Using a Trust

Once a trust account has been opened, the co-trustee will work with MSNT to identify needs of the beneficiary and make distribution requests for the sole benefit of the beneficiary with a disability. To process a distribution for approval and payment, MSNT must receive a completed request for funds form with an estimate for the requested distribution (or original receipts for reimbursement requests) for review by MSNT staff. MSNT must review the request and document that the distribution complies with federal requirements to protect the beneficiary’s public benefits such as Medicaid and SSI. Once MSNT approves a request, authorization to produce a check is sent to the bank. Co-trustees are encouraged to plan ahead since requests generally require 7-10 business days.

 

The following chart provides some general guidelines for distributions for quick review. Detailed information is provided in the MSNT Guide for Co-Trustees and Beneficiaries.

Allowable
With documentation and co-trustee approval, preferably payable to vendor
Not Allowable
  • Clothing
  • Transportation expenses
  • Services or costs not covered by Medicaid (co-pays, chore services, hours exceeding caps, dental services for adults)
  • Telephone or cable television
  • Furniture or household items
  • Cleaning supplies
  • Modifications to home for accessibility
  • Communication or assistive devices not covered by Medicaid
  • Caregiver agencies
  • Beneficiary travel expenses to visit family or for pre-approved vacations
  • Pre-paid burial plan
  • Rent or mortgage payments
  • Basic utilities
  • Groceries or food
  • Room and board
  • Cash to the life beneficiary
  • Alcohol or gambling
  • Guns, explosives, or other weapons
  • Charitable Donations or gifts to others
  • Anything paid already by another funding source (Medicaid, Medicare)
  • Non- affiliated caregivers, including family
  • Any expenses, including funeral expenses, after the death of the life beneficiary
Due to IRS regulations, MSNT does not have the infrastructure to comply with federal requirements to perform employer duties.

Rate of Trust Use

When distributions are reviewed by MSNT staff, one important consideration is the rate of trust use. Whenever possible and to the extent possible, MSNT attempts to preserve assets so they are available for the sole benefit of the beneficiary for their lifetime or as long as practicable. To achieve this end, an annual rate of use of 3%-5% is recommended. However, compelling needs may justify distributions at a faster rate. In some cases, priorities may be established to assist in making careful spending decisions that will best serve the needs of the beneficiary and have the greatest impact on independence and quality of life. Additional information about distribution requests may be requested for decision support when rate of trust use is a concern.

Minimum Trust Account Balance

MSNT will initiate closure of a trust when the trust account balance falls to $500 or less. When a distribution request will reduce the trust account balance to $500 or less, the co-trustee should contact MSNT to discuss since the distribution will result in closure. MSNT must reserve as close to $500 to cover final administrative costs and preparation of a final tax return if necessary. The closure will be processed consistent with federal requirements for early termination of a special needs trust including notice to state Medicaid authorities of the opportunity to make a claim against the remainder amount.

Sole Trustee

When all designated co-trustees and successors are no longer willing or able to serve or when no co-trustees are named as part of the trust declaration, MSNT serves as sole trustee and will work directly with the beneficiaries, family or care management staff to identify beneficiary needs and process distributions. An additional fee is charged when MSNT serves as sole trustee.  See Trust Service Frequently Asked Questions for additional information.