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PLANNING FOR THE FUTURE: SPECIAL NEEDS AND SUPPLEMENTAL NEEDS TRUSTS BY: ROXANNE JENKINS AND LARRY PIUMBROECK, LSS OF MINNESOTA and LAURIE HANSON, LONG, REHER & HANSON, P.A. Long, Reher & Hanson, P.A Slide 2 OVERVIEW OF PRESENTATION Purpose of supplemental, special needs, and pooled trusts for persons living with brain injuries. Overview of Trusts Overview of public benefits and trusts How trusts are used to assure financial stability for a person with a brain injury How much money is needed to establish a trust? Is a lawyer necessary to establish or maintain a trust? How are trusts administered what are the trustees duties? What happens to funds remaining in a trust at the death of a disabled person?. Long, Reher & Hanson, P.A Slide 3 PURPOSE OF SPECIAL NEEDS/SUPPLEMENTAL NEEDS/POOLED TRUSTS FOR PERSONS LIVING WITH A BRAIN INJURY With a properly drafted and administered trust: There is no period of ineligibility imposed for benefits when assets are transferred into the trust. Tools which can be used to preserve assets and income without interfering with public benefits on which the individual relies to meet daily needs. Provide parents and families with a sense of comfort that their loved one will have access to oversight, educational, therapeutic and vocational experiences to maximize safety, self-reliance, independence, and the ability to enjoy life. Long, Reher & Hanson, P.A Slide 4 PUBLIC BENEFITS FOR PERSONS WITH A BRAIN INJURY Non-Needs Based Needs -based Social Security Retirement (RSDI) Social Security Disability Income (SSDI) must be certified disabled Medicare Some Veterans Benefits (note right after injury before certification of disability, some MA programs do not count assets, only income) Medical Assistance for Long-term Care -must be certified disabled Supplemental Security Income - must be certified disabled or over age 64 Brain Injury Waiver Public Housing Food support (SNAP) Minnesota Supplemental Aid Long, Reher & Hanson, P.A Slide 5 MEDICAL ASSISTANCE ELIGIBILITY Medical Assistance for long-term care. MA-LTC provides health care coverage for long-term care services for individuals over age 64 and those living with disabilities. Eligibility is complex but as a general rule, an individual is eligible for MA-LTC and the Brain Injury waiver when: The individual has only $3,000 in available assets; The cost of long-term care is greater than the individuals income (or the individuals income is less than $719 per month); and The individual has not transferred assets for less than fair market value while eligible for MA-LTC or in the five years preceding the application for benefits. Long, Reher & Hanson, P.A Slide 6 TRUSTS A Trust is an arrangement in which a person or financial institution (a Trustee) owns and manages Trust Assets for the benefit of a person or persons (the Beneficiary). The person who sets up the trust is called the Grantor or the Settlor. Many times, the Grantor and Beneficiary and Trustee are the same people! A written agreement explains the duties the Trustee owes to the Beneficiary. Long, Reher & Hanson, P.A Slide 7 CHOOSE A TRUSTEE CAREFULLY! A trustee has as much, if not more responsibility than an attorney-in-fact. Trustee responsible for management of assets during life and must distribute assets to beneficiaries after death May have to be a trustee for a minor or disabled beneficiary after Grantors death Avoid temptation to choose the oldest child. Think of the long-term in light of paperwork, tax returns, property management, etc. Sometimes a professional trustee/pooled trust is the best option let siblings be siblingsand trustee the trustee Long, Reher & Hanson, P.A Slide 8 TRUSTS LIVING TRUSTS A living trust is a set of written instructions for the management of income and/or assets during and after Settlors life. A trust set up in a will is called a testamentary trust and a supplemental needs trust may be set up in a will. A living trust can be revocable or irrevocable. Long, Reher & Hanson, P.A Slide 9 DO ASSETS IN A TRUST COUNT FOR PUBLIC BENEFIT ELIGIBLITY? Depends : 1. Revocable grantor trusts ALWAYS available 2. Irrevocable grantor trusts MAY be available 3. Testamentary trusts are available unless they conform with Minn. Stat. 501B.89 subd. 2 or are purely discretionary. 4. Special Needs Trust exempt 5. Pooled Trust sub-accounts exempt 6. Supplemental Needs Trust - exempt Long, Reher & Hanson, P.A Slide 10 SUPPLEMENTAL NEEDS TRUST Created for a person living with a disability Created and funded by someone other than the person living with a disability or spouse Distributions must be to supplement and not to supplant government benefits Available if person >64 and in nursing home No payback requirement Can be revocable or irrevocable Can be a pooled supplemental needs trust. Long, Reher & Hanson, P.A Slide 11 SPECIAL NEEDS TRUST Established for a disabled person under age 65 by a parent, grandparent, guardian, or court Funded only with the disabled persons assets Trust states: at death of the disabled person, any remaining trust assets must be distributed first to the State as repayment for any MA received by the disabled person Trust must be for the sole benefit of the disabled person. Trust administered so that distributions supplement and do not supplant government benefits Long, Reher & Hanson, P.A Slide 12 POOLED SPECIAL NEEDS TRUST Established for sole benefit of disabled person of any age by the disabled person, parent, grandparent, legal guardian, or court Only the individuals money is used Trust is maintained by a non-profit corporation Trust funds are in separate account for each beneficiary but the funds are pooled for management and investment Long, Reher & Hanson, P.A Slide 13 POOLED TRUST, CONTD To the extent that amounts remain upon the death of the beneficiary, the non-profit may keep 10% of the assets to be used for charitable purposes or pay back to the state. The transfer of the disabled persons assets into trust may be penalized if the person is 65 years of age or older. Long, Reher & Hanson, P.A Slide 14 DISCRETIONARY TRUST Concern about a supplemental needs trust for someone over age 64: will the person need nursing home care? Funded with assets of someone other than individual with disability or spouse Trust assets can be distributed to the beneficiary solely at the discretion of the trustee. No payback provision required Long, Reher & Hanson, P.A Slide 15 TRUST ADMINISTRATION Minimum Investment Fees Rules Tax Implications Pre-Paid Funeral Accessing Trust Funds What Goods and Services can I buy with Trust Funds? What cant I purchase with my Trust Funds? Long, Reher & Hanson, P.A Slide 16 LSS POOLED TRUST LSS Examples of Pooled Trust Fund Usage Real world trust usage by TBI Individuals Long, Reher & Hanson, P.A Slide 17 WHAT TO LOOK FOR IN A TRUST? Trustworthy + Dependable + Accessible Trustworthy Mission, Longevity, Reputation, Oversight, Expense Control, Investment Knowledge Dependable Experienced with rules, disability and programs, local people with resources in your community, modern business practices and systems Accessible Welcoming, Compassionate, Approachable, Committed Long, Reher & Hanson, P.A Slide 18 PERSONAL TRUSTEE OR POOLED TRUST PROS AND CONS POSITIVE STRATEGIES FOR AGING AND LIVING WITH DISABILITIES LONG REHER & HANSON P.A. Pros Family Knowledge (personal, investment, business) Empathetic, loving Bright Good Common Sense Personally Involved Cons Decision Pressure ( a mistake can be catastrophic) No track record or experience Emotionally involved Unskilled at business Conflicts of interest Lack of Accountability Family Members Long, Reher & Hanson, P.A Slide 19 PERSONAL TRUSTEE OR POOLED TRUST PROS AND CONS Pros Good Business Person Tough, honest, hardworking Trained Professional Cons Human (may embezzle, speculate poorly, die) Not enough time, burden May play favorites Lack of Accountability Conflicts of Interest Friend, Business Associate, Professional Advisor Long, Reher & Hanson, P.A Slide 20 PERSONAL TRUSTEE OR POOLED TRUST PROS AND CONS Pros Professional Experienced Established track record Accountable Will always be there Not emotionally involved Objective Cons Dispassionate Ignorant of family affairs Poor investment performance Turnover of staff Hard to reach Too conservative Slow to act No local staff on the ground The Institutional Trustee Long, Reher & Hanson, P.A Slide 21 Q & A THANK YOU! Roxanne Jenkins Senior Director LSS Of Minnesota Guardianship Options & Pooled Trust 651-310-9400 Larry Piumbroeck Outreach Representative 651-310-9407 www.lsspooledtrust.org Laurie Hanson Shareholder, Attorney At Law Long, Reher, Hanson, P.A. 952-929-0622 www.mnelderlaw.com Long, Reher & Hanson, P.A