Planning Considerations

MSNT encourages people with disabilities and their families to ask lots of questions and explore unique issues associated with their planning efforts to identify a trustee option that is the best fit possible for their situation.

 

MSNT trust administration provides an affordable and accessible option for people with low to modest incomes; relieves family burden through it’s expertise on Social Security and Medicaid rules for proper distributions; documents the trust as an exempt asset for eligibility purposes; and makes final disbursements consistent with federal requirements.

However, MSNT also recognizes its limitations and capacity and advises that MSNT –

  • Administers special needs trusts ONLY under the unaltered terms of the trust documents provided by MSNT as approved by the Board of Trustees
  • Does not offer Medicare Set Aside (MSA) accounts or sub-accounts
  • Does not accept homes, real estate or other real property as trust assets
  • Uses a strict standard for distribution that protects public benefits and will not result in reduction or elimination of SSI or Medicaid benefits
  • Does not arrange or pay for attorneys to appeal adverse public benefits decisions but will provide important information to the beneficiary’s attorney or advocate to document the trust as a qualifying special needs trust that is an exempt asset
  • Will not serve as employer for caregivers or pay caregivers directly from the trust due to Internal Revenue Service payroll tax requirements and restrictions
  • Will not accept an IRA account as a trust asset
  • Requires pre-approval of the Board to accept securities or other investment instruments as a trust asset

 

Contact MSNT to discuss these issues since may be able to offer solutions or alternatives to address these challenges or may be able to identify another trustee option that may meet the needs of the individual beneficiary.

Transfer Penalties for People Over the Age of 65

For individuals who are 65 or older, state Medicaid agencies can impose transfer penalties that invalidate the value of a first party special needs trust. MSNT does not determine eligibility or calculate transfer penalties and MSNT encourages communication with the appropriate Medicaid eligibility authorities to determine whether a trust is advisable.

  • When an individual who is 65 or older receives or applies for certain Missouri Medicaid program types, a transfer to a pooled First Party Special Needs Trust is subject to a transfer penalty.
  • Transfer penalties can be imposed for individuals who are applying for or already eligible for the following Medicaid eligibility categories:
  • Transfer penalties apply for transfers to a first party special needs trust in the five years prior to becoming eligible for one of the above-listed Medicaid programs, sometimes called the “look-behind” period.
  • Transfer penalties are imposed as a period of ineligibility during which the individual is ineligible for individuals applying for or receiving services in one of the above-listed Medicaid categories. The deferred eligibility period can be months or years and is calculated based on the transferred asset amount.
  • Imposition of a transfer penalty makes a special needs trust impracticable with no benefit to the person with a disability. MSNT will not establish a first party special needs trust for an individual who is ≥65 if the transfer is subject to transfer penalty.
  • MSNT does not establish public benefit eligibility policy and cannot interpret or advise Medicaid applicants or recipients regarding application of transfer penalty policies or the length of the ineligibility period.

 

The following chart summarizes policy discussions with the Missouri Family Support Division (FSD) staff to clarify the 2013 policy position for transfer penalties and pooled trust organizations like MSNT.

Type of Trust Beneficiary Age Medicaid Program Eligibility Category Subject to Transfer Penalty Look Behind Period
Third Party Trust Any Age Any Eligibility Type No None
First Party Trust <65 Any Eligibility Type No None
First Party Trust ≥65 Institutionalized individuals defined as:

Yes 5 Years
First Party Trust ≥65 Any eligibility type for non-institutionalized individuals. Includes coverage for
1915(c) Home & Community-Based Services waivers, including all DMH waivers
No 5 years prior to date of move to institutional services such as NF, State Mental Hospital, or HCB recipient under 1902(a)(10)(A)(ii)(VI) of the Social Security Act

Inactive Trust Option

If the funding for the account will be available at a later date, MSNT offers the option to complete all the forms required to establish the trust with a $200 fee. $100 will be placed in a pooled account and the trust will be activated when the minimum deposit is received to establish an active account. The inactive trust option is especially attractive when the trust is testamentary or will be funded by a life insurance or retirement account payout. The chart below provides a comparison of an active and inactive account to assist in determining whether an inactive account will address your needs.

Active Inactive
Trust Documents Appropriate first or third party trust documents must be completed.
Enrollment Fee $500 or reduced fee calculated based on income and initial deposit amount $100
Minimum Deposit $500 $100
Activation Account is active at opening Account will convert to active when a deposit is made that establishes an account balance greater than $500. Remainder of enrollment fee (applicable enrollment fee minus $100) is required at that time.
Minimum Required Balance $500 $100
Account Number and Statements
  • MSNT Trust number assigned at opening
  • Landmark Bank individual trust account number assigned when bank at MSNT’s instruction
  • Quarterly statements generated & mailed
  • MSNT Trust number assigned at opening
  • No individual trust account number assigned since inactive trusts are pooled in a shared account
  • No statements are issued until activation
Fees Published fees are reported in quarterly statements No fees applied
Investments Account is invested per directive in the trust documents and consistent with MSNT policy Not invested until activation when it is invested consistent with trust documents & MSNT policy
Amendments to Trust Language MSNT reserves the right to amend the trust documents to comply with applicable statutes, regulations and operational requirements. Current trust documents are available for download from the MSNT website.
Notification
Requirements
MSNT must be notified of status changes including but not limited to:

  • address or contact information changes for life beneficiary, donor, or co-trustees
  • death of the listed donor(s), co-trustee(s), life beneficiary or remainder beneficiary
  • appointment of guardian or other legal status changes for life beneficiary

Termination of Trusts by Other Trustees

For a variety of reasons, a special needs trust may be established with one trustee but may need to be moved to another trustee at a later time. One common reason is that a corporate trustee may determine that the trust balance is too small, making it impractical to continue to administer. Because MSNT will keep a trust open until it reaches $500, it may be advisable to establish in the trust document the authority to establish a trust with MSNT and to move the assets to MSNT as trustee. This can be accomplished with appropriate language in the trust document that provides authority to establish the trust with MSNT or it may be advisable to establish an inactive trust to avoid any questions about donor intent or any risk that the assets may disqualify the beneficiary for any public benefits.