FAQs

How are the Frequently Asked Questions to be used?

The information provided in the Frequently Asked Questions is not intended to be legal advice, but merely conveys general information related to legal issues commonly encountered.  The reader is encouraged to consult with an attorney who is knowledgeable about estate planning.  Contact CCT if you would like an attorney referral.

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  • What is the First-Party Pooled Special Needs Trust?

    The federal Omnibus Budget Reconciliation Act of 1993, known as OBRA, is a federal law that defines who can have a special needs trust and still qualify for public benefits, and how the trust can be established.  OBRA allows people with special needs to place their own money into an irrevocable pooled special needs trust and still be eligible for SSI and Medicaid.  These trusts, sometimes also referred to as OBRA trusts, can be set up to prevent personal funds from being counted as the person’s assets, so the individual’s eligibility for SSI and Medicaid services is not jeopardized.  The pooled trust program must be set up and managed by a nonprofit organization such as CCT, and should be established within the same month that the funds are received to ensure that public benefits will not be interrupted.

    CCT’s First-Party Pooled Special Needs Trust is established by a Grantor and self-funded by the individual with special needs. The Grantor can be the Beneficiary, the Beneficiary’s Guardian, parent, or grandparent, or the Court.

    Please note: As of June 1, 2016, the Self-Funded Pooled Disability Trust was renamed to First-Party Pooled Special Needs Trust.

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  • How can the trust be funded?

    The First-Party Pooled Special Needs Trust is funded with the Beneficiary’s own funds. This trust can be established with funds from a personal injury settlement, Social Security back payment, sale of property, inheritance left directly to the Beneficiary, or the Beneficiary’s own savings.

    Checks can be made payable to the Trust Company of Virginia (TCVA) for deposit to the trust at any time.  Real estate or other non-cash assets are not accepted, since the funds must be pooled for investment purposes.

    Please note: As of June 1, 2016, the Self-Funded Pooled Disability Trust  was renamed to First-Party Pooled Special Needs Trust.

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  • Is the First-Party Pooled Special Needs Trust irrevocable?

    By law, the First-Party Pooled Special Needs Trust is irrevocable.

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  • What are the fees to establish the First-Party Pooled Special Needs Trust?
  • What happens to the remainder when the Beneficiary passes away?

    The Grantor can designate Primary and Contingent Successor Beneficiary(ies) in the Joinder Agreement.   The Grantor can designate one person, several people or a nonprofit organization like CCT to receive some or all of the remainder funds.  This information can be updated by the Grantor(s) at any time by completing the Amendment to the First-Party Pooled Special Needs Trust Joinder Agreement form.

    For a Beneficiary who never received Medicaid benefits:
    After administrative fees are deducted, the remaining funds are distributed to the Successor Beneficiary(ies) per the Joinder Agreement.

    For a Beneficiary who received Medicaid benefits:
    The First-Party Pooled Special Needs Trust is a Medicaid payback trust for Beneficiaries who receive Medicaid.  Upon the actual death of the Beneficiary, there are specific rules for what happens to the remainder.  These rules may vary state-to-state.

    In general, the Medicaid office for each state in which the Beneficiary received Medicaid benefits is notified upon the death of the Beneficiary.  CCT requests information regarding the total amount of claims (funds that Medicaid has spent) that is owed to Medicaid on behalf of the Beneficiary.

    The following scenarios help to explain CCT’s policy for the remainder of the First-Party Pooled Special Needs Trust upon the death of the Beneficiary.  CCT’s policy is followed to the extent that it complies with each state’s Medicaid Policy:

    1. When Medicaid is owed less than the amount remaining in the trust:
      If there is $50,000 remaining in the trust and Medicaid is owed $25,000, the Successor Beneficiary(ies) per the Joinder Agreement will receive the balance after Medicaid is reimbursed and administrative fees are deducted.
    2. When Medicaid is owed more than the amount remaining in the trust:
      If there is $50,000 remaining and Medicaid is owed $60,000, the remainder will be retained by CCT to support the mission of CCT, which includes the Charitable Fund Award.

    IMPORTANT! Pre-need funeral and burial arrangements for the Beneficiary should be made and paid for in advance, as disbursements will not be approved after the Beneficiary has passed away.

    It is also important that CCT is notified by the Grantor or Advocate at the time of death of the Beneficiary.  We are not notified by any other agency.  A copy of the death certificate is requested when it becomes available.

    See the Joinder Agreement section on Distributions upon the death of the Beneficiary for further details.

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  • What types of trusts are administered by CCT?

    CCT administers the following types of trusts:

    • Third-Party Pooled Special Needs Trust – A trust established by a third party, usually a parent, grandparent, relative or friend for the benefit of a loved one with special needs.
    • First-Party Pooled Special Needs Trust – A trust established with the Beneficiary’s own funds with the Grantor being the beneficiary, parent(s), grandparent(s), Guardian, Conservator or the court.
    • Military Survivor Benefit Plan Special Needs Trust – A trust established by a parent who is a military member or retiree for the benefit of his or her dependent child with special needs and funded by annuity payments from a Military Survivor Benefit Plan. This trust is also a first-party pooled special needs trust.

    The trusts differ in whose assets are funding the trust. All trusts are administered by CCT in a similar manner. Many Beneficiaries have both a third-party and first-party trust with CCT. For Medicaid recipients, a major difference between a first-party and third-party trust is how the remainder is handled when the Beneficiary who received Medicaid passes away.

    See What happens to the remainder when the Beneficiary passes away?

    For Remainder Policy for Third-Party Pooled Special Needs Trust

    For Remainder Policy for First-Party Pooled Special Needs Trust

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  • How are the trust funds managed and invested? What does “pooled trust” mean?

    Each Beneficiary’s funds are placed in an individual sub account.  CCT accepts cash assets for deposit into the trust; no real estate or non-cash assets are accepted.  The cash assets from all sub accounts are then “pooled” together, and are invested and managed by the Trust Company of Virginia (TCVA) (www.tcva.com).  TCVA is a federal chartered financial institution with trust powers, located in Virginia.  Pooling the funds reduces administrative fees and increases the principal for investment purposes.  Earnings based on the Beneficiary’s share of the principal are reinvested into each sub account.

    A financial record is maintained for each sub account that reflects all the activity in the account.  The Advocate has the option of receiving quarterly financial statements in the mail or accessing financial information about the account online at the TCVA website.

    The funds are conservatively invested.  The Investment Committee of CCT’s Board of Directors provides oversight and meets quarterly with the staff at TCVA.  TCVA staff members make a presentation to the full Board annually.  The Board votes on the Investment Policy.

    CCT provides trust administration services that include reviewing payment requests and managing disbursements.

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  • Who can have a trust?

    CCT provides services for people with special needs who meet the criteria under the Social Security Administration’s (SSA) definition of disability.

    For an adult 18 and older, “disability” under Social Security is based on an inability to work. To be considered disabled under SSA rules, the following criteria must be met:

    a.)  The adult cannot do work that was done before;

    b.)  Social Security decides that the individual cannot adjust to other work because of his or her medical condition(s); and

    c.)  The disability has lasted or is expected to last for at least one year or to result in death.

    For a child under the age of 18, the SSA defines having a disability as follows:

    a.)  The child must have a physical or mental condition(s) that very seriously limits his or her activities; and

    b.)  The condition(s) must have lasted, or be expected to last, at least 1 year or result in death.

     For more information, please visit the Social Security website.

    Note:

    CCT’s Third-Party Pooled Special Needs Trust is available to Beneficiaries of any age.

    CCT’s First-Party Pooled Special Needs Trust is available to Beneficiaries of any age. For clients who are 65 years of age and older and receiving or planning to apply for Medicaid Long Term Care, the eligibility requirements for a self-funded trust vary from state to state.  Please contact CCT for more information.

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  • In what states are trusts from Commonwealth Community Trust available?

    Commonwealth Community Trust (CCT) is a national nonprofit organization that provides trust administration service for individuals with special needs across the country.  The CCT staff is knowledgeable about the rules and provisions for Medicaid and SSI per state in order to not jeopardize benefits.  States where CCT currently offers trust administrative services include the following:

    Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, D.C., Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and Wyoming.

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  • What expenses can the trust pay?

    The trust can be used in many ways to enrich the quality of life of the Beneficiary.  The trust can pay for clothing, computer equipment, furniture, dental care, eye exams and eye glasses, vocational training or other educational expenses, and transportation.  Also see “How Can Funds from the Trust be Used”.

    The trust must be used for the sole benefit of the Beneficiary.

    For a Beneficiary who receives SSI and/or Medicaid, it is the responsibility of CCT to preserve these benefits.  CCT follows the rules of government agencies for pooled trust organizations.  Disbursements are not made that would duplicate what benefit programs are providing, such as food and shelter for SSI recipients, as these disbursements would affect benefits.

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  • Who can request disbursements?

    A Primary and Secondary Advocate are named on the Joinder Agreement by the Grantor and can be changed at any time by completing the Change of Advocate Form.  The Advocate has the responsibility of requesting disbursements, receiving financial statements, and communicating with CCT about the needs of the Beneficiary.  The Advocate can be a parent or Guardian, Conservator, Power of Attorney, family member, case manager, or the Beneficiary himself or herself.

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  • How are disbursements handled?

    CCT follows the rules outlined in the Master Trust Agreements in administering trusts.  Please see CCT’s Trust Administration Services for additional useful information.

    Checks are made payable to a vendor, not the Beneficiary, so as not to be counted as income or assets for clients receiving SSI and/or Medicaid.

    Also, members of the Board of Directors with expertise in Estate Planning and other related fields serve on the Disbursement Committee and assist the Executive Director, as needed, in making disbursement decisions on behalf of the Beneficiary.

    For more information, see Instructions for Requesting a Disbursement.

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  • How do I share my vision for the trust and other helpful information with CCT?

    The Family and Beneficiary Information form provides the Grantor(s) of the Third-Party Pooled Special Needs Trust the opportunity to let CCT know about their vision for the trust and to share important information about the Beneficiary.

    The Advocate for the First-Party Pooled Special Needs Trust will be asked to complete Objectives for the Trust that describes his or her vision for the trust.

    This information can be updated as needed.

     

    Please note: As of June 1, 2016, the Self-Funded Pooled Disability Trust was renamed to First-Party Pooled Special Needs Trust.

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  • What is the enrollment process?

    CCT encourages prospective participants to consult with an attorney or trusted advisor, and contact CCT with any questions regarding the enrollment process.

    The following documents and payments are required for enrollment:

    1. Joinder Agreement – Completed and signed by Grantor(s) in front of a notary
    2. Fee Schedule – Signed by the Grantor(s)
    3. Attorney Checklist – if applicable
    4. Check for the enrollment fee made payable to Commonwealth Community Trust.
    5. Check to fund the trust made payable to the Trust Company of Virginia if the trust is to be funded immediately.
      Note: Most Third-Party Pooled Special Needs Trusts and Military Survivor Benefit Plan Special Needs Trust are funded at a later date.
    6. Copy of the Beneficiary’s Social Security card.

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  • What tax information is provided?

    Participants with funded trusts will receive a K-1 Form as required by IRS regulations.  This form is for tax preparation purposes and will reflect taxable activity of the trust during a given calendar year.  Please consult with a tax preparer if you have any questions.

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  • What is the Third-Party Pooled Special Needs Trust?

    A third-party trust is a general term for a special needs trust that a parent, family member or others (the “third-party”) establish “for the benefit of” an individual with special needs. Third-party trusts are based on applicable state law (both statutory and common law).  All assets intended for the Beneficiary must be third-party assets, typically belonging to the Grantor, family member, or friend at the time of transfer.  None of the assets may belong to the Beneficiary.

    CCT’s Third-Party Pooled Special Needs Trust is a pooled special needs trust administered by CCT, a nonprofit organization. Each Beneficiary’s funds are placed in an individual sub account.  CCT accepts cash assets for deposit into the trust; no real estate or non-cash assets are accepted.  The cash assets from all sub accounts are then “pooled” together, and are invested and managed by the Trust Company of Virginia (TCVA) (www.tcva.com).  TCVA is a federal chartered financial institution with trust powers, located in Virginia.  Pooling the funds reduces administrative fees and increases the principal for investment purposes.  Earnings based on the Beneficiary’s share of the principal are reinvested into each sub account.

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  • Why should I consider a Third-Party Pooled Special Needs Trust?

    Family members or others can set up a Third-Party Pooled Special Needs Trust that will provide financial support for a loved one with special needs.

    In the case of an individual who receives public benefits such as Supplemental Security Income (SSI) and/or Medicaid, an inheritance left directly to the Beneficiary will jeopardize eligibility because of the $2,000 asset limit.  (See What is the connection between public benefits and personal resources (assets and income)?)  The same funds, if directed to a Third-Party Pooled Special Needs Trust for the benefit of the Beneficiary, will not be counted as an asset or income for the purpose of maintaining SSI and Medicaid eligibility.

    In addition, the Grantor may have concerns about the Beneficiary’s ability to manage his or her own funds.  The Third-Party Pooled Special Needs Trust eases this anxiety by providing fiscal oversight to ensure that funds left for the Beneficiary meet their intended goals.

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  • How can the trust be funded?

    The most common way to fund the Third-Party Pooled Special Needs Trust is through the Grantor’s will, estate plan, life insurance policy or employee benefit.  The trust may also be funded by a gift, bequest, or inheritance directed to the trust by a family member or friend.

    Checks can be made payable to TCVA for deposits to the trust at any time.  Real estate or other non-cash assets are not accepted, since the funds must be pooled for investment purposes.

    The following resources may also be helpful in determining how much to allocate to a special needs trust.

    1. Budget and Expense Worksheet: This annual budget worksheet can be helpful in making decisions about how to use funds from the trust. The estimated costs per year should be based on how many years you anticipate the trust lasting.
    2. Special Needs Planning Calculator: This calculator, provided by MetLife, is intended to help you project the future expenses for the individual with special needs.
    3. How to Assess Future Life Needs for a Loved One with a Disability: This article was written by CCT Executive Director, Joanne Marcus, MSW, for the Special Needs Alliance.

    It is helpful to consult with an Estate Planning Attorney who is familiar with special needs trusts when writing your estate plan or will.  CCT can provide the Master Trust Agreement and suggested language and is available to assist with questions that you or your attorney may have.

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  • What are the fees to establish the Third-Party Pooled Special Needs Trust?

    There is a one-time Enrollment Fee that is due at the time the Joinder Agreement is completed, signed in front of a Notary and received by CCT.

    If a Grantor does not submit a completed Joinder Agreement and Enrollment Fee prior to passing away, the Enrollment Fee is assessed at three times the current Enrollment Fee.  Trusts that are established in this manner are much more complex to administer due to the lack of information about the Beneficiary and the Grantor’s intentions for the trust.

    For SNTs that will not be funded immediately, there is an Annual Renewal Fee.  This fee is assessed annually until the trust is funded.

    Once the trust is funded, there are ongoing administrative fees and the Annual Renewal Fee is no longer billed.

    (See Third-Party Pooled Special Needs Trust Fee Schedule for current fees and additional details.)

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  • What is the connection between public benefits and personal resources (assets and income)?

    Many individuals with disabilities receive SSI, a monthly monetary allowance that pays for food and shelter and usually makes the person eligible for Medicaid.  Medicaid pays the cost of health services for people with special needs who demonstrate a financial need.  Adults are eligible for SSI if they have a disability that prevents them from working and earning a self-sufficient wage, and they do not have more than a certain amount of assets.  Children, who are minors, are eligible for SSI if they have “marked and severe functional limitations” from a physical or mental condition.

    In order to be eligible for SSI and Medicaid, a person cannot have more than $2,000 (current in 2016) in assets that can be converted to cash.

    Establishing the First-Party Pooled Special Needs Trust or Third-Party Pooled Special Needs Trust will preserve funds that can be used for the benefit of an individual with special needs, without jeopardizing SSI and Medicaid, as the funds in these trusts are not counted as income or assets.

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  • What services are not provided by public benefit programs?

    Usually people who receive SSI have meager funds available for basic living expenses.  SSI pays for food and shelter related expenses, and allows a small amount of money, which may be as little as $30 a month, for a personal care allowance.  A trust can pay for supplemental needs that include eye and dental care, eye glasses, hearing aids, clothing and other items and services that would enhance the Beneficiary’s quality of life.  (See How the Trust can be Used.)

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  • What happens to the remainder when the Beneficiary passes away?

    The Grantor can designate Primary and Contingent Successor Beneficiaries in the Joinder Agreement.  For participants of the Third-Party Pooled Special Needs Trust, the Successor Beneficiaries will receive the remainder of funds in the trust sub account upon the death of the Beneficiary.  The Grantor can designate one person, several people or a nonprofit organization like CCT to receive a percentage or all of the remainder funds. This information can be updated by the Grantor at any time by completing the Amendment to the Third-Party Pooled Special Needs Trust Joinder Agreement form.

    Upon the actual death of the Beneficiary, distributions for CCT and TCVA administrative and termination fees are allowed.  After the administrative fees are disbursed, the remaining funds are distributed to the individual(s) designated in the Joinder Agreement.

    IMPORTANT! Pre-need funeral and burial arrangements for the Beneficiary should be made and paid for in advance, as disbursements will not be approved once the Beneficiary has passed away.

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  • Can a family member or friend other than the Grantor make a contribution to a Third-Party Pooled Special Needs Trust?

    Yes, the trust can receive gifts, bequests, and inheritances from relatives or friends who choose to direct funds to the Beneficiary’s Third-Party Pooled Special Needs Trust.  This allows for an efficient and cost-effective way for family members to avoid having to prepare separate special needs trusts, since anyone can name the Beneficiary’s trust with CCT in their estate plan or will.  It is important that family members be notified that the Third-Party Pooled Special Needs Trust has been established and that funds should be directed to the trust with CCT and not directed to the individual.

    Once the Third-Party Pooled Special Needs Trustis set up, checks can be made payable to the Trust Company of Virginia (TCVA) and sent to CCT for deposit into the Beneficiary’s account.  The Beneficiary’s name, and account number if available, should be included on the check to ensure funds are deposited to the correct account.

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  • What information is reported by CCT to government agencies for clients receiving SSI and Medicaid?

    The following reports are provided to the appropriate public agencies for Beneficiaries who receive SSI and or Medicaid:

    • The establishment of the trust at the time of enrollment.
    • When requested by a public agency, CCT will provide a copy of the Joinder Agreement and financial statements that detail deposits and disbursements.
    • CCT will provide notification to the state Medicaid office, upon the death of the Beneficiary, for clients who have the First-Party Pooled Special Needs Trust and receive Medicaid.

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  • What must be reported to government agencies for SSI and Medicaid recipients by the Beneficiary or his/her representative?

    It is the responsibility of the Beneficiary or his/her representative to report the following:

    • A change in the Beneficiary’s living arrangement.
    • A change in the Beneficiary’s income (including the receipt of any direct income from the trust, but not distributions that are “not income”).
    • A change in any countable resources.
    • New eligibility for other public benefits.
    • Substantial medical improvements that may result in the Beneficiary no longer being considered disabled.
    • A change in the Beneficiary’s marital status.
    • Admission to or discharge from any health facility or public facility, such as a hospital or nursing home.
    • Any intended trip outside the United States.

    The report should be in writing to the Social Security Administration and include the Beneficiary’s name and Social Security number, the name of the person making the report, and a description of the event reported and the date it happened.  The report is due within 10 days after the end of the month in which the event occurred.

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