DISABILITY TRUST PROGRAMS

Transcription

1 DISABILITY TRUST PROGRAMS POOLED TRUST PROGRAM INDIVIDUAL TRUST SERVICES The disability trust prgrams at Guardian Cmmunity Trust, Inc. ( Cmmunity Trust ) are prfessinally run, nn prfit fiduciary platfrms dedicated t the well being f vulnerable senirs and persns wh are disabled thrughut Massachusetts. In cperatin with the Medicaid and SSI prgrams, ur pled and individual Special Needs Trusts ffer persnalized, supplemental supprt, enhancing the dignity, independence and cmfrt f ur beneficiaries, all f whm depend upn public benefits fr basic medical and financial needs. Cmmunity Trust s beneficiaries include bth yung and ld, married and unmarried, persns living in the cmmunity and persns living in nursing hmes, assisted living, grup hmes and ther cngregate arrangements. The benefits that we prvide are as varied as the individuals we serve. A few f the mre cmmn types f expenditures are: Telephne and cable TV service Cmpaninship supprt Chair car and ther transprtatin Clthing, tiletries and ther persnal items Denture replacement and nn medical dental care Hearing aids, pdiatry, and alternative therapies Fiduciary, scial wrk and legal expenses Recreatin and scial activities Benefits fr each beneficiary are prvided thrugh the excess assets that he r she puts in trust. Cmmunity Trust presently administers trust accunts fr mre than 800 beneficiaries thrugh its cmbined prgrams, with ver $65M under management. PARTNERSHIP WITH PUBLIC PROGRAMS While Medicaid and SSI prvide indispensable basic supprt, public prgrams d nt have the ability t ensure quality f life in the circumstances f each member. Disability trusts fill these gaps. Federal and state gvernments lng have recgnized the value f such private resurces, by allwing recipients t set aside excess assets in qualifying trusts withut jepardizing Medicaid and/r SSI eligibility. 1 P age

2 Amng the criteria fr an exempt trust are (1) the beneficiary must be disabled; (2) the trust must be fr the sle benefit f the disabled beneficiary; and (3) the state Medicaid prgram must be the primary remainder beneficiary upn the death f the initial beneficiary. Pursuant t these laws, the trusts managed by Cmmunity Trust reimburse the state frm the balance that remains at death. Under the same laws, we als retain a share f each Pled Trust accunt (see schedule n Page 5, belw) fr ur further charitable wrk. WORKING WITH A TRUSTEE A trust is a relatinship between a trustee and a beneficiary that gverns the use f the dnated assets fr the beneficiary. Like any relatinship, it takes cmmitment t maintain a quality trust experience. At Cmmunity Trust, we aspire t high standards, and we rely upn plicies that have evlved ver time thrugh ur experiences with thusands f beneficiaries. Our standards include Easy set up. There is n applicatin r initiatin fee fr new accunts, which typically are pened the next business day after receiving papers. We take yur telephne calls in persn, nt n a machine. We take care f yur funds with advice frm prfessinal financial managers. We get t knw yu and yur supprt persns, s that we can use the trust with as much understanding and wisdm as pssible. JOINING The exemptin under Medicaid and SSI applies nly t trusts established by certain actrs in the life f the beneficiary. The persn r entity that creates the trust is referred t as the Settlr. The Settlr must be: The beneficiary him r herself A parent r grandparent f the beneficiary A guardian r cnservatr f the beneficiary s estate A curt In additin t the Settlr criteria, age is a factr under the regulatins. Individual Special Needs Trusts are available nly t persns age 64 r yunger. Persns f any age can jin the Pled Trust prgram. It is imprtant t be aware f these age limits, especially fr thse wh may be cnsidering a disability trust while still under the age f 65. Acting befre turning 65 will keep pen the ptin f an individual Special Needs Trust. Only the Pled Trust ptin will remain after the individual turns 65. It is very cmmn fr a disability trust t be created by an agent under a Durable Pwer f Attrney (DPOA). Regulatins view the agent as the individual fr purpses f the Settlr criteria. In rder t accept any trust created by an agent, hwever, r by a cnservatr r guardian f the estate, Cmmunity Trust must ensure that the dcuments that give authrity t the fiduciary include specific trust making language. Any DPOA r curt decree that will be relied upn shuld be sent ahead f time t Cmmunity Trust fr review. If there are any prblems with the dcuments, we wrk with the beneficiary and/r respnsible parties t crrect them, r t find wrk arunds if necessary. 2 P age

3 Jining the Pled Trust Prgram Creating a Pled Trust accunt is simple. There is n applicatin r acceptance fee. The persn creating the accunt simply cmpletes a Spnsr Agreement, usually with the help f qualified legal cunsel, and sends it in with the depsit. The Spnsr Agreement is nt a separate trust, but rather a jinder agreement that incrprates the full text f the master trust instrument, the Guardian Cmmunity Trust fr Supplemental Needs. This master trust was established riginally in 2004 and has been jined by ver 2,000 separate beneficiaries ver the ensuing years. If the trust is being created by a fiduciary, a cpy f the authrizing dcuments must be included. An accunt being creating by a curt als must include a reference t the legal actin r t the petitin that authrizes creatin f the accunt. Anther essential dcument fr a Pled Trust accunt is a Beneficiary Distributin Plan, where the beneficiary r respnsible party prvides their best estimate f the types and amunts f benefits the beneficiary will need frm the accunt. This dcument des nt have t be cmpleted at the time f the Spnsr Agreement, but it shuld be submitted within a week r tw thereafter. Creating an Individual Special Needs Trust The prcess t create an individual Special Needs Trust initially is mre cmplicated. The trust instrument must be drafted, and Cmmunity Trust must review and apprve it befre the appintment can be accepted. When it reviews the instrument, Cmmunity Trust is nt yet a fiduciary. It acts n its wn behalf at this stage, t ensure that the trust instrument is clear, lawful and within the purpses f Cmmunity Trust s missin. Fr that reasn, the beneficiary must have his r her wn legal cunsel t write the trust. Reviewing and apprving an individual trust can take sme time if multiple revisins are required. Once the trust instrument is agreed t, hwever, the prcess becmes very easy. There is n applicatin r set up fee. If the trust is being created by a fiduciary, the same review prcess that is used fr pled trust accunts is used fr individual trusts. The authrizing dcuments need t be reviewed and apprved befre the appintment can be accepted. Other Infrmatin Cntact names and ther backgrund infrmatin is gathered fr all trusts, including bth individual Special Needs Trusts and Pled Trust accunts. This kind f data, such as living situatin, public benefits, primary identificatin data, infrmatin abut any nn trust assets that may need t be maintained, and similar infrmatin, is essential fr establishing the trust relatinship. We d nt share beneficiary infrmatin with anyne, except t the extent required in rder t set up accunts, make distributins and create tax dcuments. The primary purpse f backgrund infrmatin is t help Cmmunity Trust t anticipate the range f needs that the beneficiary is likely t present, and t understand the cntext fr any particular request fr a distributin. 3 P age

4 USING THE TRUST ACCOUNT Beneficiaries and respnsible parties have several ways t request distributins, including telephne, mail, fax and, in sme circumstances, e mail. Cmmunity Trust prvides frms n its website t simplify the prcess f requesting distributins. As Trustee, we are respnsible t accunt t ur beneficiaries, and in cnnectin with this duty, we have t keep recrds t explain ur decisins. Fr this reasn, we ask each beneficiary r respnsible party t prvide invices and/r receipts t supprt mst distributins. Alng with ur authrity as Trustee t make decisins abut distributins, cmes a respnsibility t cnsider whether the trust instruments allw each distributin. The mst imprtant criterin is that distributins must be fr the sle benefit f the beneficiary. Smetimes a beneficiary r respnsible party may want Cmmunity Trust t distribute funds fr a purpse that may benefit ther individuals. The fact that ur beneficiary may want the distributin t be apprved may nt be sufficient t characterize it as a benefit t him r her; if nt, then we have t say n. Frtunately, denial f distributins is a rare ccurrence. The Cmmunity Trust staff includes a Clinical Relatinship Crdinatr wh is a licensed Scial Wrker. She visits mst beneficiaries at the utset f the relatinship, and is available t prvide infrmatin and perspective t ur Trust Administratrs when distributin requests are cmplex, r a decisin is disputed. Taxes Factrs that we cnsider when making distributin decisins include the beneficiary's stated preferences the nature and pririty f the prpsed use the views f family members and ther respnsible parties impact, if any, upn the beneficiary's public benefits whether there are enugh funds t meet ther present and future needs the availability f alternative surces f supprt fr the beneficiary 99% f ur trusts, including accunts in the Pled Trust prgram and mst individual Special Needs Trusts, are established with the beneficiary s wn assets. This means that almst all f ur trusts are cnsidered grantr trusts fr tax purpses. Bth the IRS and the Massachusetts Department f Revenue treat the incme f a grantr trust as persnal incme f the beneficiary, whether r nt the trustee actually distributed the incme t the beneficiary, r used it fr his r her benefit during the year. In rder t reprt the incme f a grantr trust, the trustee must send the beneficiary a Grantr Letter that states the amunt, plus any deductins that the beneficiary als can claim under the rules fr grantr trusts. Cmmunity Trust sends Grantr Letters as early in the tax seasn as we can, s that beneficiaries wh file tax returns will have this infrmatin in time t include it when they file. Smetimes, fr reasns that we cannt cntrl, the letters are delayed. Beneficiaries and their respnsible parties are urged t cmmunicate with Cmmunity Trust during tax seasn if they have urgent circumstances regarding tax filing. 4 P age

5 Almst withut exceptin, ur beneficiaries d nt actually have t pay any taxes n the incme frm their trusts, because they have large medical expense deductins each year. These deductins exist because MassHealth requires that sme (r, in nursing hme cases, mst) f the individual s incme must be used fr medical care befre Medicaid cverage begins. If fr sme reasn a beneficiary des we incme tax, whether as a result f trust incme r any ther type f incme, Cmmunity Trust pays the tax frm the trust, unless there are extreme circumstances that wuld prevent it frm ding s. DEATH OF THE BENEFICIARY After the lifetime f each beneficiary, Cmmunity Trust administers any assets that remain in the accunt as required by the terms f the trust. Sme terms are required fr the trust t qualify as exempt under Medicaid and SSI; ne f the harshest f thse requirements is that the trust cannt pay fr the beneficiary s funeral r burial expenses. Because f this limitatin, Cmmunity Trust urges every beneficiary t purchase a pre need funeral cntract and ther burial related assets, befre r immediately upn establishing a disability trust. We give ntice t every new beneficiary f this imprtant issue, and frequently we use assets f ur trusts t purchase funeral and burial related assets. The rder f final distributin fr all disability trusts includes Medicaid reimbursement, up t the amunt f MassHealth benefits the individual received. If any funds remain after reimbursement, they can g t private individuals r charities, as directed by the trust instrument. Pled Trust accunts (but nt individual Special Needs Trusts) als are subject t a prvisin f federal law that allws sme f the remaining balance t be retained by the trustee fr its charitable purpses. Cmmunity Trust retains a varying amunt, depending upn hw lng the accunt existed: Duratin f Trust Prir t Death Schedule f Trust Retained Amunts Percentage Retained Up t ne year: 5% Mre than ne year, but less than tw years: 10% Tw years r lnger: 15% The trust retained amunts are nt cumulative. Only ne percentage applies, based upn the number f years that the trust existed. Amunts retained by Cmmunity Trust are added t an Endwment that was established in 2006 t supprt an Office f Public Guardian fr Massachusetts. Fr mre infrmatin abut hw the Endwment is used, yu may visit the Institute website, at where this missin is discussed in detail. 5 P age

6 FEES The fees assessed by Cmmunity Trust pay fr the csts f perating its trust prgrams. Services fr mst individual trusts are priced belw cst. Prfessinal investment advice is included in all trustee fees, as is the cst f ur Clinical Relatinship Crdinatr and all ther csts f administratin, ther than tax returns, which are billed at actual cst. Fees are billed at the end f each quarter (March 31, June 30, September 30 and December 31), based upn the principal balance f the trust n the last day f the quarter. The amunt billed each quarter is ne furth f the annual fee. Rate fr Individual Special Needs Trusts 1.25% f principal per year Tax Prep: $250 $400 annually, depending upn cmplexity Rates fr Pled Trust Accunts Fees fr Pled Trust accunts are charged n a schedule, as fllws: $1,000 t $ 80, % $80,001 t $120, % $120,001 t $200, % Over $200, % Tax Prep (Grantr Letter): $140 annually MANAGEMENT AND INVESTMENT Cmmunity Trust ensures the safety f the funds it hlds in trust thrugh relatinships with strng financial institutins. Our custdian f funds is Wilmingtn Trust Cmpany, a subsidiary f M & T Bank, which is a $130B full service financial institutin. Recrds and individual trust transactins and accunts are managed by Fiduciary Technlgy Partners, a Cnnecticut cmpany that handles accunts fr 90 nn prfit fundatins with ver $50B in assets. Cmmunity Trust btains independent financial advice frm Duffield Financial Grup f Cncrd, Massachusetts. Investment gals fr all but a small number f individual trusts are aimed at preservatin f capital and generatin f incme. Mst f the Pled Trust accunts have a relatively shrt time hrizn, and as a result there is almst n expsure t the equity markets in ur prtfli. We maintain relatively high liquidity, and since 2014 ur nly investments have been in very shrt term bnd mutual funds. Individual Special Needs Trusts are treated differently, because they ften invlve yunger beneficiaries. Unlike Pled Trust accunts, individual trust investments are nt managed as a cmbined fund, but rather are invested separately n the basis f relevant facts abut the beneficiary and his r her circumstances. Each trust is reviewed and assigned its wn investment bjectives, which may include incme, grwth and/r preservatin f principal. 6 P age

7 STEPS TO ESTABLISH A DISABILITY TRUST 1. Determine whether a Disability Trust is apprpriate fr the individual. 2. If yes, evaluate what type f trust (individual vs. Pled Trust accunt) is apprpriate: a. If cnsidering a Pled Trust accunt, the master trust instrument can be dwnladed frm the Cmmunity Trust website, 1 alng with a sample f the Spnsr Agreement. 2 b. If cnsidering an individual Special Needs Trust, wrk with cunsel t submit a draft f the prpsed instrument t Cmmunity Trust fr review. Allw ne t tw weeks fr the review prcess. 3. Sign the trust papers. a. If the beneficiary can sign the trust fr himself r herself Fr a Pled Trust accunt, dwnlad the Spnsr Agreement fr self settled accunts, 3 and have the beneficiary sign (in the presence f a Ntary Public). Fr an individual Special Needs Trust, wrk with legal cunsel t arrange fr signing f the instrument b. If the beneficiary cannt sign fr himself r herself Prvide Cmmunity Trust with a cpy f the dcument that authrizes smene else either a Cnservatr r an agent under a Durable Pwer f Attrney t sign. Cmmunity Trust will infrm the parties if the authrizatin is inadequate, and if s, we will wrk with the parties t find apprpriate alternative authrity. c. If a parent, grandparent r curt will establish the trust, dwnlad the Spnsr Agreement that is apprpriate fr that settlr. 4. If pssible, dwnlad and cmplete a Beneficiary Distributin Plan Mail the signed instrument(s), alng with the funds t be depsited, t Cmmunity Trust at the address belw. Checks shuld be payable t Guardian Cmmunity Trust, Inc., with a ntatin in the Mem sectin f the check, f/b/ [name f beneficiary]. GUARDIAN COMMUNITY TRUST, INC. ONE ELM SQUARE, SUITE 2D ANDOVER, MA (978) Family_Trust_fr_Supplemental_Needs_II_with_Amendment.pdf P age