Long, Reher & Hanson, P.A

1. Long, Reher & Hanson, P.A PLANNING FOR THE FUTURE: SPECIAL NEEDS AND SUPPLEMENTAL NEEDS TRUSTSby:Roxanne Jenkins AND Larry Piumbroeck,LSS of Minnesota andLaurie Hanson, Long, Reher & Hanson, P.A.

2. Overview of presentation Long, Reher & Hanson, P.A • Purpose of supplemental, special needs, and pooled trusts for persons living with brain injuries. • Overview of Trusts • Overview of public benefits and trusts • How trusts are used to assure financial stability for a person with a brain injury • How much money is needed to establish a trust? • Is a lawyer necessary to establish or maintain a trust? • How are trusts administered – what are the trustee’s duties? • What happens to funds remaining in a trust at the death of a disabled person? .

3. Purpose of special needs/supplemental needs/pooled Trusts for Persons Living with a brain injury Long, Reher & Hanson, P.A • With a properly drafted and administered trust: • There is no period of ineligibility imposed for benefits when assets are transferred into the trust. • Tools which can be used to preserve assets and income without interfering with public benefits on which the individual relies to meet daily needs. • Provide parents and families with a sense of comfort that their loved one will have access to oversight, educational, therapeutic and vocational experiences to maximize safety, self-reliance, independence, and the ability to enjoy life.

4. Public Benefits for persons with a brain injury Long, Reher & Hanson, P.A Non-Needs Based Needs -based Social Security Retirement (RSDI) Social Security Disability Income (SSDI) – must be certified disabled Medicare Some Veterans Benefits (note right after injury before certification of disability, some MA programs do not count assets, only income) Medical Assistance for Long-term Care -must be certified disabled Supplemental Security Income -must be certified disabled or over age 64 Brain Injury Waiver Public Housing Food support (SNAP) Minnesota Supplemental Aid

5. Medical assistance eligibility Long, Reher & Hanson, P.A • Medical Assistance for long-term care. MA-LTC provides health care coverage for long-term care services for individuals over age 64 and those living with disabilities. Eligibility is complex but as a general rule, an individual is eligible for MA-LTC and the Brain Injury waiver when: • The individual has only $3,000 in available assets; • The cost of long-term care is greater than the individual’s income (or the individual’s income is less than $719 per month); and • The individual has not transferred assets for less than fair market value while eligible for MA-LTC or in the five years preceding the application for benefits.

6. Trusts Long, Reher & Hanson, P.A • A Trust is an arrangement in which a person or financial institution (a Trustee) owns and manages Trust Assets for the benefit of a person or persons (the Beneficiary). • The person who sets up the trust is called the Grantor or the Settlor. • Many times, the Grantor and Beneficiary and Trustee are the same people! • A written agreement explains the duties the Trustee owes to the Beneficiary.

7. Choose a Trustee Carefully! Long, Reher & Hanson, P.A • A trustee has as much, if not more responsibility than an attorney-in-fact. • Trustee responsible for management of assets during life and must distribute assets to beneficiaries after death • May have to be a trustee for a minor or disabled beneficiary after Grantor’s death • Avoid temptation to choose the oldest child. • Think of the long-term in light of paperwork, tax returns, property management, etc. • Sometimes a professional trustee/pooled trust is the best option – let siblings be siblings…and trustee the trustee

8. Trusts –Living Trusts Long, Reher & Hanson, P.A • A living trust is a set of written instructions for the management of income and/or assets during and after Settlor’s life. • A trust set up in a will is called a testamentary trust and a supplemental needs trust may be set up in a will. • A living trust can be revocable or irrevocable.

9. DO ASSETS IN A TRUST COUNT FOR PUBLIC BENEFIT ELIGIBLITY? Long, Reher & Hanson, P.A Depends : 1. Revocable grantor trusts ALWAYS available 2. Irrevocable grantor trusts MAY be available 3. Testamentary trusts are available unless they conform with Minn. Stat. 501B.89 subd. 2 or are purely discretionary. 4. Special Needs Trust – exempt 5. Pooled Trust sub-accounts – exempt 6. Supplemental Needs Trust - exempt

10. Supplemental Needs Trust Long, Reher & Hanson, P.A • Created for a person living with a disability • Created and funded by someone other than the person living with a disability or spouse • Distributions must be to supplement and not to supplant government benefits • Available if person >64 and in nursing home • No payback requirement • Can be revocable or irrevocable • Can be a pooled supplemental needs trust.

11. Special Needs Trust Long, Reher & Hanson, P.A • Established for a disabled person under age 65 by a parent, grandparent, guardian, or court • Funded only with the disabled person’s assets • Trust states: at death of the disabled person, any remaining trust assets must be distributed first to the State as repayment for any MA received by the disabled person • Trust must be for the sole benefit of the disabled person. • Trust administered so that distributions supplement and do not supplant government benefits

12. Pooled special needs Trust Long, Reher & Hanson, P.A • Established for sole benefit of disabled person of any age by the disabled person, parent, grandparent, legal guardian, or court • Only the individual’s money is used • Trust is maintained by a non-profit corporation • Trust funds are in separate account for each beneficiary but the funds are pooled for management and investment

13. Pooled Trust, cont’d Long, Reher & Hanson, P.A • To the extent that amounts remain upon the death of the beneficiary, the non-profit may keep 10% of the assets to be used for charitable purposes or pay back to the state. • The transfer of the disabled person’s assets into trust may be penalized if the person is 65 years of age or older.

14. Discretionary Trust Long, Reher & Hanson, P.A • Concern about a supplemental needs trust for someone over age 64: will the person need nursing home care? • Funded with assets of someone other than individual with disability or spouse • Trust assets can be distributed to the beneficiary solely at the discretion of the trustee. • No payback provision required

15. Trust Administration Long, Reher & Hanson, P.A • Minimum Investment • Fees • Rules • Tax Implications • Pre-Paid Funeral • Accessing Trust Funds • What Goods and Services can I buy with Trust Funds? • What can’t I purchase with my Trust Funds?

16. LSS Pooled Trust Long, Reher & Hanson, P.A • LSS Examples of Pooled Trust Fund Usage • Real world trust usage by TBI Individuals

17. What to Look for in a Trust? Long, Reher & Hanson, P.A Trustworthy + Dependable + Accessible • Trustworthy • Mission, Longevity, Reputation, Oversight, Expense Control, Investment Knowledge • Dependable • Experienced with rules, disability and programs, local people with resources in your community, modern business practices and systems • Accessible • Welcoming, Compassionate, Approachable, Committed

18. Personal Trustee or Pooled TrustPros and Cons Long, Reher & Hanson, P.A Pros • Family Knowledge (personal, investment, business) • Empathetic , loving • Bright • Good Common Sense • Personally Involved Cons • Decision Pressure ( a mistake can be catastrophic) • No track record or experience • Emotionally involved • Unskilled at business • Conflicts of interest • Lack of Accountability Family Members Positive Strategies for Aging and Living with Disabilities Long Reher & Hanson P.A.

19. Personal Trustee or Pooled TrustPros and Cons Long, Reher & Hanson, P.A Pros • Good Business Person • Tough, honest, hardworking • Trained Professional Cons • Human (may embezzle, speculate poorly, die) • Not enough time, burden • May play favorites • Lack of Accountability • Conflicts of Interest Friend, Business Associate, Professional Advisor

20. Personal Trustee or Pooled TrustPros and Cons Long, Reher & Hanson, P.A Pros • Professional • Experienced • Established track record • Accountable • Will always be there • Not emotionally involved • Objective Cons • Dispassionate • Ignorant of family affairs • Poor investment performance • Turnover of staff • Hard to reach • Too conservative • Slow to act • No local staff on the “ground” The Institutional Trustee

21. Q & AThank You! Long, Reher & Hanson, P.A Roxanne Jenkins Senior Director LSS Of Minnesota Guardianship Options & Pooled Trust 651-310-9400 Larry Piumbroeck Outreach Representative 651-310-9407 www.lsspooledtrust.org www.lsspooledtrust.org Laurie Hanson Shareholder, Attorney At Law Long, Reher, Hanson, P.A. 952-929-0622 www.mnelderlaw.com