Master Pooled Trust

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Master Pooled Trust
The Arc of Minnesota

• A service of The Arc of Minnesota andaffiliated
  chapters throughout Minnesota
• www.TheArcOfMinnesota.org
• Dennis Collins Trust Director
• Rob Arnold Trust Officer
• Marlene Johnson Trust Account Mgr.
• 651-523-0823 or 1-800-582-5256

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History of The Arc of Minnesota
The Arc of Minnesota Master Trust

• Contents
• Trusts gtBackground
• gtSNT
• Arc gtAbout
• Arcs Master Pooled Trust (MPT)
• gt Description
• gt Applications
• gt Why
• Our workshop terms get comfortable, QA at end,
  cells off please

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Definitions for a Disability Trusts

• Trust an entity, created in law, having duties
  obligations. One party accepting, managing,
  and using property for the benefit of another
  party. 3-2-1
• Grantor (Settlor, Trustor, Creator) creates
  trust (3)
• Trustee manages the trust and its funds (2)
• Beneficiary person w/ the disability, and
  benefits by the trust (1)
• Donor funds the trust
• Fiduciary a duty to act in best interest of
  beneficiary
• Trust Agreement Joinder (details) contract
  Trustee Grantor.
• Corpus principle, , trust funds
• Trust Funds Manager holds and manages trust
  funds (Associated Bank)
• Means Tested benefits benefits with a cap on
  assets or income - SSI, MA
• Sub-Account account designated to beneficiary
  in pool with funds info
• Key Person contact person, assists provides
  guidance to Trustee
• Remainderman heir to any remaining trust upon
  death of beneficiary
• Testamentary after death Inter Vivos
  during life

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Dilemma

• Estate Planning choice??
• What proportion of your estate should you leave
  to your child (person) w/ disabilities More?,
  Same?, Less? or Disinherit?
• How to maximize the inheritance benefit?
• --------------------------------------------------
  --------------------------------------------------
  ----
• Funds of the person with a disability
• Unexpected windfall (gift, inheritance, court
  award or settlement) or
• Pre-existing wealth
• How to get a greater benefit for a longer
  period?

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SNT Trusts

• SNT (Special Needs Trusts ---- Supplemental Needs
  Trusts)
• SNT a category of trusts supporting persons
  with disabilities.
• Supplemental Needs Trust
• Special Needs Trust (1993)
• Master Pooled Trust

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SNT What they have in common

• Designed to improve the beneficiarys material
  quality of life by supplementing (not
  supplanting) government benefits.
• Can pay for items that governmental benefits
  dont, such as vacations, pet, internet, gifts,
  games, furniture, cell phone, medical, etc.
• Can improved beneficiarys quality of life
  without jeopardizing eligibility for means
  tested governmental benefits i.e. SSI, MA, HUD,
  etc.
• Allows families to provide financial support for
  their loved ones, and generally implemented after
  the death of Grantor(s) (or their inability to
  continue financial support).
• SNTs are tools in the broader picture of Life
  Planning for persons with disabilities.
• Money placed in an SNT is irrevocable.

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SNT Similar Different

• 1. Supplemental Needs Trust (private)------------3
  rd Party Trust
• Drafted by attorney, Grantor- typically Mom
  Dad, funds are anyones other than Beneficiarys,
  trustee is selected.
• 2. Special Needs Trust (private)------------------
  ---1st Party Trust
• Drafted by attorney, Grantor-family/legal
  representative, not beneficiary, uses
  beneficiarys funds, trustee is selected, age
  limits on starting funding.
• 3. Master Pooled Trust (MPT) ---------------1st
  3rd Party Trust
• Master --All clients use the same Trust legal
  document, Trustee is non-profit, Grantor can be
  Beneficiary, no age limitation on starting or
  funding.
• Pooled --Funds are pooled for improved
  investment and management, each beneficiary has
  own sub-account. Getting advantages of private
  Bank managed trusts where they typically must be
  large, often starting at 250,000.

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SNT Who can Benefit?

• Not Just persons with Developmental Disabilities
• Elderly who become infirmed.
• Nursing home resident or soon to be resident.
• Anyone receiving or applying for means tested
  governmental programs SSI, MA, HUD.
• Recipients of court awards of personal injury,
  malpractice, etc.

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Supplemental Needs Trust (Private 3rd Party Trust)

• Key features
• Private trusts (attorney drafted) start up cost
  from 1000 up.
• Grantor generally is Mom Dad, Grandma
  Grandpa, sibling, etc.
• Typically funded by the Grantor possibly other
  Donors.
• Often funded after Grantors death, through a
  Will or Life Insurance.
• Grantor selects Trustee, usually a sibling,
  family member or contractor.
• Trustee must act in fiduciary manor, understand
  the system, manage funds, handle disbursement,
  governmental reports, taxes, and select successor
  trustees.
• Any remainder upon death of the beneficiary go
  to recipients' named in trust (Remaindermen).

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SPECIAL Needs Trust (Private 1st Party
Trust) Also called Self-Funded, Self-Settled or
Medicaid Payback Trusts

• Key features
• Authorized by OBRA 93
• Private (created by an attorney) start up cost
  1000 up.
• Beneficiary under 65 to start and deposits over
  65 subject to big penalty.
• Grantor is parent, grandparent, Power of
  Attorney, or the court (not beneficiary).
• Funded with the money belonging to the
  beneficiary.
• Source of funds, inheritance, SSI back payments,
  court awards, previous wealth.
• Grantor selects Trustee.
• Trustee duties perform in fiduciary manor,
  understand the system, manage funds,
  disbursement, reports, taxes, selection of
  successor trustees.
• Any remainder upon death of the beneficiary
  goes to the state for repayment of any MA lien.
  Any excess (unlikely) to heirs.

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History of The Arc of Minnesota
About The Arc of Minnesota

• Public Policy Arcs program is committed to
  progressive legislation to protect the rights and
  improve services for people with developmental
  disabilities.
• Advocacy - The Arc of Minnesota is the leading
  organization for persons with developmental
  disabilities and their families. 
• Public education - the Arc changes minds and
  proves that people with disabilities can and do
  live as our neighbors, work, learn and play in
  the community.
• Programs - Assisting families Housing Access,
  Quality Assurance, Life Planning, Master Trust.

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About Arc continued

• Arc was established in 1946 by parents of
  children with developmental disabilities.
• With the Arc of Minnesota are 12 Minnesota Arc
  chapters and all are affiliated with The Arc of
  The United States.
• Arc worked to close state institutions,
  permitting former residents to live in the
  community.
• Arc lead the fight to allow all children to
  attend public school.
• Ensured that infants and toddlers with
  disabilities receive early intervention services.
• Fighting for legislation and funding to provide
  Medicaid waivers for home and community based
  services
• Arc is a resource for families to come together
  to and advocate for a better life for their loved
  ones.

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Arc of Minnesotas Master Pooled Trust (MPT)

• Arc Minnesotas MPT began May 2009
• Our Team
• Three Arc Minnesota staff in Trust Department
  supported by other Arc staff
• The Arc of Indiana
• Trust Funds Manager Associated Trust Co.
  (Bank), Associated Wealth Management
• Nearly a decade of experience with WisPACT
  (Wisc. Pooled Community Trust).
• Legal Counselor, Allen Thiel of Thiel,
  Campbell, Gunderson Anderson P.L.L.P.
• Many others involved w/, development, operations,
  advisory and oversight
• Parents, Financial Planners, Bankers, Business
  Executives, Lawyers, Arc staff, IT consultants,
  State and National Arcs.

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Master Pooled Trusts (MPT) History

• The Arc of Minnesota Master Trust follows the
  model perfected by the Arc of Indiana
• The Arc of Indiana, the oldest (20yrs) and
  largest Master Pooled Trust in the US.
• Arc of Indiana has1500 clients, 30 million in
  sub-accounts, 7 million in Remainder funds, and
  growing at 100-200 new clients a year.
• Most states have a few MPTs (65 nationwide in
  2007), Minnesota has 4.
• .

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Arc Master Trust MPT Offers

• Two Master Trusts
• 1. Their Heritage Trust - 3rd Party
• 2. Safe Harbor Trust - 1st Party
• Four Fund Pools
• Invested Pool - Conservatively invested -
  80/20, 5 income goal.
• EE Bond Pool - Long holding periods
  inexpensive, limited tax.
• Entrusted Pool - Non-invested, non-interest
  bearing.
• 3. Remainder Pool - Used for 3rd party
  beneficiaries outliving their funds.
• Arc Trust funds are held by and managed by
  Associated Trust Company

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Arc 3rd Party MPT Their Heritage Trust FUNDING

• Often funded upon the death of the parents by
  their Will, Living Trust, or Life insurance
  policy.
• Some 3rd Party Trusts are funded during the
  Donors lifetime in whole, or in part i.e. by
  grandparents.
• There is no funding minimum or maximum.
• How much money should be placed into a trust ?
  This is a private decision based on the best
  judgment, and the resources availability of the
  Donor.

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Arc 3rd Party MPT Annuitization Spending
TargetRemaindermen

• GOAL 1) The trust funds of a beneficiary will be
  100 spent during a beneficiarys lifetime, and
  2) funds will last the beneficiarys lifetime.
• Trust will be annuitized ( spent equally over
  the beneficiarys projected lifetime), which
  creates a flexible Annual Spending Target.
• (Options are available to opt in, out, or change
  the annuity program over time)
• --------------------------------------------------
  -----------------------------------------------
• If any funds remain in a beneficiarys
  sub-account after their death, are disbursed to
  recipients designated in the Joinder by the
  Grantor. Legally recipients are called
  Remaindermen (heirs).

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3rd Party MPT What happens if my child lives
beyond their life expectancy, and all the trust
funds are spent?

• Lifetime Funds.
• A goal for Heritage (3rd Party) Trusts is to
  continue providing funds to beneficiaries with
  annuitized sub-accounts that outlive the
  projections and have depleted their trusts.
• Maximum LifeTime continued funding the level
  of previous annual spending target.
• Minimum dictated by the availability of funds
  in the Remainder Pool.

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3rd Party MPT Does the 3rd Party Account require
any funds that remain after the death of the
beneficiary to go to The Arc?

• Yes 10 from every sub-account. This retainage
  is one of the funding sources for the Remainder
  Pool used to fund the LifeTime Funds goal.
• The Donor can also designate additional Remainder
  funds to
• Your local Arc Chapter
• The Remainder Pool
• Arc of Minnesota
• ---but remember this is not a requirement.

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1st Party MPT Safe Harbor Trust

• Thanks in part to the leadership of The Arc of
  The United States, Congress passed legislation in
  1993 (Obra93) that made it possible for a person
  with a disability to fund their own trust, and
  remain eligible for government benefits.
• If a person with a disability receives an
  inheritance, or a lump sum back payment from say,
  social security, a personal injury or medical
  malpractice legal settlement, etc, these funds
  may make them ineligible for means-tested
  government benefits requiring a spend-down.
• Funds can be placed in a 1st Party MPT to keep
  their government benefits, and allowing the funds
  to be spent wisely over time.

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1st Party Trust MPT What happens to money in a
1st Party trust upon death of the beneficiary?

• Federal law requires that any funds left in a SNT
  funded by a person with a disability must go back
  to the state to reimburse the state for all
  Medicaid funds spent on that person (the MA
  lien).
• If any funds remain after MA lien has been
  reimbursed, those funds can then be distributed
  to designated heirs. This is very rare.
• The same Federal law states that if the Trust is
  administered by a not-for-profit (like The Arc),
  the non-profit can retain any portion of the
  remainder funds, before repayment to the state.
  The Arc Master Trust retains only 10 and 90 is
  returned to the state to repay Medicaid funds
  spent for that person.

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How can SNT be used?

• SNT can pay for dental care, eye care, or
  medical expenses not covered by Medicaid or other
  insurance, school tuition, communication aids,
  cable television, cell phone and Internet
  service, transportation, clothing, household
  items, furniture, vacations, entertainment, and
  many other items.
• For more items see page 28 of our Trust booklet
  found on our website for more.
• If the beneficiary is receiving SSI it cant be
  used for food or shelter, if Section 8 shelter
  utilities, if MA services.

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How often can Arc MPT funds be used?

• The Arc Trust allows for 5 disbursement checks
  per month, additional checks are 10.00 each.
• Reimbursements count as only 1 check.
• Minimum check amount 10.00.
• Requests are easy to make, usually made by phone,
  and payments sent in as little a 3 days.

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The Arc Trust MPT General use info

• The Arc trust can never give money directly to a
  beneficiary.
• Money placed in a SNT is irrevocable. Money
  designated for future deposit into a SNT is
  revocable.
• Beneficiary may open, and place in an Arc 1st
  Party trust even after beneficiary is 65.
• Donor can place money in a 3rd Party MPT and not
  be subject to a look-back provision for MA
  eligibility.
• Trust money can not be used for funeral expenses
  after death. At death money belongs to the state
  or heirs

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The Arc Trust MPT Expertise

• The Arc staff know what expenditures are
  permissible, and will report all Trust
  disbursements as required, will provide periodic
  reports to governmental agencies as required,
  file taxes, and comply with all requirements to
  lessen the risk of loss of governmental benefits.
• Arc will report Trust sub-account information to
  Donors, Key Persons and Beneficiaries.
• Arc will archive and maintain records as
  required.
• Associated Bank will provide professional
  financial management of invested funds.
  Sub-accounts are available on-line to
  authorized clients.

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What are the MPT Fees?

• Enrollment (one time only fee) 8001
• Renewal Fee (Unfunded Bond sub-accounts) 100
  every 2 years 2
• Trustee Fee (Bank Arc fees combined Funded
  sub-accounts only)
• Invested Active 108/mo or 1.6/Yr
• Invested In-Active 53/mo or 1.25/Yr
• Entrusted Active 92/mo
• Entrusted In-Active 40/mo
• Bond 5/mo pay
  every 2 yrs
• Tax Preparation (Invested accounts) tba
• Tandem discuss
• 1 Inter Vivos, Testamentary enrollment fee
  2400
• 2 - Fee is 0 if enrolled in LAP or PLAN.

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The Arc Trust Example 1

• 1 Mom Dad decide they want to create a SNT for
  their 10 year old child with Down Syndrome. They
  want to insure their child has money to access
  extras that they now supply after they are gone.
  They know that their 10 years olds siblings will
  be involved, but they dont want to burden those
  siblings with the management details of a trust,
  they want the siblings involved the Key persons.
• They set up an Arc 3rd Party MPT, and designate
  in their Will to disinherit the child with the
  disability, and direct a chosen amount of their
  estate to the MPT.
• They also tell grandparents and family to
  disinherit the 10 year old in their wills as well
  and direct his/her portion to the MPT. This
  avoids the possible need for a spend down
  situation or 1st Party trust later.

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The Arc Trust MPT Example 2

• An adult with a disability is receiving SSI and
  MA and receives an unexpected inheritance from a
  deceased relative. The adult is informed by the
  county that they have a short period of time in
  which to use the money or become ineligible for
  SSI MA and enter a spend-down mode.
• An Arc 1st Party Safe Harbor MPT is established
  quickly. The adult remains eligible for SSI MA
  benefits and the funds are used more wisely, and
  over a longer period of time.

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Top 10 Reasons to select the Arc Master Trust
MPT

• Why is Arc Master Trust a wise decision for your
  childs security and your piece of mind?
• 10. Arc is a well known and trusted disability
  organization.
• 9. Arc has a 60year history you can rely on
  it for generations more.
• 8. Arc improves security with many eyes on a
  beneficiarys sub-account.
• 7. Arc is insured.
• 6. Arc intends to fund exhausted accounts w/
  LifeTime Funds program.
• 5. Arcs Trust program is more cost effective
  than most alternatives.

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Top 10 Reasons to select the Arc Master Trust
MPT

• 4. Arc provides choices and options to change
  some items.
• 3. Arc has a knowledgeable team of professionals
  to insure that accounts are set up properly and
  functions according to laws rules in order to
  minimize any risk of loss of governmental
  benefits. Advocates, Attorneys, Committees
  (Family, Legal Advisory), Accountants, Financial
  Planners, IT Technicians, Bankers, Arcs Ind,
  Wis, Texas.
• 2. Arc takes over the work of managing a SNT so
  family members are not burdened with trust
  management and free to spend their limited time
  with loved ones in memorable, and enjoyable ways.
  
• 1. What parents tells us they are looking for in
  a trust.

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What Parents tell us theyre looking for in a
Trust

• Continuity Dependability Accessibility
• Continuity
• Stability, security, background, longevity, and
  with a predictable future.
• Arc layers of oversight, a long history a
  bright future.
• Dependability
• Familiar, experienced, and trustworthy.
• Families know the Arc and trust us to support
  persons with disabilities.
• Accessibility
• Friendly, approachable, and affordable.
• Arc strives to be welcoming and keep costs
  affordable.

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For More information Contact

• Start your MPT inquiry with your local Arc
  Chapter
• Arc West Central
• 1-218-233-5949
• 1-800-411-0124
• www.ArcWestCentral.org