What Lawyers Needs to Know Before Recommending a Pooled Trust
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10/19/2021 What Lawyers Needs to Know Before Recommending a Pooled Trust Megan Brand, Stephen Dale, Eric DeGroot, and Yolanda Mazyck 1 What Lawyers Needs to Know Before Recommending a Pooled Trust •The use of a pooled special needs trust (PSNT) can be an excellent tool that greatly enhances the life of your clients on means tested benefits. There are many factors that need to be thoroughly reviewed with your client in order to determine if a trust will be a good fit. Further, not all PSNTs are created equally and the merits of each PSNT need to be weighed to determine the best choice for your client. Clients who are ill- prepared for the limitations on the use of proceeds in a pooled special needs trust may find themselves in a difficult spot or unhappy with the results. This session will examine the key considerations to examine when counseling your client on their decision re: a PSNT account. 2 1
10/19/2021 Eric DeGroot 3 What Attorneys Should Know When Counseling Clients on Joining a Pooled Trust 4 2
10/19/2021 If you don't know where you are going any road will take you there? Cheshire Cat 5 Things to • The goal of this presentation is to develop a team approach to the creation of the Special Needs consider Trust and on going administration. • Clients benefit from getting a clear before understanding of the benefits and limitations of a opening a • Special Needs Trust Setting expectations will improve the overall trust account satisfaction of the Beneficiary 6 3
10/19/2021 • * Client’s age and life expectancy Things to • * Is the client likely to survive and benefit from the trust? consider • * Has the client received Medicaid for a long time? before • * Are there other disabled family members who opening a could benefit from the trust fund proceeds post‐ death? trust account • * Does the client have dependents such as a spouse or children? 7 • * Does the client have a formal disability Things to • determination? * Does the client have dependents such as a consider spouse or children? • * Does the client have outstanding pre‐trust before debts? opening a • * Does the client have adequate community support to assist them with documentation trust account requirements? 8 4
10/19/2021 What are • What are your clients intentions for the use of the trust proceeds? * Does the client want to pay off debts? Can these be paid prior to funding? your clients' • Does the client wish to purchase exempt assets such as burial, a car or a home immediately after funding? intentions • Consider possible delays cause by the nature of the transfer to the SNT: • Court transactions such as guardianship approval etc. * Does client express a desire to access cash, do they have access to a credit card? for the use of • Does the client wish for others to benefit from the proceeds: • Consider outright gifts and impact on public benefits. the trust Does the client desire the trust to pay their shelter costs and food cost? Is the client subject to ISM reductions of their SSI? proceeds? 9 • Don’t go it alone. Identify the members of your Consider team and the role each person will play. Creating a • • Make a plan for spending: Many pooled trust organizations usually have a Spending budgeting tool they use for their clients. A proactive review of these resources can benefit Plan • the client before funding takes place. 10 5
10/19/2021 Stephen W. Dale Golden State Pooled Trust 11 • Mr. Fader, you sure ask a lot of damned questions for There are a someone from New Jersey! Great Many Questions • Roseanne Roseannadanna, • Correspondent Weekend to be Asked Update Saturday Night Live , 1978 12 6
10/19/2021 Stability Factors to Transparency Consider when Recomending a Pooled Trust Accountability Mobility 13 Stability Read Renee Lovelace's “Dark Side of Pooled Trusts” Is the structure of the pooled trust stable? Is the underlying nonprofit stable? Are the investments prudent? Risk tolerance Who is in charge of the investments and what is the cost? Are the fees being charged practical? Charging too little may be worse than charging too much. How much is the trust dependant upon volunteers? Some well‐intentioned pooled special needs trusts fail because of poor administration or management. 14 7
10/19/2021 Stability • Length of time the PSNT and/or affiliated organization has been in operation? • How many people are served by the PSNT? • What are the assets under management? • Is the PSNT engaging in an annual audit? 15 Transparency What are the fees? • Administrative fees • Investment fees Are there extra charges? How is policy created? • Is it charged monthly, quarterly, annually? • Fees for additional services such as set‐up, case management? • Minimum and Maximum fees? • Tax Preparation fee? 16 8
10/19/2021 Transparency How are requests made by the How long does it take to process a distribution request? beneficiary? • May be dependent on approval needed and type of • Are they accessible for my beneficiary? distribution (Ex: Vehicle takes longer than a monthly • (Ex: in writing only? Or via Phone, Text, E‐mail, cable bill) Mail, Fax, in person?) Logistics of Distributions What is the approval process? • Staff involvement or approval authority. • How “creative” is the PSNT in their distributions? • Board/Committee involvement. • Do they make purchases in person? • Do staff have access to a credit card or do they rely only • Is there an Appeal process? on checks? • Do they allow reimbursements to others? • Are they utilizing TrueLink cards or other pre‐paid debit cards for distributions? 17 Accountability • Is the trust accountable to someone? • Does some third party have the power to ask questions? • Does it make sense to turn over these precious assets with no oversight by the family? (sometimes yes) 18 9
10/19/2021 Accountability • What is the Mission/vision of the organization? • What is the Board structure? • Do I know or recognize the board members? • What is the board involvement in requests? • Are they providing general oversight, oversight for specific requests? • Or are they reviewing every request? • Are they aligned with the Guidelines for PSNTs which were developed in 2016 by the National Pooled Trust Standards Committee? The Guidelines for Pooled Trust Organizations can be found at: http://www.nationalplanalliance.org/Final%20Guidelines%20For%20Pooled%2 0Trust%20Organizations%20v1_2016‐2017.pdf evaluating a pooled trust can use the guidelines as a guide in evaluating and interviewing the PSNT. 19 Mobility A basic premise of the disability community rights movement is giving persons with disabilities and their families choices. Many pooled special needs trusts have no mechanism to allow the movement of the funds from the pooled trust to another trustee. This can be very problematic if all the planning is done by a joinder agreement. Some pooled trusts have liberal policies to allow beneficiaries and families to move their account to another pooled trust . By design, some pooled trusts do not allow movement of accounts, or require a court order. 20 10
10/19/2021 Mobility • The beneficiary may move out of state • The trust beneficiary should consider the portability of the trust when they are considering the type of trust. • A stand‐alone first party trust would need to be approved in each state the beneficiary resides and the trust termination provisions and state payback at the time of the beneficiary’s death can be the biggest obstacle to approval of the trust agreement in the new state. 21 Mobility • The beneficiary may move out of state • Conversely, a PSNT can port from one PSNT to another and this is codified in the POMS at SI01120.199.F.2: • 2. Exception for early termination clauses in Section 1917(d)(4)(C) trusts • For pooled trusts established under Section 1917(d)(4)(C), an early termination clause does not need to meet the above criteria if the clause solely allows for a transfer of the beneficiary’s assets from one Section 1917(d)(4)(C) trust to another Section 1917(d)(4)(C) trust. The early termination clause must contain specific limiting language that precludes the early termination from resulting in disbursements other than to the secondary Section 1917(d)(4)(C) trust or to pay for the expenses listed in SI 01120.199F.3 in this section and SI 01120.201F.4. • An attorney reviewing the PSNT should ensure that the early termination provisions of the PSNT and the PSNT policy allow for porting from one state to another. • https://secure.ssa.gov/poms.nsf/lnx/0501120199 22 11
10/19/2021 Mobility • In some cases, it may be best to create a self settled trust, and have the pooled trust administer it. • This may be especially prudent if there may be a situation where the trust needs to be transferred to a non‐ pooled trustee. 23 What is the policy regarding retained assets in the trust? 24 12
10/19/2021 What is the • Many pooled special needs trusts require that some or all of the assets remaining in the trust policy upon the death of the beneficiary be retained by the non‐profit that oversees the trust and is either regarding redistributed to other recipients or pay for the general operating costs of the non‐profit. • Some do allow remaining assets to be distributed retained to heirs or family. • Keep in mind; for self settled trusts in some states assets in the the State Medicaid Agency will have a lien on the assets upon the death of the beneficiary that in trust? many cases will be greater than the account 25 Yolanda’s Section 26 13
10/19/2021 A POOLED TRUST AS A CENTER OF A POOLED TRUST INFLUENCE AS A CENTER OF INFLUENCE 27 I I'm trying to free your mind, Neo. N But I can only show you the door. F You're the one that has to go L through it. U Morpheus, The Matrix E N C E 28 14
10/19/2021 What else can the PSNT do for me? Public Policy: • PSNT organizations can be a great influence on public policy. A recent example of this was the POMS issued by SSA on 4/30/18. • PSNT organizations can also have an impact on both legislative and litigation efforts affecting people with disabilities and those who are beneficiaries of trusts. Lewis v. Alexander, 685 F.3d 325 (3rd Cir. 2012). • PSNT organizations have also been instrumental in legislation and litigation re: individuals over the age of 65 joining the pooled trust. • See also Brand, Hanson 2013 Funding Pooled Trust Subaccounts for Beneficiaries Age 65 and Older 2015 Update. Stetson SNT Conference 29 POOLED SPECIAL NEEDS TRUSTS (PSNTs): We’ve Come a Long Way Since 1993 • The Nonprofit’s Commitment to Service • Person Focused • Umbrella of Social Service Network • Understanding People, Disabilities and Systems • Many PSNTs can be a one‐stop shop for your clients. • Consider some of the other Services the Nonprofit Administering the PSNT may provide: • 3rd party pooled trust • Trustee for stand‐alone first and third party trusts • Representative Payee • Case Management/Trust Advisory • Training and Public Awareness Partners • Quality of Life Planning and Budgeting • Guardian of the Person/Conservator/Guardian of the Estate • Contract or Grant work (Example: Case Management through the state for I/DD Services or through special funding) 30 15
10/19/2021 PSNTs as Change Agents: Impacting Legislation • PSNT organizations can be a great influence on public policy. A recent example of this was the POMS issued by SSA on 4/30/18. • PSNT organizations can also have an impact on both legislative and litigation efforts affecting people with disabilities and those who are beneficiaries of trusts. Lewis v. Alexander, 685 F.3d 325 (3rd Cir. 2012). • PSNT organizations have also been instrumental in legislation and litigation re: individuals over the age of 65 joining the pooled trust. • See also Brand, Hanson 2013 Funding Pooled Trust Subaccounts for Beneficiaries Age 65 and Older 2015 Update. Stetson SNT Conference 31 PSNTs As Educators: Sharing, Expanding and Increasing Awareness • Many PSNTs are active in educating their communities. Just as the services of the PSNT in your community may differ, so do the education and forum for educating. • Most offer user‐friendly informational platforms for families, agencies, organizations and businesses committed to hiring and supporting people with disabilities. • PSNT’s are in a good position to educate you and your clients about trust administration, the importance of estate planning for people with disabilities, serving as rep payee and many other topics. 32 16
10/19/2021 Our Collective Experience: Evaluating Engagement of a Pooled Trust • By their very nature, PSNTs provide services to more trust beneficiaries than any other trustee. Due to the numbers, the PSNTs can begin to see trends in Social Security, Medicaid and other areas regarding people with disabilities. • In addition, many PSNT administrators, especially the Executive Directors and senior level staff, are: • members of the National PLAN Alliance, • attending national conferences (such as Stetson!), • participating in the pooled SNT listserv, • communicating with one another regarding distributions, Medicaid, Social Security, investments, taxes and all of the other areas that affect their PSNT and their trust beneficiaries. • *One of the best ways to find a PSNT out of your state is to ask the PSNT in your state. 33 Still Not Sure? Ask We are Happy To Clarify 34 17
10/19/2021 Megan Brand 35 What can I do for my PSNT? “Ask not what your PSNT can do for you, but what you can do for your PSNT.” 36 18
10/19/2021 What can I do for my PSNT? • PSNTs rely heavily on volunteers. • experienced board members to serve on the board of directors and on committees. • Attorneys who are skilled in Medicaid, Social Security, Taxes, Trust Administration, Fiduciary Services and other areas are extremely beneficial to the PSNT. • A financially stable PSNT relies on various sources of income in addition to the fees that they charge for their services. • Donations from you and those in your community make for stronger PSNTs. • The donations may also support ancillary services such as Representative Payee or Guardianship and these services may ultimately benefit your clients. 37 What can I do for my PSNT? • There are also many ways in which attorneys can provide direct services to the PSNT. • An attorney may help with general legal work of the PSNT, • with drafting the PSNT and amendments, • with litigation efforts such as the 65 and older work or other matters. • The attorneys providing services to the PSNT may agree to do this work at reduced rate or even pro bono. 38 19
10/19/2021 What can I do for my PSNT? • PSNT is often in the position of referring its trust beneficiaries to attorneys for the following: • Legal advice at the time a person joins the PSNT. (Some PSNTs require this.) • When the beneficiary needs representation regarding their trust, their SSA or Medicaid benefits or any disagreement they may have with the PSNT. • To transition to a new PSNT. (Ex: move out of state) • When guardianship or conservatorship is necessary. 39 What can I do for my PSNT? • The best way you can support the PSNT in your community is to refer you clients to it. Consider the following: • PSNTs likely administer trusts for more individual beneficiaries than anyone else in your state. • This sheer volume often comes with experience, expertise and ability to perform on a quantity of scale. • They are also able to administer their trust and services on a mass scale and typically have good policies and procedures • The set‐up of the trust is often much faster in time‐sensitive cases • When the asset size makes sense for more economical administration • There are no family members or others who want to take on the liability/responsibility of serving as trustee • When a conservatorship or conserved funds are dwindling, and Medicaid is imminent. • 40 20
10/19/2021 Summary PSNT organizations can be of great value to you and your clients. However, not all PSNTs are created equally and must be reviewed and examined carefully to determine if they will meet the needs of your client. 41 21
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