From the Offices of PLAN of PA.

From the Executive Director

PLAN of Pennsylvania is a nonprofit organization established in 1989 by a group of parents who had adult children with Mental Health or Intellectual Disability diagnoses. These families created a social services organization with financial acumen to become a fiduciary and serve as a Corporate Trustee for their family members’ Special Needs Trusts. As a result of these efforts, a core component of PLAN of PA’s mission is to educate and de-mystify the process of creating a Special Needs Trust for a loved one. We guide families toward a deeper understanding of the various components that must be completed to create a trust; including, securing legal counsel, funding that trust, and selecting a Corporate Trustee. If you do not yet have a Special Needs Trust (SNT), below are some facts to consider regarding: The Key Benefit of a SNT; Types of SNT; the various professionals that can assist you in creating your SNT; Examples of allowable distributions from a SNT.

  1. The Key Benefit of a Special Needs Trust is to allow a person with a disability to set aside funds while remaining eligible for public benefits (Supplemental Security Income, Medicaid & Medicaid Waivers). These benefits are often, if not always, crucial in providing the medical care and income necessary to support the individual. In order to qualify for these benefits, the individual can have no more than $2,000 in liquid assets. A monetary gift, settlement, or inheritance will cancel these benefits. Setting funds aside in a Special Needs Trust allows the person to conserve some resources for certain expenses.
  2. Types of Trusts – The type of trust you need is predominantly determined by who is funding the trust or, in other words, from where the funds derived. While this may seem straightforward, it often gets more complicated in an actual real life situation. Some education around legal perspectives and rationale about the ownership of financial resources is advisable.
    1. First Party Trusts are funded with resources owned by the individual for whom the trust is created. A Trust document is drafted specifically for the person with a disability and approved by the courts. All first party trusts have a payback requirement, meaning that if there are still funds in the trust after the beneficiary passes away, the state will require a pay back of all government funded resources used by the person during his or her lifetime.
    2. Third Party Trusts are funded with financial resources that do not belong to the individual for whom the trust is being created. In other words, money given to them by another person. A Third Party Trust document is developed specifically for the beneficiary, providing the fullest amount of flexibility for the beneficiary’s unique circumstances. Because the money is derived from a third party, and not the beneficiary, there is no payback requirement to the state for benefits utilized. Further, the person funding the trust can designate where funds should be directed if the beneficiary dies with resources remaining in the trust.
    3. Pooled Disability Trusts are set up to be managed by a nonprofit corporation. Those who choose this option share a master trust document instead of a trust designed for their specific purpose. Often, those who choose this option have fewer resources and are most likely charitably inclined. This is because if a beneficiary dies before the trust resources are utilized, the remaining resources are first subject to state payback provisions and secondly will remain in the pool as retained funds. The use of retained funds varies, but each pooled trust program offers a policy statement about how they utilize the retained funds. Often a percentage is utilized to help other members of the pool and a portion is utilized to support the administration of the program.
  3. Get Professional Help Estate planning attorneys, financial planners, and case managers can give their perspective on long-term financial needs that will best suit the ‘what if’ scenarios. Because the regulations are complex and constantly changing, it’s important to select an attorney or nonprofit that specializes in the area of Special Needs Trusts and understands regulations pertinent to the Special Needs community.
    1. Select a Corporate Trustee – First and Third Party SNT’s require a corporate trustee to:
      1. Engage the person and his or her support system to develop and implement a lifetime plan for the beneficiary.
      2. This plan should be revisited regularly to assure that goals are being met, make adjustments when warranted, and assure that trust funds assist the person in living a more meaningful life.
      3. Work directly with the financial advisor to oversee the investment of funds.
      4. Make and carry out disbursement decisions based on the beneficiary’s sole benefit, in accordance with regulations and in compliance with the constructs of the trust document.
      5. Function with a deep understanding of SNT regulations, solid relationships with government agencies that enforce regulations, recognition and familiarity with Orphans’ Court, and knowledge of regional social services resources.
      6. Provide accounting as requested to the government agencies providing the benefits utilized by the beneficiary.             Note: Regulations allow for a family member, a financial institution or a non-profit entity to be the trustee of a SNT. Unlike a financial institution, PLAN of PA is a non-profit which is mission focused first. In addition, we have solid roots in human services to assure each beneficiary lives as happy, healthy and meaningful a life as is possible. While a family member may be willing to be a trustee, we advise families to consider the complications that can arise when family members are in charge of allowing or denying requested expenditures. Further, there is the demand of staying informed about changing regulations and opportunities. At PLAN of PA, we work closely with all family members and support systems; but, we provide the objectivity and expertise as we render decisions and engage with those key people in the beneficiary’s life.
    2. Seek Out Legal Counsel
      1. The SNT document is designed in accordance with applicable laws and determines the circumstances under which the trust resources can be utilized, successor trustees, and the very nature of how the trust will operate.
      2. A trust designed by your legal counsel is tailored to your unique dynamics and addresses foreseeable issues which may impact the beneficiary within the allowable constructs of the law.
      3. PLAN of PA works with many competent Elder Law attorneys who develop excellent SNT documents that assist the beneficiary and his or her family in meeting their goals for the Trust resources.
      4. Engage a Financial Advisor
      5. The trust you create with your lawyer can fund immediately or at some point in the future.
      6. It is crucial that your financial advisor understand the importance of securing all benefits which may be needed by your loved one now &/or at the time of your passing.
      7. Once the trust does fund, your financial advisor assures that the money is invested in accordance with your preferences and wishes.
      8. Often families review the option of purchasing insurance packages that will fund a trust at the time of their passing.
      9. If you do not have a financial advisor, PLAN of PA does work with many advisors who are competent in the Special Needs field. We would be happy to provide you with a list of professionals we recommend.                                                      Note: Again, PLAN of PA highly recommends that families and individuals seek out elder law attorneys and financial advisors who have experience in working with individuals with Behavioral Health diagnoses, Intellectual Disabilities and other specific physical diagnoses and realities that qualify them for a SNT. We can connect you to a selection of attorneys and financial advisors who understand the Special Needs Community.
    3. Advocate / Trust Protector – Some trusts include a Trust Protector Advocate for the beneficiary. This person is designated by the grantor (individual funding trust) and is generally someone close to the beneficiary who understands the grantor’s wishes and the beneficiary’s needs. The advocate works closely with the trustee in determining disbursements that will maintain quality of life for the beneficiary in accordance with the Grantor’s wishes.
  4. Examples of Allowable Expenditures from a SNT – These are some common items that may be purchased using trust funds:
    1. Wheelchair;
    2. Uncovered Medical Services or Equipment (i.e., therapy, massage, dental services, eye glasses, hearing aids, adaptive equipment, acupuncture, etc);
    3. Education and Tutoring;
    4. Recreation and Travel;
    5. Transportation;
    6. Furniture;
    7. Electronic equipment (computer or phone);
    8. Clothing.