It s Not Your Mother s PSNT What PSNTs Offer to Special Needs Planners. October 18, 2018

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1 2018 National Conference on Special Needs Planning and Special Needs Trusts It s Not Your Mother s PSNT What PSNTs Offer to Special Needs Planners October 18, 2018 Megan Brand, Executive Director, CFPD CO Fund for People with Disabilities, Denver, CO, mbrand@cfpdtrust.org

2 What is a PSNT? Overview Why should my clients consider a PSNT? Getting to know the PSNT What else can the PSNT do for me? What can I do for the PSNT?

3 What is a PSNT?

4 What is a PSNT? In 1993 Congress enacted the Omnibus Budget Reconciliation Act of 1993 (OBRA 93) which allowed for stand alone first party trusts as well as pooled first party trusts. The Pooled Trust is defined by the U.S. Code at 42 USC 1396p(d)(4)(c).

5 What is a PSNT?, cont. (C) A trust containing the assets of an individual who is disabled (as defined in section 1382c(a)(3) of this title) that meets the following conditions: (i) The trust is established and managed by a non profit association. (ii) A separate account is maintained for each beneficiary of the trust, but, for purposes of investment and management of funds, the trust pools these accounts. (iii) Accounts in the trust are established solely for the benefit of individuals who are disabled (as defined in section 1382c(a)(3) of this title) by the parent, grandparent, or legal guardian of such individuals, by such individuals, or by a court. (iv) To the extent that amounts remaining in the beneficiary s account upon the death of the beneficiary are not retained by the trust, the trust pays to the State from such remaining amounts in the account an amount equal to the total amount of medical assistance paid on behalf of the beneficiary under the State plan under this subchapter.

6 What is a PSNT?, cont. Social Security s Program Operations Manual System (POMS) also gives us guidance on PSNTs SI A pooled trust is a trust that is established and managed by an organization and that contains and pools the assets of multiple individuals in separate accounts for investment and management purposes. This section contains information on reviewing third party pooled trusts. For information on pooled trusts in which the individual account is funded with the beneficiary s own assets, see SI

7 What is a PSNT?, cont. Each state has adopted their own statutes and regulations for pooled trusts. Directory of Pooled Trusts at Special Needs Trust Answers trust The biggest difference among PSNTs is the treatment of remaining funds at the death of the beneficiary. (See also Brand, M; Wong, O 2016 Using Retained Funds Stetson SNT Conference)

8 Why should my client consider a PSNT?

9 Why should my client consider a PSNT? 1. PSNTs likely administer trusts for more individual beneficiaries than anyone else in your state. This sheer volume often comes with experience, expertise and ability to perform on a quantity of scale. They are not only experienced fiduciaries, but they are providing a niche service through their work with people with disabilities They are also able to administer their trust and services on a mass scale and typically have good policies and procedures making payments on time, paying with items with a credit card to get the trust beneficiary s needs met. group plans and discounts for things such as cell phones, bus passes, etc.

10 Why should my client consider a PSNT? 2. The set up of the trust is time sensitive Prospective beneficiaries are often anxious to get their trust set up. The PSNT Master Trust Agreement should (more on this later) already be approved by the Social Security Administration and the Medicaid Department. Instead of going through a sometimes lengthy trust approval process, the PSNT trust administrator is only informing the SSA and Medicaid of the individuals joinder to the master trust. The process for proving disability can also be more streamlined and take less time with the PSNT than with the review process for a stand alone first party trust.

11 Why should my client consider a PSNT? 3. The beneficiary may move out of state The trust beneficiary should consider the portability of the trust when they are considering the type of trust. A stand alone first party trust would need to be approved in each state the beneficiary resides and the trust termination provisions and state payback at the time of the beneficiary s death can be the biggest obstacle to approval of the trust agreement in the new state.

12 Why should my client consider a PSNT? 3. The beneficiary may move out of state, cont. Conversely, a PSNT can port from one PSNT to another and this is codified in the POMS at SI F.2: 2. Exception for early termination clauses in Section 1917(d)(4)(C) trusts For pooled trusts established under Section 1917(d)(4)(C), an early termination clause does not need to meet the above criteria if the clause solely allows for a transfer of the beneficiary s assets from one Section 1917(d)(4)(C) trust to another Section 1917(d)(4)(C) trust. The early termination clause must contain specific limiting language that precludes the early termination from resulting in disbursements other than to the secondary Section 1917(d)(4)(C) trust or to pay for the expenses listed in SI F.3 in this section and SI F.4. An attorney reviewing the PSNT should ensure that the early termination provisions of the PSNT and the PSNT policy allow for porting from one state to another.

13 Why should my client consider a PSNT? 4. The asset size makes sense The average size of a pooled trust sub account is going to vary from PSNT to PSNT, but could be in the neighborhood of $30,000. The pooled trust may also be a good place to start small ($1,500 $5,000) and build over time as resources become available. They are also a great tool to consider with an annuity structure or maintenance, Military Survivor Benefit Plan that pays monthly. There are many pooled trust sub accounts that are over $200,000 or $300,000. (Their main decision point is generally related to what happens to the remainder when they die.)

14 Why should my client consider a PSNT? 5. There are no family members or others who want to take on the liability/responsibility of serving as trustee Many times the trust beneficiary has outlived or will soon outlive their family members or their family members are just not fit to serve as trustee. Family members who are already busy providing care to their loved one with a disability, or Family members do not want to take on the liability and responsibility of serving as a trustee. Finally, there are many attorneys who simply will not name individual, non professionals as trustees due to the expertise and experience that managing a trust, especially a trust for a person with a disability receiving government benefits, entails.

15 Why should my client consider a PSNT? 6. Case Management and a Network of Professionals There are a number of PSNTs who provide some level of case management. The case manager enables the PSNT to fulfill it s fiduciary duty of loyalty to the beneficiary by evaluating needs of the beneficiary, assisting with access to government and community benefits and overseeing their health and safety. A PSNT that is active in the community (and it should be) will also develop and attract a network of professionals in all areas of need such as caregiving, contract work, transportation, guardianship, tax preparation, accessibility equipment and technology, attorneys, etc.

16 Why should my client consider a PSNT? 7. The set up and management fees are typically less expensive The PSNT, by it s nature as a pooled trust, is typically invested collectively. This reduces the fees due to economy of scale and the rate negotiation The less expensive fees are especially noticed in regards to the minimum fees that a PSNT charges, which often saves the beneficiary hundreds, if not thousands of dollars per year. This is especially important as the PSNT trust assets dwindle over time.

17 Why should my client consider a PSNT? 8. When a conservatorship or conserved funds are dwindling and Medicaid is imminent. While there are many sources to fund a PSNT, it is especially important for professional attorneys and conservators (guardians in some states) to review conserved assets as they are dwindling to determine if Medicaid is imminent. By placing the remaining conserved assets in the PSNT, the trust beneficiary is able to enjoy an enhanced quality of life by preserving the remaining assets and qualifying for Medicaid.

18 Getting to know the PSNT

19 Getting to know the PSNT Overview: It is really important for both you and your client to get to interview and get to know the staff at the PSNT. Each PSNT will have different staff members handling the process for prospective beneficiary but a phone call or in person interview is highly recommended in order to get a feel for the PSNT and to have the opportunity to ask questions and gather information.

20 Getting to know the PSNT POMS Guidance at GN D.2 and 3. Social Security s Program Operations Manual System (POMS) gives specific guidance to SSA Representative Payees about what actions they should take before establishing a trust for an individual. That guidance is found at GN D.2 and 3. Most generally, the Rep Payee must be prepared to submit a copy of the trust and explain how the trust funds are used.

21 Getting to know the PSNT PSNT Guidelines In 2016, National PLAN Alliance members, along with a number of executive directors and attorneys representing Pooled Special Needs Trusts (PSNTs) across the country, formed the National Pooled Trust Standards Committee and created PSNT Guidelines. The Guidelines for Pooled Trust Organizations can be found at: A ooled%20trust%20organizations%20v1_ pdf evaluating a pooled trust can use the guidelines as a guide in evaluating and interviewing the PSNT.

22 Getting to know the PSNT Further, it is strongly recommended to request copies of the following documents when evaluating a PSNT: 1.Master Trust Document 2.Transfer/Joinder Agreement 3.Approval letter from Social Security 4.Approval letter from state Medicaid office.

23 Getting to know the PSNT Frequently Asked Questions: There are several questions that an attorney or potential beneficiary should consider asking the PSNT. Consider this list of Frequently Asked Questions: 1. What is the Mission/vision of the organization?

24 Getting to know the PSNT 2. Stability of the PSNT Length of time the PSNT and/or affiliated organization has been in operation? How many people are served by the PSNT? What are the assets under management? Is the PSNT engaging in an annual audit?

25 Getting to know the PSNT 3. Structure of PSNT National, Regional or Statewide organization? Is another entity the trustee or investment manager? Is the PSNT category or disability specific? (Ex: primarily people over the age of 65 or people with a certain disability)

26 Getting to know the PSNT 4. How and where are the funds invested? What is the rate of return?

27 Getting to know the PSNT 5. How is the tax statement handled? Grantor Tax Letter K 1

28 Getting to know the PSNT 6. What is the fee structure? What is the fee? Is it charged monthly, quarterly, annually? Fees for additional services such as set up, case management? Minimum and Maximum fees? Tax Preparation fee?

29 Getting to know the PSNT 7. What happens with the Remainder Funds? Does the PSNT keep all or a portion? If so, how are these used? Is the PSNT Remainder policy in line with the federal and state regulations?

30 Getting to know the PSNT 8. What is the Staffing model? Case Management/Trust administrator assigned to each person? Is this over the phone or in person? Does the case manager do work outside of the specific duties of trustee? (Ex: Help me/my client to find an assisted living, go shopping with me) Or a Call Center in which the person calls a general line and whoever answers the phone addresses their request? Somewhere in between?

31 Getting to know the PSNT 9. What is the Board structure? Do I know or recognize the board members? What is the board involvement in requests? Are they providing general oversight, oversight for specific requests? Or are they reviewing every request?

32 Getting to know the PSNT 10. Procedure for Request Review How are requests accepted? Are they accessible for my beneficiary? (Ex: in writing only? Or via Phone, Text, E mail, Mail, Fax, in person?) What is the approval process? Staff involvement or approval authority. Board/Committee involvement. Is there an Appeal process?

33 Getting to know the PSNT 10. Procedure for Request Review, cont. Timelines for requests to be decided and distributions to be made Logistics of distributions How creative is the PSNT in their distributions? Do they make purchases in person? Do staff have access to a credit card or do they rely only on checks? Do they allow reimbursements to others? Are they utilizing TrueLink cards or other pre paid debit cards for distributions? POMS SI I.1.e

34 Getting to know the PSNT 11. Process for establishment of the PSNT sub account Is Attorney review or involvement required? What if my client lacks capacity and parents/grandparents are no longer alive? Does the PSNT have a template for court approval? Once paperwork is submitted, how long until the first disbursement can be made? Who will notify SSA (if necessary) and Medicaid? What about HUD, LEAP and SNAP (if necessary)?

35 What else can the PSNT do for me?

36 What else can the PSNT do for me? Many PSNTs can be a one stop shop for your clients. Consider some of the other Services the PSNT may provide: 3 rd party pooled trust Trustee for stand alone first and third party trusts Guardian of the Person Conservator/Guardian of the Estate Representative Payee Case Management/Trust Advisory Contract or Grant work (Example: Case Management through the state for I/DD Services or through special funding)

37 What else can the PSNT do for me? Public Policy: PSNT organizations can be a great influence on public policy. A recent example of this was the POMS issued by SSA on 4/30/18. PSNT organizations can also have an impact on both legislative and litigation efforts affecting people with disabilities and those who are beneficiaries of trusts. Lewis v. Alexander, 685 F.3d 325 (3 rd Cir. 2012). PSNT organizations have also been instrumental in legislation and litigation re: individuals over the age of 65 joining the pooled trust. See also Brand, Hanson 2013 Funding Pooled Trust Subaccounts for Beneficiaries Age 65 and Older 2015 Update. Stetson SNT Conference

38 What else can the PSNT do for me? Experience: By their very nature, PSNTs provide services to more trust beneficiaries than any other trustee. Due to the numbers, the PSNTs can begin to see trends in Social Security, Medicaid and other areas regarding people with disabilities. In addition, many PSNT administrators, especially the Executive Directors and senior level staff, are: members of the National PLAN Alliance, attending national conferences (such as Stetson!), participating in the pooled SNT listserv, communicating with one another regarding distributions, Medicaid, Social Security, investments, taxes and all of the other areas that affect their PSNT and their trust beneficiaries. *One of the best ways to find a PSNT out of your state is to ask the PSNT in your state.

39 What else can the PSNT do for me? Education in the community: Many PSNTs are active in educating their communities. Just as the services of the PSNT in your community may differ, so do the education and forum for educating. PSNT s are in a good position to educate you and your clients about trust administration, the importance of estate planning for people with disabilities, serving as rep payee and many other topics.

40 What can I do for my PSNT? Ask not what your PSNT can do for you, but what you can do for your PSNT.

41 What can I do for my PSNT? PSNTs rely heavily on volunteers. experienced board members to serve on the board of directors and on committees. Attorneys who are skilled in Medicaid, Social Security, Taxes, Trust Administration, Fiduciary Services and other areas are extremely beneficial to the PSNT. A financially stable PSNT relies on various sources of income in addition to the fees that they charge for their services. Donations from you and those in your community make for stronger PSNTs. The donations may also support ancillary services such as Representative Payee or Guardianship and these services may ultimately benefit your clients.

42 What can I do for my PSNT? There are also many ways in which attorneys can provide direct services to the PSNT. An attorney may help with general legal work of the PSNT, with drafting the PSNT and amendments, with litigation efforts such as the 65 and older work or other matters. The attorneys providing services to the PSNT may agree to do this work at reduced rate or even pro bono.

43 What can I do for my PSNT? PSNT is often in the position of referring its trust beneficiaries to attorneys for the following: Legal advice at the time a person joins the PSNT. (Some PSNTs require this.) When the beneficiary needs representation regarding their trust, their SSA or Medicaid benefits or any disagreement they may have with the PSNT. To transition to a new PSNT. (Ex: move out of state) When guardianship or conservatorship is necessary.

44 What can I do for my PSNT? The best way you can support the PSNT in your community is to refer you clients to it. A healthy PSNT relies on ongoing referrals.

45 Summary PSNT organizations can be of great value to you and your clients. However, not all PSNTs are created equally and must be reviewed and examined carefully to determine if they will meet the needs of your client.

46 Contact Information Megan Brand Executive Director CFPD Colorado Fund for People with Disabilities 1355 South Colorado Boulevard, Suite 920, Denver, CO Direct: Main: Fax:

It s Not Your Mother s PSNT - What PSNTs Offer to Special Needs Planners

It s Not Your Mother s PSNT - What PSNTs Offer to Special Needs Planners Megan Brand, Executive Director, CFPD-Colorado Fund for People with Disabilities I. Introduction Pooled Supplemental Needs Trusts