1. What is a special needs trust?
A special needs trust is simply a legal document, an advantageous way to set aside money for a person with a disability.
The trust is intended to help preserve funds for a person with a disability, enhance the person’s quality of life, while protecting his or her eligibility for public benefits, such as Medicaid and Supplemental Security Income (also known as “SSI”).
A 1993 federal law permitted the creation of special needs trusts. The policies that must be followed in creating and administering them are detailed by the Social Security Administration.
2. Who is a special needs trust right for?
A special needs trust can be the right tool for a person with disabilities who-
1) has savings, or expects to receive a legal settlement, an insurance payout, an inheritance, or a gift; AND
2) wants to protect access to public benefits; OR
3) is unable to manage money.
Depositing those funds in a special needs trust can protect a person’s eligibility for public benefits.
A special needs pooled trust (SNPT) can be the right choice for a persons with disabilities where the family-
1) wants to be sure their disabled loved one has resources and assistance to live after the parents or other family are gone, and that those resources do not jeopardize access to public benefits; AND
2) does not want to burden siblings or other relatives with the responsibility of administering a trust – managing the finances, complying with the legal rules of a special needs trust and public benefits; OR
3) has limited assets and may not afford standalone trust set-up costs or satisfy minimum deposit requirements.
Transferring funds to a SNPT can provide a knowledgeable and compassionate trustee who will protect a person’s access to public benefits while ensuring that funds in the trust are used to help the person in ways that the family intended.
3. A special needs trustee has certain important responsibilities. What are they?
A trustee assumes several important responsibilities:
•Helps a beneficiary make good use of their financial resources to get the care and goods and services they need and to enjoy life.
•Ensures that money in the trust is used only to pay for items and services for the beneficiary.
•Protects the beneficiary’s ability to receive public benefits, such as Medicaid, Supplemental Security Income and subsidized housing.
•Handles agency reporting, disbursements, accountings, investments, tax statement preparation and, where appropriate, Medicaid payback
Beneficiaries and their families choose PLAN as their trustee for many reasons:
1) As a nonprofit organization, PLAN has an independent board of directors who provide oversight and guidance. Board members bring a range of professional and personal experience that benefit the organization and the people PLAN serves.
2) PLAN administers the oldest and largest SNPT in New England (aka MARC Trust), and the only one to be recognized by the Social Security Administration in it’s operations manual.
3) PLAN offers high-quality, professional fiduciary services, administering the trust accounts of hundreds of people, young and old, with all types of disabilities.
4) Compassionate, caring and experienced social service support are an integral part of the PLAN service model.
5) PLAN’s special needs trusts are cost efficient and accessible to people of modest means.
6) PLAN is an active member of the National PLAN Alliance (an umbrella of 18+ PLAN affiliates, dedicated to future planning for people with disabilities), and other professional organizations serving people with disabilities and their families.
4. What does a special needs trust pay for?
Funds from a SNPT can cover items and services that benefit the trust beneficiary, including necessities not covered by public benefits—such as medical and dental care, utilities, insurance and real estate taxes, transportation, haircuts, clothing, and other necessary items and services.
Funds also can cover things that enhance the beneficiary’s life—such as books, newspapers and magazines, movies, music and other types of entertainment and recreation, cell phones, computers, and tablets, travel, and classes and other educational activities.
These are just examples. They are not an exhaustive list. Key factors evaluated by the trustee are sole benefit and supplemental needs.
5. How are payments from the PLAN trust made?
There are three methods for requesting funds from a PLAN trust account:
1. A trust beneficiary submits a Disbursement Request Form (via email, fax or mail) to the assigned Service Coordinator along with a detailed written estimate or invoice before purchasing the item or service. PLAN pays the vendor directly.
2. With approval from a Service Coordinator, a trust beneficiary can request that certain recurring bills, such as telephone, cable, etc. be sent directly by the vendor to PLAN. PLAN pays the vendor directly.
3. A trust beneficiary or authorized representative submits a Disbursement Request Form along with itemized receipts and proof of payment. In case of payment by check, a copy of the cancelled check must be provided. The beneficiary or authorized representative can request that PLAN pay a credit card company or a third party.
6. The PLAN trusts are designed to be different than working with a standalone trust and individual trustee. How does that work?
PLAN is a professional trustee with a social services heart dedicated to serving people with disabilities of all kinds and any level of means. The founders were parents of children with disabilities who collaborated on health care, public benefits, housing, self-insurance, and future planning. That group created an organization that established one of the first “pooled” special needs trusts in the country, and ultimately led to the organization called PLAN of Massachusetts and Rhode Island.
- A special needs pooled trust must be created and overseen by a nonprofit organization.
- A master trust document allows funds to be set aside for many persons with a disability.
- A separate account is established for each participant. The funds, income and disbursements from each account are strictly separate.
- There is one set of rules governing administration and investments.
- Administrative costs and overhead are reduced because they are shared by all of the trust accounts.
- A service coordinator, who is an experienced, licensed social worker, is assigned to serve as the primary contact for each beneficiary and family.
7. PLAN offers different kinds of services to beneficiaries than individual trustees. Please tell me more about that.
PLAN, a nonprofit organization, serves as trustee not simply one person. The organization and its staff are highly experienced with trust administration and the protection of public benefits, PLAN relieves family members of these responsibilities, allowing them to focus on their relationship with their loved one.
PLAN offers social services support. PLAN has knowledgeable, experienced, compassionate social workers who follow the complicated and ever-changing rules of the trust and public benefits. They serve as the primary liaison with the beneficiary and family and the access point for disbursements.
PLAN’s all-inclusive model includes payments for the various living expenses incurred by the person with the disability, professional fund investment, annual accounting, and tax statement preparation, and, where requested, reporting to public benefits agencies.
8. I understand there are costs to setting up special needs trusts. What are the costs for a PLAN special needs trust?
Fees generate the funds to sustain the organization, to enable PLAN to offer high-quality, professional fiduciary services.
There is a one-time enrollment fee. For PLAN’s Third-Party SNPT, the fee is $500.
For a First-Party (MARC) SNPT, the fee ranges between $600 and $750, depending upon whether the trust applicant can sign the application or needs someone to sign on their behalf.
There is also an annual fee for all trusts—covering the cost of investment management, trust administration and social services support for the beneficiary. That fee is 3% of account value for the first $500,000; 2.25% on the next $250,000; 2% on the next $250,000; 1.75% on funds above $1 million.
Adequate revenues have allowed us to waive the minimum annual fee of $500 since 2017. The waiver is reviewed annually.
9. Money in special needs trusts is professionally managed. Who does that for PLAN beneficiaries?
Webster Private Bank (WPB) is the wealth management division of Webster Bank, a $25 billion regional financial institution. WPB provides its clients with holistic, integrated services and sophisticated fiduciary, planning, and investment offerings, taking pride in delivering straight-forward, objective advice and attentive service from a single relationship manager.
WPB is the investment manager for all funds deposited in the SNPTs.
WPB also provides the trust accounts with custodial, sub-accounting, tax reporting and tax preparation services.
10. What happens to funds remaining in the trust account after the beneficiary passes away?
PLAN encourages the people we serve to use the money in their trust accounts to get the care, services, and items they can afford in order to enjoy their lives. Nevertheless, money sometimes remains in the trust at the end of a person’s life.
When a family creates an account in PLAN’s Third Party SNPT, they can choose where any remaining funds go after their loved one dies. For example, they may direct the funds to be disbursed to another member of the family or to a charity. They also may donate some of the remaining funds to support PLAN’s Community Fund. The Community Fund awards small grants to pay for goods and services for former and current beneficiaries who otherwise could not afford them, and to organizations that serve people with disabilities.
A person opening a First Party (MARC) SNPT account can name recipients for a portion of funds remaining after they die. However, the remaining funds must first be allocated to (in order):
1) Tax statement preparation fees.
2) PLAN’s account-closing costs.
3) PLAN’s retainer fee.
4) Payback of any Medicaid claim.
11. What is the process for setting up a trust account with PLAN?
The process for creating an account generally takes up to 3 weeks.
12. Being in the family home is important. Can a special needs trust help with this?
Although PLAN trusts do not hold or manage real property, funds from a First Party or Third Party SNPT may be used to pay for expenses related to a person’s home. Examples include but are not limited to — property taxes, insurance, maintenance and repairs.