Episode 3: Establishing a Special Needs Trust – with Michelle LaPointe

Jordan: Welcome to the Plan for Special Needs Trusts podcast presented by PLAN, the Planned Lifetime Assistance Network of Massachusetts and Rhode Island. Our plan is your plan. Hello there. I'm Jordan Rich. 

PLAN retains two highly experienced legal counselors to make sure that PLAN provides beneficiaries, families and their attorneys and financial advisors with expert guidance. 

We're thrilled to welcome one of the attorneys today. Her name is Michelle LaPointe. Michelle is a partner at Wade Horowitz LaPointe & Days in Brookline, Massachusetts, a law firm that specializes in estate planning, elder law, disability planning, and related issues. Michelle, welcome. Nice to have you here. And thank you for all you do with PLAN of Massachusetts and Rhode Island. Let's talk about your role as an attorney helping the folks at PLAN. 

Michelle: I am an attorney in private practice. I'm an elder law attorney, and I have been counseled to PLAN since 2007. In my private practice, I work mostly with elderly folks who are on benefits or looking to make sure that they're situated to maintain eligibility for benefits if they need them. And I also work with folks on estate planning, so that gives me some familiarity with both sides of the coin. I understand how to set up a trust and how to administer a trust. And I also understand what's at stake with regard to benefits and how to make sure that eligibility stays in place. 

Jordan: Okay. So you're very familiar with how PLAN works, and they are very happy to have you on board. Thank you so much for joining us today. So let's talk a little bit about the process of setting up a special needs trust. Is it very complicated? People are a little fearful of things like this. Should they be? 

Michelle: I don't think so. I think it's pretty straightforward. And the PLAN staff are very knowledgeable and patient and helpful about guiding folks through the process. And I'm always available to help if any legal issues arise during that process. 

Jordan: Anyone can set up a trust, am I right? 

Michelle: Absolutely. Anyone can set up any kind of trust. And with pooled trusts, specifically, the only real threshold is that they have to be disabled. 

Jordan: And let's talk about the significance of a pooled trust that gives explain a pool trust in clear terms for me, 

Michelle: Perhaps if Jordan, if you and I were both disabled and we entered the pool trust at PLAN of Massachusetts, our funds may be pulled together for investment purposes, but you and I would each have our separate accounts. So if the distribution is made for my benefit, it comes out of my trust and it doesn't impact yours, 

Jordan: which makes you feel very comfortable when you know your money is invested in such a vehicle. 

Michelle: Exactly. Because there's so much there, they're able to really get a lot of bang for their buck and invest wisely and get pretty good returns. 

Jordan: Now there are first party trusts and third party trusts. Let's define the difference if we can, Michelle. 

Michelle: A first party trust is a trust that's established with my money, and a third party trust is a trust that's established voluntarily by someone else for me. So perhaps a parent, a grandparent, something like that. 

Jordan: Let's define how a typical meeting might go. 

Michelle: Sure. Maybe starting with a first party trust, someone might come in my door and they're looking to get onto Medicaid benefits in order to help pay for home care services at home, because maybe they need a little bit of extra help with medical services or even just day to day issues getting around the house and coping with a disability. Generally, the asset limit for programs like that is $2,000. Maybe that person has just $20,000, and $20,000 isn't going to get you very far paying privately for services. So we might agree, hey, let's put $18,000 into this trust to get you onto Medicaid to get you some home care services, and then you can use the funds in the trust in order to pay privately for some supplemental care and really get as many hours as possible. 

Jordan: So in other words, lots of options depending on the situation. 

Michelle: Exactly. 

Jordan: Okay. Now one of the important issues we want to talk with you about are the guidelines that need to be followed. And there's something, an acronym called POMS P-O-M-S to find what that is and also why it's so important, Michelle? 

Michelle: Sure. I would say the three types of benefits that we're juggling to try and maintain when folks enter a pool trust are SSI, Medicaid benefits and housing benefits. And of all of them, SSI is really the biggest maze. And SSI, the employees at Social Security, which is the agency that administers SSI benefits, operate by the rules under the POMS, which is the acronym, means the Program Operations Manual System. So it's really the manual that their case workers use to determine whether I'm following all the rules or not. 

Jordan: Something you're familiar with in the work that you do. 

Michelle: Yes, exactly. And it gives us a real advantage because, for example, with Medicaid, we all know what all attorneys know what the law is. Everyone agrees on it. It's public. But case workers get to we don't know what manuals and policies they follow. We don't know how they analyze circumstances that are in front of them, whereas with SSI, we've got a real advantage because we know exactly how they're trained. We know what they're told to do when they're looking at a particular type of transaction. So it allows us to stay ahead of it. And the folks at PLAN are very familiar with the POMS and really are very thoughtful about how funds are distributed and managed.

Jordan: The ability to anticipate, in other words, changes in the law and also changes to certain individuals’ situations. And I think the fear that people have is basically if they're not being careful and they sign in the wrong place or don't re-up at a certain point they might lose benefits. That does happen. 

Michelle: Absolutely. The rules are really designed to trip folks up. These are very expensive programs, and so they make it as hard as possible to get on there and to stay on there. 

Jordan: So the advantages, from your point of view to having a professional trustee like Plan, what are they? Overall? 

Michelle: I would say the biggest benefit is what we've talked about, getting eligible for benefits and being smart enough to make smart distributions and maintain eligibility for benefits. I think that's a priceless service that PLAN provides. And also, as a professional trustee, they're responsive if when a bill comes in, they pay it promptly, unlike maybe if you have a family member as a trustee, they've got a family, they've got a full time job. PLAN has someone there nine to five who can pick up the phone, answer your question, make sure a bill is paid, and they can also advocate for the beneficiaries. If they're entitled to a service and they're not getting it, the social workers and case managers at PLAN will get on the phone and fight for them and make sure they get the services that they are entitled to.

Jordan: Something they've been doing for 50 years. I might have, which is a pretty nice anniversary. Can you share with us a story or two about how it works from an Attorney's point of view? Just give us a couple of examples. 

Michelle: Sure. I think a scenario that I think really demonstrates PLAN’s value with respect to a third party trust is, for example, a scenario where you've got a family with an adult child or a teenage child who's reaching adulthood, who maybe has some mental health issues and some behavioral issues. Often there could be some combativeness and some behavioral challenges that go along with that. And I think the traditional notion a parent arrives at is, Gee, well, okay, I'm going to have a sibling service trustee, or I'm going to have his or her aunt or uncle service trustee. But especially when you have behavioral issues and mental health issues, that really is so damaging and destructive to that relationship between those two folks. And instead, if that family gets good advice and they think to set up a pool of third party trust in advance, when they die, the funds will go into that trust. That adult child is going to have a professional trustee to say, no, you can't have a Ferrari, or cope with difficult behavior. Make sure that they're housed and comfortable and safe, and making those tough decisions and keeping them on the rails won't jeopardize the personal relationships that are so valuable to this disabled child. That sibling is going to remain just a sibling and an advocate and a friend. And they don't have to have an adversarial relationship. 

Jordan: Michelle, as people listen to this podcast and investigate, they may say to themselves, I've got a trust in place, but I'm not happy with it. And what you're talking about sounds appealing. Do they have options? Can they change the trust they have either close it down or just transfer assets into a pool trust, let's say, with a trustee like PLAN. 

Michelle: Absolutely. And that happens very frequently, especially with a third party trust that was established or a family trust that was established for a disabled person when they were very young. Often if there's a family trustee, by the time this person reaches age 60 or age 70, that family member may no longer be around, or they may be disabled themselves and not able to serve. And it's a great opportunity for that trustee to say, I'm ready to resign, and I'm going to turn either the management of the trust itself over to PLAN to take over as trustee, or they may be able to actually take the assets out of the trust and move them over into a trust account at PLAN. And then PLAN can just step in seamlessly and begin serving as trustee. 

Jordan: It's very rare that an estate plan isn't tweaked along the way because grandchildren come along. People leave the family one way or another. For folks listening, they should know that it's a very fluid situation and it's not a problem if you have to change something.
 
Michelle: I think that's right. And often trusts in the benefits eligibility world are designed to be irrevocable. But I don't think someone should assume just because the trust is called the so and so irrevocable trust, that doesn't mean that there are no options. You may be able to just like I said, maybe you can take the funds out of it and put it into a trust at PLAN. Maybe they can take over or there might be ways to modify that trust. So I think it's always worth talking to a professional if you find yourself with a trust arrangement that is no longer working. 

Jordan: I know it's very special to people who work at PLAN. What does it mean for you to help these folks? 

Michelle: I think for me, it's really about enabling people to have dignity as they go through their lives with disabilities. Most programs and it's just the nature of the beast. Most programs are designed for us to become impoverished before we're eligible for benefits. And there's very little dignity in living on $900 a month in public housing. And having a pooled trust, even with a modest amount of money in it, gives people some freedom and dignity to go to the movies, to maybe own a car, to live a more full life. And I think that's something that it's something to be proud of. 

Jordan: And as we've said over and over again, there's that sense that it's concrete, that it's not going anywhere. It's very safe, very foundationally based. 

Michelle: I think that's true. And in fact, you mentioned the POMS. PLAN has the distinction of actually being mentioned in the POMS. They have been recognized by the Social Security administration as a pool trust that qualifies with all of their rules so it's a very safe choice for a disabled person. 

Jordan: Well, Michelle, we appreciate your time today and all the fine work that you're doing for clients of PLAN and others. Thanks so much for joining us. 

Michelle: Thank you for having me, Jordan. It was really a pleasure. 

Jordan: We want to thank you for listening to the Plan for Special Needs Trusts Podcast Presented by PLAN The Planned Lifetime Assistance Network of Massachusetts and Rhode Island, PLAN is a 501(c)(3) nonprofit company where the goal for every one of its clients is always to preserve assets, protect benefits and live well. For more visit www.planofma-ri.org. We invite you to subscribe, download, rate and review this podcast and thank you for sharing it with others. Our Plan is your plan.