EPISODE 2 – Three Types of Special Needs Trust – January 15, 2022
Bart, the voice of Vista Points, introduces the three types of special needs trusts. He also details the beneficiary and explains the professional team involved with special needs trusts. He shares examples and stories for listeners interested in a brighter financial future for a loved one living with a disability.
EPISODE 2 TRANSCRIPT:
Hello, and welcome to today’s Vista Points podcast, “Choose Your Path”, where the Vista Points’ staff are committed to improving the quality of life for those living with a disability.
Vista Points serves the community by providing professional trustee services and education about special needs trusts. The organization partners with a variety of nonprofit and corporate entities to better the lives of those living with disabilities and their families.
My name is Bart, and I am your podcast host. In our first episode, we introduced special needs trusts, what they are and who is involved in their establishment. This subject is more detailed and sophisticated than can be explained in a few minutes.
Vista Points created this podcast series – to educate anyone interested in special needs trusts. Throughout this podcast, I will tell you stories related to each type of trust. If I mention a name or mention a special situation, during the story, rest-assured the name and the situation has been changed to maintain the privacy of the beneficiary.
As a reminder, a special needs trust belongs to a person of any age who is living with a disability – physical, mental, or intellectual. At Vista Points, we never say “the disabled person” because that is not who the beneficiaries are. They are people who are “living with a disability”. The special needs trust is this person’s trust and this person is referred to as the “beneficiary.”
The purpose of a special needs trust is to ensure a more predictable financial future for a person living with a disability. This is one of the many tools used to manage the beneficiary’s assets, or gifts, and help the beneficiary to qualify for or maintain needed government benefits, such as SSI – Supplemental Security Income and Medicaid. Given that this is a new year, there is no better time to listen to a new idea, think about it, and consider taking steps toward a brighter financial future.
We are going to explore three types of special needs trusts. They are – the pooled special needs trust, first party/self-settled special needs trusts, and third-party supplemental needs trusts. We will talk more about these and how they legally allow a beneficiary to qualify or maintain needed government benefits by protecting their assets, financial gifts, even when a windfall such as: a personal injury settlement, inheritance, or a lottery winning occurs.
Pooled special needs trusts are managed by non-profit organizations. The trustee company will combine a portion of the resources of many beneficiaries, for the purpose of investment opportunities. All investment dividends are applied directly to each beneficiary’s trust. This type of special needs trust has a Medicaid payback provision.
My first story is about Jason. Jason was injured during an altercation with a group of individuals. Jason almost died. He now has lasting effects and is disabled with a traumatic brain injury. Jason received a lawsuit settlement, which his attorney used, to establish a pooled special needs trust for him.
The professional trustee helps Jason to live a good quality of life, makes suggestions of services that can benefit him, and only approves distributions that will not negatively affect his government benefits, such as Medicaid, which is needed to take care of his healthcare needs.
The second type of trust is called a First Party/Self-Settled Special Needs Trust. This type of trust is used when the individual, living with the disability, is under the age of 65. This individual is called “the beneficiary”. The money deposited into the special needs trust belongs directly to the beneficiary. There is a Medicaid payback provision associated with this type of trust.
My second story is about Gwen. She established a first party/self-settled special needs trust with the money she obtained from the sale of her home. Gwen is 35 years old and is deemed disabled. She has multiple sclerosis. Gwen has an advocate, her brother James, who helps her with her day-to-day needs. James can also contact the professional trustee for assistance when Gwen is unable to speak for herself, due to her progressing medical condition. This team effort, between the professional trustee, Gwen, and the advocate provides Gwen with the support she needs. This gives her brother and her peace of mind knowing that there are people there to help her.
The final type of trust is the third-party supplemental needs trust. This type of trust accepts monetary “gifts”, for the beneficiary. The beneficiary can be for any age. This could be for grandpa, dad, son, grandson, or even for a newborn. No money belonging to the beneficiary can be deposited into this type of trust. Family members commonly establish 3rd party supplemental needs trusts for their loved ones living with a disability. This allows the family members to plan for their loved ones’ financial future. Many times, inheritances are written in estate plans (wills, life insurance policies, or other beneficiary designations). The biggest benefit of a 3rd party supplemental needs trust, for the beneficiary, is that no medicaid payback is required, as is the case with pooled and first party special needs trusts.
Mary Gayle is 74 years old. She has advanced diabetes, COPD, and has lost a leg. She is deemed disabled. Her sisters arranged yearly deposits to be made into a third-party supplemental needs trust for Mary Gayle. They want their sister to live a good quality of life and have the financial means to do so. The money in the third-party supplemental needs trust can be used to pay for items or services her government benefits do not cover. The professional trustee can help Mary Gayle to maintain her benefits, provide financial statements to various entities when required, and check on her to ensure she is doing well.
This is a lot of information! Special needs trusts are intricate and complex. Unlike regular financial trusts, the rules and laws are different for special needs trusts. The important thing is to understand the basic qualifications for special needs trusts and if or how you would like to pursue the idea. I say this to help educate you, yet also to let you know you are not in this alone.
As you begin to walk down this path, to the establishment of a special needs trust, you will work with a team of professionals, whose job is to ensure the beneficiary’s special needs trust is being established and managed so that the beneficiary can live a good quality of life.
This team approach allows each professional, using their individual expertise, to contribute when new or changing information arises thus allowing them to make better short-term and long-term suggestions, for the benefit of the beneficiary. After all, it is an ongoing effort to manage the funds as they come into the trust and the disbursements of the funds leaving the trust. The team approach is especially useful and beneficial when aligning existing and changing laws with the quality of life of the beneficiary.
I mentioned it previously, but I remind you that one size does not fit all. So now, I encourage you to grasp the basic idea and purpose of a special needs trust, then allow an attorney to customize the correct trust for you.
As we come to the end of this episode, I am glad to preview future podcast episodes which go live on the 1st and 15th of every month. In February, we will be celebrating Valentine’s Day and will include Heartfelt Moments telling stories of how special needs trusts have helped people. You or your loved one may relate to one or more of the stories. The stories may inspire your own stories to be told.
Each of us, on the Vista Points team, is here for you. This podcast is one way we create awareness and provide education about special needs trusts. But this is not a one-way street! We hope you participate by asking questions. You may submit your questions via our Facebook page at Vista-Points-Inc, Facebook Messenger, or by calling the office using our toll free number, 888-422-4076.
This concludes our second episode of Choose Your Path, a Vista Points podcast. Subscribe now to stay up-to-date on the latest episodes, which go live on the 1st and 15th of every month. Or, visit the Vista Points website online at vistapoints.org. You can find all our episodes there. Once again, you can also call the Vista Points office at 888-422-4076. That number again is 888-422-4076. Enjoy your day with your loved one. Come back for more information when you are ready. I look forward to talking with you again.