts w/ ‘LifeTime Funds’ program. 5. Arc’s Trust program is more cost effective than most alternatives.

  30. Top 10 Reasons to select the Arc Master Trust MPT Inclusion is … Our Passion, Our Priority, Our Promise 4. Arc provides choices and options to change some items. 3. Arc has a knowledgeable team of professionals to insure that accounts are set up properly and functions according to laws & rules in order to minimize any risk of loss of governmental benefits. Advocates, Attorneys, Committees (Family, Legal Advisory), Accountants, Financial Planners, IT Technicians, Bankers, Arc’s Ind, Wis, Texas. 2. Arc takes over the work of managing a SNT so family members are not burdened with trust management and free to spend their limited time with loved ones in memorable, and enjoyable ways. 1. What parents tells us they are looking for in a trust.

  31. Inclusion is … Our Passion, Our Priority, Our Promise What Parents tell us they’re looking for in a Trust: Continuity + Dependability + Accessibility Continuity Stability, security, background, longevity, and with a predictable future. Arc = layers of oversight, a long history & a bright future. Dependability Familiar, experienced, and trustworthy. Families know the Arc and trust us to support persons with disabilities. Accessibility Friendly, approachable, and affordable. Arc strives to be welcoming and keep costs affordable.

  32. Inclusion is … Our Passion, Our Priority, Our Promise For More information Contact Start your MPT inquiry with your local Arc Chapter Arc West Central 1-218-233-5949 1-800-411-0124 www.ArcWestCentral.org

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