Special Needs Trusts and ABLE:

Special Needs Trusts and ABLE:
The Arc of Northern Virginia Our Special Needs Trust Program serves all disabilities in all of VA, MD, and DC. Tia Marsili Director of Trusts Phone: x 115 me with questions Visit our website: Special Needs Trusts & Futures Planning The Arc of Northern Virginia

Content: Special Needs Trusts (SNT)
How The Arc of Northern Virginia’s trust program works Disbursement Process SNT fees ABLE Accounts

6 Things to Consider when Planning for the Future
Letter of Intent Legal Authority Government Benefits Estate planning Financial planning Special Needs Trust

Questions: What can I do if money is left to a person with disabilities in order to preserve their public benefits? Who can I trust to manage that money? Why is it important to know how to disburse from a SNT? When is an ABLE account used?

Answers in brief: Establish a First-party or Self-funded SNT.
The Arc of Northern Virginia, a similar trust program, private trustee, or financial institution can manage the money. If disbursed incorrectly, public benefits may be jeopardized. An ABLE is another tool in the toolbox.

1. Special Needs Trust It is legal vehicle designed to:
provide benefit to and protect the assets of a person with disabilities, and still allow the individual to qualify for and receive government benefits. See: Federal Statute 42 USC 1396 p (d)(4)(a) and (d) (4) (c) Special Needs Trusts & Futures Planning The Arc of Northern Virginia

a.) Who is eligible for a SNT?
Anyone with a physical, mental, or intellectual disability as defined by the Social Security Act (SSA)

b.) Why Establish a SNT? Protect government benefits
2. Help with money management and longer-term financial planning 3. Promote the dignity, comfort and happiness of the individual with disabilities To be eligible to receive SSI benefits based on disability, a claimant or current recipient cannot have more than $2, in assets or resources. Assets include all income and countable resources of the individual and of the individual's spouse such as liquid resources in a savings account, cash value in life insurance policies, additional motor vehicles, and real property other than the home in which a claimant resides. Tia Marsili

2. Types of Special Needs Trusts
Third-Party Trusts Funded and Unfunded Private or Nonprofit First-Party Trusts D4 (a) - Private D4(c) - Pooled

Third-Party aka Family-Funded Trusts
Who Establishes: parents, relatives, friends; What’s the Process: contact The Arc of Northern Virginia, an attorney, or bank to establish; When to Fund: 2nd to die; may fund prior to death with seed money How to Fund: inheritance, life insurance policy, transfer from another trust, contributions, etc. What happens to the funds at death of the beneficiary: the Grantor decides who will inherit

First-Party aka Self-Funded Trusts
Who Establishes: individual with disabilities, parent, grandparent, legal Guardian, or court Why? ONLY WHEN NECESSARY: when person with disabilities needs to apply for or protect benefits, &/or cannot manage money (The SNT is exempt for Medicaid eligibility purposes) Age limit?: under 65 in VA How to Fund: unexpected inheritance, lump-sum payback from SSA, jury-decision, settlement, income, adult child support, military survivor benefit (SBP) program, alimony, lottery, savings,... What happens to the funds at the death of beneficiary: Medicaid payback or nonprofit contribution

More facts about Self-funded SNTs
Money or other property transferred to SNT is deemed a non-penalty transfer for Medicaid. Non-countable or unavailable to the beneficiary of the SNT for Medicaid and Supplemental Security Income purposes as well as for some other programs. Transfers by individuals age 65+ may be income in the month added to the SNT, depending on the source of the funds, and may be counted as resources in the following month under regular SSI SNT rules. (ex: SSI payments, veterans pensions, federal employee retirement payments (CSRS, FERS), Railroad Retirement… Irrevocable assignments from an annuity or support payments made prior to 65 do not disqualify the SNT after 65+. I have seen a hardship dispensation that is court ordered at 65+ SNT is for the sole benefit of the individual.

Congress passed the National Defense Authorization Act of 2015 with an amendment that allows military members and retirees to irrevocably assign annuity payments from Survivor Benefit Plans (SBP) to a Self-funded SNT for the benefit of their dependent child who is disabled.

This is page 1 of a Self-fund Joinder Agreement

Our Partnership as a SNT Team
The Arc of Northern Virginia Manager Key Private Bank Trustee Expertise Providing services for people with disabilities Understanding of current benefits eligibility requirements Following Grantors’ wishes Considering Beneficiary’s needs and priorities Unique position Progressive fee schedule Asset allocation Asset management Account reporting Tax reporting Check writing/disbursing Customized investments when over +$250,000 Holds Real property In-kind transfers of stock Tia Marsili

3. How Does The Arc’s Trust Work?
Grantor(s) Beneficiary Primary Representative(s)

SNTs: Unfunded or Funded
The Arc of Northern VA Private Financial Institution The Arc: Manager Trustee: Key Bank Establish at The Arc One-time nominal fee for enrollment to Arc Management & Trustee fees Experts in disabilities and finance providing client relations Continuity, reliability (Co-)Trustee administers Establish with Attorney Attorney fees Trustee may charge, outsource services; investment fees Depends on person(s) If named, successor trustees may carry on Establish with Bank or Attorney Bank Trustee, administration, & investment fees Depends on bank personnel Depends on Bank’s continuity

4. Disbursement Process Complete Disbursement Request (DR) form
Gather receipts, invoice, bills, training invoice Send completed DR & documentation to Arc The Arc verifies all aspects, for example: Is it for the benefit of the person with disability? Does it jeopardize government benefits? Does it follow the Grantor’s wishes? Is it legitimate and legal?

Most common disbursement requests:
Dental Care Vacations Phone bills Clothes Veterinary Bills Hobbies Car insurance Pre-need Burial Expenses General rule: Anything not covered by Medicaid or SSI

5. How Our Team Supports SNT Clients:
The Arc of Northern Virginia Manager Key Private Bank Trustee Pre-Funding Educate & plan with family Prepare trust paperwork Facilitate trust plan preparation Review & approve trust documents Trouble-shoot special situations Ensure compliance Once Funded Review & process client disbursement requests Ensure each disbursement aligns with grantors’ priorities & beneficiary’s needs Maintain up-to-date documents & trust plans Coordinate, with consent, with case managers and other stakeholders supporting beneficiary Process disbursements Distribute statements Conduct reviews Tax reporting Account reporting Investing Managing real estate Didn’t we want to take out the flexible funding alternatives? Tia Marsili

The Arc of Northern Virginia, we’re the solution because:
Unique position – The Arc’s mission is to advocate for the human rights of people with disabilities Experts on current disability regulations Minimal agency responsibility Multiple checks & balances Low fees No minimum Account & Tax reporting Customized investments Holds real property In-kind transfers of stock

Distribution by Trust Type Jan 2018

Growth in Number of Trusts per Year

Growth in Assets

6. SNT fees The Arc’s one-time enrollment fee: $ (subject to change) Second trust for same individual or their sibling: $525.00 Annual fee: Unfunded account: $65.00 OR Funded account: The Arc’s Annual Management fee drawn quarterly: 0.75% (subject to change) Key Private Bank’s Annual Trustee fee drawn quarter: 0.90% (subject to change) Closing fee: $ (subject to change) Tia Marsili

What is the ABLE Act? Achieving a Better Life Experience (ABLE) - a newer tool. Signed into law on December 19, 2014 by President Obama, ABLE authorizes states to create a new category of savings programs for those people with disabilities who qualify. Like SNTs, assets held in accounts that comply with ABLE will not affect eligibility for Medicaid, SSI, as long as they are used for “qualified disability-related purposes”. Citations: Public Law 113–295 The Stephen Beck, Jr., Achieving a Better Life Experience Act (ABLE Act) – Enacted December 19, 2014

ABLE Facts Onset of disability Who may establish Number of accounts
ABLE Accounts Onset of disability Who may establish Number of accounts Fees Contribution limits Investment options Valid distributions Taxes Medicaid payback Qualifying disability exits prior to 26 Beneficiary, parent, guardian, agent ONE Financial institution fees $15,000/yr (federal gift tax limit); total capped at state limit for 529 plans; SSI payments suspended when assets total $100K Investment strategies many be changed twice annually Broadly defined as “disability expenses,” including basic living expenses Earned income is tax-free Remaining funds must reimburse state for Medicaid benefits 10% penalty

Qualified Disability Expenses
Education; Housing; Transportation; Employment training and support; Assistive technology and related services; Health; Prevention and wellness; Financial management and administrative services; Legal fees; Funeral and burial; Expenses for ABLE account oversight and monitoring; Basic living expenses. Qualified disability expenses (QDE): related to blindness or disability of designated beneficiary; for the benefit of the designated beneficiary.