Preserving Public Benefits through Special Needs Trusts

1. Preserving Public Benefits through Special Needs Trusts September 23, 2011 MOPRA Conference

2. Presentation Overview • MSNT background • Special Needs Trusts • Protecting Benefits • Opening and using a SNT • MSNT Services • Questions & Discussion

3. What is a Special Needs Trust (SNT)? • Financial planning and estate tool • Trust account for an individual with a disability • Administered by trustee/co-trustees • Protects eligibility for SSI, Medicaid & other public benefits • Trust funds can be used for supplemental needs, NOT basic support needs

4. Two Types of SNTs • First Party or Self-Settled • Typical sources of funds • Back payment from Social Security • Inheritance • Personal Injury Settlement • Medicaid payback required • Third Party • Family donors • Typically revocable until donor’s death • Does not require Medicaid payback

5. What’s “Special” About a Special Needs Trust? • Trust language protects benefits • Used only to supplement benefits • No distributions that negatively affect benefits • Trust “exception” allowed by Medicaid and SSI regulations • Missouri Statute exempts resource for DMH services • Funds Can Be Used for Wide Range of Living and Health Needs • No Upper Limit on Amount in Trust

6. Federal Authority Protecting Public Benefits for SNT life beneficiaries Exception for Counting Trust Resources for Persons with Disabilities • Federal Medicaid Regulations • Title 42 US Code Section 1396p(d)(4)(A) • Title 42 US Code Section 1396p(d)(4)(C) • SSI • Section 1917(d)(4)(A) of the Social Security Act • Section 1917(d)(4)(C) of the Social Security Act • www.ssa.gov

7. How Can I Be Sure MSNT Trust Won’t Affect Benefits? • Trust Established with Beneficiary’s Resources (SI 01120.203) • MSNT qualifies as Pooled Trust Exception [(d)(4)(C)] • No age restriction • Must be established and administered by a non-profit organization • Must be for the sole benefit of individual with a disability • May be established by the disabled individual, a parent, grandparent, legal guardian, or a court • State pay-back clause required • If revocable, further criteria apply

8. Opening A Trust with MSNT • All Necessary Documents Available at http://midwestspecialneedstrust.org/trustDocs/default.htm • Master Trust Agreement • Beneficiary Background Information Form • Waiver of Right to Revoke (for third party only) • Enrollment Fee on Sliding Scale up to $500 • Minimum Trust Deposit of $500 • Add additional funds at any time • MSNT advises attorney consultation but does not require it

9. Consulting an Attorney • Attorneys Specializing in Special Needs & Estate Planning • National Association of Elder Law Attorneys • http://www.naela.org/public/ and click on pink box at right that says Find a Special Needs or Elder Law Attorney • Special Needs Alliance, LLC • http://www.specialneedsalliance.com/locate-an-attorney

10. Making Distributions from SNT • Distribution request form signed by co-trustee with appropriate documentation • MSNT reviews each request • Must conform decision-making to fiduciary duties • Must assure will not have negative effect on benefits • Processed daily • Authorize bank to prepare check available on next business day • Checks are sent by MSNT to vendor or to co-trustee • $5 check fee • Periodic distributions can be arranged with appropriate justification

11. How Can Trust Funds Be Used? • Medical and dental care not covered by Medicaid or health insurance • Private rehabilitative training • Durable medical & rehabilitation equipment • Supplementary education • Entertainment • Concerts • Periodic vacations and outings • Transportation of beneficiary or family & friends to visit beneficiary

12. How Can Trust Funds Be Used? • Pre-paid burial expenses • Expenditures to foster interests, talents, hobbies • Personal property, goods and services • Furnishings, telephone/cable, etc. • Personal caregiver or respite • In-home support • To accompany beneficiary or provide transportation • Attorney fees to create trust or other legal matters

13. Complications with high-value big ticket items - • MSNT will not accept or hold a home in trust • Large purchases require board approval • Takes time • Scrutiny • Example: Car • Documentation and Security agreement • Check from MSNT to vendor

14. MSNT Administrative Fees

15. NFP Trust Organization compared to Bank Trust Services • Provide consultation on use of trust funds • Staff and board knowledgeable about SSI, Medicaid and services to PWD • Smaller amount accepted to open a trust • Reasonable administrative fees • Investments managed at no additional charge • Minimizes co-trustee burden

16. Created by Missouri Statute in 1989 as Missouri Family Trust with 2011updates to authorizing statutes • Values-driven board appointed by Governor • Not for profit 501 c 3 • Administer trusts for >900 individuals with disabilities in Missouri & surrounding states • Average trust at opening is about $30,000

17. Charitable Trust • Missourians with disabilities with no trust may apply • Grants up to $1000 • Urgent care • Board review • Limitations • One award per year • Cannot be for medical or dental already completed • Must provide a treatment plan with estimated costs from the intended provider • Award must be used within 90 days • Payment made directly to the vendor, not the recipient • Application online or by request • Contact information on next slide • Sponsor or self submission • Timelines for submission

18. MSNT Contact Information Midwest Special Needs Trust 1500 Vandiver Drive, Suite 100 Columbia, MO 65202 Phone: 573-882-3388 Fax: 573-303-5866 Email:mftbt@midwestspecialneedstrust.org Web: www.midwestspecialneedstrust.org

19. Questions & Discussion