General Information
What types of trusts are administered by CCT?
How are the trust funds managed and invested?
Who can have a trust?
What can a trust pay for?
Who can request disbursements?
How are disbursements handled?
How do I share my vision for the trust and other helpful information with CCT?
What tax information is provided?
How do I enroll in CCT?
How are the Frequently Asked Questions to be used?
Third Party Special Needs Trust (SNT)
What is a third party Special Needs Trust (SNT)?
How can I provide financially for my loved one?
Can I establish a third party SNT with CCT in my will, estate plan or life insurance policy?
What are the fees to establish a SNT with CCT?
What happens to the remainder when the Beneficiary passes away?
Can a family member or friend make a contribution to the SNT?
Self-Funded Pooled Disability Trust (PDT)
What is a self-funded Pooled Disability Trust?
Is the PDT irrevocable?
What are the fees to establish a PDT?
What happens to the remainder when the Beneficiary passes away for Medicaid recipients?
Supplemental Security Income (SSI) and Medicaid Information
Is there a connection between public benefits and personal resources (assets and income)?
What services are not provided by public benefit programs?
What must be reported to government agencies for SSI and Medicaid recipients by the Beneficiary or the Advocate?
What information is reported to government agencies for clients receiving SSI and Medicaid?
GENERAL INFORMATION
What types of trusts are administered by CCT?
CCT administers the following types of trusts:
Third Party Special Needs Trust – A trust established by a third party, usually a parent, grandparent, relative or friend for the benefit of a loved one with a disability.
Self-Funded Pooled Disability Trust – A trust established by the Beneficiary, parent, grandparent, Guardian, Conservator or court with the Beneficiary’s own funds.
Both trusts are administered in the same manner. The two types of trusts differ in how the remainder is handled when the Beneficiary passes away for clients who receive Medicaid. (see What happens to the remainder when the Beneficiary passes away? for third party funded Special Needs Trust or self-funded Pooled Disability Trust)
Some Beneficiaries have both types of trusts with CCT.
How are the trust funds managed and invested?
Each Beneficiary’s trust fund is placed in a sub account. In order to facilitate combining the assets for each sub account, only cash deposits are accepted. The cash assets from all sub accounts are then "pooled" together and are invested and managed by the Trust Company of Virginia (www.tcva.com), a licensed and bonded investment corporation. Pooling the funds reduces administrative fees and increases the principal for investment purposes. Beneficiaries of the trust receive earnings based on their share of the principal.
A financial record is maintained for each sub account that reflects all the activity in the account. Quarterly financial statements are sent to the Grantor or Advocate or can be accessed through the internet.
The funds are conservatively invested. The Investment Committee of the Board of Directors provides oversight and meets quarterly with the staff from the TCVA. TCVA staff members make a presentation to the full Board annually. The full Board votes on and approves the TCVA Investment Policy for CCT.
CCT approves payment requests and expedites disbursements.
Who can have a trust?
CCT provides services for people that meet the criteria for disabled under the Social Security Administration’s (SSA) definition. Adults are considered disabled if they have a disability so severe that it prevents them from performing gainful employment. Children are eligible for Supplemental Security Income (SSI) if they have severe limitations and are unable to function in age appropriate activities.
A third party Special Needs Trust is available to Beneficiaries of any age.
The self-funded Pooled Disability trust is available to Beneficiaries of any age. For clients who are 65 years of age and older and receiving Medicaid Long Term Care, the eligibility requirements for a self-funded trust vary from state to state.
What can a trust pay for?
There is more flexibility in what the trust can pay for Beneficiaries who do not receive means-tested government benefits such as SSI and Medicaid. For clients who receive SSI and/or Medicaid, it is the responsibility of CCT to preserve the Beneficiary’s benefits. CCT follows the rules of government agencies for pooled trust organizations. Disbursements are not made that would duplicate what benefit programs are providing, such as food and shelter for SSI recipients.
The trust can be used in many ways to enrich the quality of life of the Beneficiary. The trust can pay for clothing, computer equipment, furniture, dental care, eye exams and eye glasses, vocational training or other educational expenses, vacations and transportation.
Checks are not made payable to the Beneficiary but are made payable to a vendor so as not to be counted as income or assets for clients receiving means tested benefits.
The trust is for the sole benefit of the Beneficiary.
Who can request disbursements?
The Advocate and an Alternate are named on the Joinder Agreement by the Grantor and can be changed at any time. Changes should be put in writing to CCT. The Advocate has the responsibility for requesting disbursements and receiving financial statements. The Advocate can be the Beneficiary, Guardian, Conservator, Power of Attorney, family member, case manager or whoever is close to the Beneficiary and can let CCT know the needs of the Beneficiary.
How are disbursements handled?
CCT follows the rules outlined in the Master Trust Agreements. Please see Role of the Trustee for additional useful information. It is the responsibility of the Trustee to be prudent and to act reasonably under all of the circumstances.
Checks are made payable to vendors for clients who receive government benefits.
For unusual requests, there are members of the Board of Directors on the Disbursement Committee comprised of Estate Planning Attorneys and others with expertise in this area.
How do I share my vision for the trust and other helpful information with CCT?
The Family and Beneficiary Information form provides the Grantor(s) of the third party Special Needs Trust the opportunity to let CCT know about their vision for the trust and to share important information about the Beneficiary.
The Grantor or the Advocate of the self-funded Pooled Disability Trust will be asked to complete Objectives for the Trust that describes their vision for the trust.
This information can be updated as needed.
What tax information is provided?
All Beneficiaries with funded trusts will receive a K-1 Form by April 15 that will reflect activity in the trust. Please consult with a tax preparer if you have any questions.
How do I enroll in CCT?
Submit the following paperwork to CCT after consulting with your attorney or trusted advisor and reviewing information with CCT:
• The completed Joinder Agreement that is signed in front of a Notary.
• The signed Fee Schedule.
• The check for the Enrollment Fee made payable to Commonwealth Community Trust.
• The check for deposit into the trust is made payable to The Trust Company of Virginia and needs to include the name
of the Beneficiary on the check.
• All completed documents and checks are to be sent to CCT.
How are the Frequently Asked Questions to be used?
The information provided in the Frequently Asked Questions is not intended to be legal advice, but merely conveys general information related to legal issues commonly encountered. The reader is encouraged to consult with an attorney who is knowledgeable about the legal issues. Contact CCT if you would like a referral to an attorney.
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THIRD PARTY SPECIAL NEEDS TRUST (SNT)
What is a third party Special Needs Trust (SNT)?
A third party trust is a general term for a Special Needs Trust that a parent, family member or others (the "third party") establish “for the benefit of” the person with a disability. Third party trusts are based on applicable state law (both statutory and common law).
The SNT is administered by the Trustee appointed by the Grantor and is to be used for the sole benefit of the Beneficiary. Funds from the trust can be used to pay for items not covered by the public benefits the Beneficiary is receiving.
How can I provide financially for my loved one?
Family members or others can set up a trust that will provide financial support for a loved one with a disability. In the case of an individual who receives public benefits such as Supplemental Security Income (SSI) and/or Medicaid, an inheritance left directly to the Beneficiary will jeopardize eligibility because of $2,000 asset limit. (See Is there a connection between public benefits and personal resources (assests and income)?) In addition, the Grantor may have concerns about the Beneficiary’s ability to manage his or her own funds and possibly compromise the money intended for support.
The appointed Trustee should be knowledgeable about the Grantor's intended goals of the trust, the Beneficiary’s needs and any public benefits the Beneficiary may be receiving.
An SNT holds funds that the Grantor provides for the Beneficiary's benefit. A properly drawn up Special Needs Trust is not counted as an asset or income of the person with a disability for the purpose of maintaining SSI and Medicaid and contains carefully written instructions on when and how to use the trust assets. (See SSI and Medicaid Benefits.)
The Trustee provides oversight and management of the assets as well as investment of the funds.
The Grantor can set up a third party SNT with CCT by completing the Joinder Agreement and providing payment of the Enrollment Fee. Once the trust is set up, the SNT can receive funds at any time and from anyone. Frequently, trusts are funded through the Grantor’s will, a life insurance policy or an employee benefit.
The responsibilities of the Trustee require a considerable commitment of time and energy, as well as the knowledge, skills and experience to properly administer the trust. CCT assures the Grantor that objective decision making is provided by professionals who have the best interest of the Beneficiary in mind. The funds are invested by an investment corporation with oversight by the CCT Board of Directors. The Grantor has the opportunity to communicate in writing the objectives for the trust (see Family and Beneficiary Information form).
Can I establish a third party SNT with CCT in my will, estate plan or life insurance policy?
The most common ways to establish a third party SNT is through a will, estate plan or life insurance policy. There may also be opportunities provided by an employer benefit.
It is important to consult with an Estate Planning Attorney who is familiar with Special Needs Trusts when writing your estate plan or will. CCT has the Master Trust Agreement and suggested language and is available to assist with questions that you or your attorney may have.
What are the fees to establish an SNT with CCT?
There is a one-time Enrollment Fee that is due at the time the Joinder Agreement is completed, signed in front of a Notary and received by CCT.
If a Grantor does not submit a completed Joinder Agreement and Enrollment Fee prior to passing away, the Enrollment Fee is assessed at three times the current Enrollment Fee. Trusts that are established in this manner are much more complex to administer due to the lack of information about the Beneficiary and the Grantor’s intentions for the trust.
For the unfunded SNT, there is an Annual Renewal Fee. The Annual Renewal Fee ends once the trust is funded. (See Third Party Special Needs Trust Fee Schedule.)
What happens to the remainder when the Beneficiary passes away?
The Grantor can designate in the Joinder Agreement who will receive the remainder. This information can be updated by the
Grantor(s) in writing to CCT as needed.
The Grantor can designate another person, several people or a nonprofit organization like CCT to receive some or all of the remaining funds.
Upon the actual death of the Beneficiary, distributions for CCT and TCVA administrative and termination fees are allowed. After the administrative fees are deducted, the remaining funds are distributed to the individual(s) designated in the Joinder Agreement.
Can a family member or friend other than the Grantor make a contribution to the SNT?
Yes, anyone can name the Beneficiary’s SNT as a Beneficiary of their estate plan or will. In order to preserve means-tested benefits, it is critical that potential inheritances be directed to the Special Needs Trust that is set up for the loved one with a disability. Once established, the trust may receive gifts, bequests, and inheritances from relatives or friends who choose to name the Beneficiary. It is an efficient and cost-effective way for other family members to avoid having to prepare separate special needs trusts.
Once the SNT is set up, checks with the name of the Beneficiary and, if possible, the account number can be made payable to the TCVA and sent to Commonwealth Community Trust for deposit into the Beneficiary’s account.
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SELF-FUNDED POOLED DISABILITY TRUST (PDT)
What is a self-funded Pooled Disability Trust?
The Pooled Disability Trust (PDT) is self-funded by the individual with a disability. The Grantor can be the Beneficiary, the Guardian, Conservator, parent, grandparent or court.
The assets must be the Beneficiary’s own and can be acquired through an inheritance, insurance settlement, social security back payment and sale of property or some other means. For Beneficiaries who receive Medicaid, this trust is a Medicaid payback trust. For clients who are 65 years of age and older and receive Medicaid Long Term Care, the eligibility requirements for a self-funded trust vary from state to state.
The federal Omnibus Budget Reconciliation Act of 1993, known as OBRA, is a federal law that defines who can have a trust and still qualify for public benefits and how the trust can be established. OBRA allows people with disabilities to place their own money into an irrevocable Pooled Disability Trust and still be eligible for SSI and Medicaid. OBRA trusts can be set up to prevent personal funds from being counted as the person's assets, so the individual's eligibility for SSI and Medicaid services is not lost.
The pooled trust program must be set up and managed by a nonprofit organization such as CCT and should be established within the same month that the funds are received to ensure that public benefits will not be jeopardized.
Is the PDT irrevocable?
By law, the PDT is irrevocable.
What are the fees to establish a PDT?
There is an initial one time Enrollment Fee and ongoing administrative fees. (See Self-Funded Pooled Disability Trust Fee Schedule.)
What happens to the remainder when the Beneficiary passes away for Medicaid recipients?
OBRA trusts are set up with the funds of the person with a disability. As this is a Medicaid payback trust for clients who receive Medicaid, there are specific rules for each state that govern how the remainder is handled. The Medicaid office for each state that the Beneficiary received Medicaid is notified upon the death of the Beneficiary.
The following is an example of CCT’s policy for the remainder as long as the policy is in compliance with the state Medicaid Policy:
If there is $50,000 remaining in the trust fund and Medicaid is owed $25,000, whoever is named in the Joinder Agreement will receive the balance after Medicaid is paid back and administrative fees are deducted.
If there is $50,000 remaining and Medicaid is owed $60,000, the remainder can stay within a nonprofit such as CCT and the funds are used to support the mission of CCT which includes the Charitable Fund Award.
It is important that CCT is notified by the Grantor or Advocate at the time of death of the Beneficiary. We are not notified by any other agency. A copy of the death certificate is requested when it becomes available.
PDT clients who receive Medicaid should make pre-need burial arrangements as disbursements will not be approved after the Beneficiary has passed away.
See the Joinder Agreement section on Distributions upon the death of the Beneficiary for further details.
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SUPPLEMENTAL SECURITY INCOME (SSI) AND MEDICAID INFORMATION
Is there a connection between public benefits and personal resources (assets and income)?
Many individuals with disabilities receive SSI, a monthly monetary allowance that usually makes the person eligible for Medicaid. Medicaid pays the cost of health services for indigent people with disabilities. Adults are eligible for SSI if they have a disability that prevents them from working and earning a self-sufficient wage, and they do not have more than a certain amount of assets. Children, who are minors, are eligible for SSI if they have "marked and severe functional limitations" from a physical or mental condition.
In order to remain eligible for SSI and Medicaid, a person cannot have more than $2,000 (current in 2010) in assets that can be converted to cash.
Establishing a self-funded Pooled Disability Trust and a third party Special Needs Trust will not jeopardize SSI and Medicaid as the funds in a trust are not counted as income or assets.
What services are not provided by public benefit programs?
Usually people who receive SSI have meager funds available for basic living expenses. SSI allows a small amount of money, which may be as little as $30 a month, for a personal care allowance. SSI pays for food and shelter related expenses. A trust can pay for supplemental needs that include eye and dental care, eye glasses, hearing aids, clothing and other items and services that would enhance the individual's quality of life.
What must be reported to government agencies for SSI and Medicaid recipients by the Beneficiary or the Advocate?
It is the responsibility of the Beneficiary or the Beneficiary’s Advocate to report the following:
• A change in the Beneficiary’s living arrangement.
• A change in the Beneficiary’s income (including the receipt of any direct income from the trust, but not distributions
that are “not income”).
• A change in any countable resources.
• New eligibility for other public benefits.
• Substantial medical improvements that may result in the Beneficiary no longer being considered disabled.
• A change in the Beneficiary’s marital status.
• Admission to or discharge from any health facility or public facility, such as a hospital or nursing home.
• Any intended trip outside the United States.
The report should be in writing to the Social Security Administration and include the Beneficiary’s name and Social Security number, the name of the person making the report, and a description of the event reported and the date it happened. The report is due within 10 days after the end of the month in which the event occurred.
What information is reported to government agencies for clients receiving SSI and Medicaid?
The following reports are provided to the appropriate public agencies for clients who receive SSI and or Medicaid:
• The existence of the trust at the time of enrollment.
• The annual financial statement that details a record of all activity such as deposits and disbursements in the trust account.
• When requested by a public agency, CCT will provide a copy of the Joinder Agreement and financial information.
• CCT will provide notification to the state Medicaid office, upon the death of the Beneficiary, for clients who have a self-funded
Pooled Disability Trust and receive Medicaid.
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