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Do you have a client who wants to include an individual with disabilities in his or her estate plan?
Is your client disabled and about to receive a lump sum, such as a personal injury settlement or back payment from Social Security?
In both of these cases, if the individual with disabilities is receiving governmental assistance, such as Medicaid or Supplemental Security Income (SSI), the receipt of an inheritance or lump sum can result in the termination of eligibility for assistance.
Thanks to The Disability Foundation, a supporting organization of The Dayton Foundation, there is an innovative planning option that can help your clients ensure a good quality of life for their family with disabilities, without disinheriting the individual or risk jeopardizing these important entitlements.
THE DISABILITY FOUNDATION
The Disability Foundation administers three pooled, disability trusts - the Ohio Community Pooled Annuity Trust, the 2014 Ohio Community Pooled Flexible-Spending Trust and the Third Party Pooled Flexible Spending Trust. Both are safe and affordable planning options for individuals with disabilities and their families.
Ohio Community Pooled Annuity Trust (OCPAT):
Individuals with disabilities and their families can establish an account that will provide a lifetime plan of payments backed by The Dayton Foundation. When a family sets up an account in this trust, an annuity calculation is made and a monthly benefit amount determined. Each month that amount is credited to the individual’s spending account.
- The monthly benefit is guaranteed for the life of the individual (by The Dayton Foundation as Trustee).
- The money in the account can be spent quarterly or accumulated for a future activity.
- The monthly payment amount is calculated when the account is funded and based upon the value of the assets transferred, the age of the individual with disabilities and charitable gift annuity rates at that time.
Learn more about Ohio Community Pooled Annuity Trust.
2014 Ohio Community Pooled Flexible-Spending Trust (OCPFST):
The OCPFST provides an option to families who do not want the annuity limitation in the OCPAT. The only limit on the amount that can be spent is the amount in the individual’s account.
- OCPFST provides more flexibility, particularly if a major purchase is needed.
- The Flexible-Spending Trust allows individuals to set resources aside for a time when those funds are needed to purchase supplemental need items.
- While it does not provide a lifetime guarantee of payments, it does allow recipients to make requests from the principle sum in the Trust.
Learn more about 2014 Ohio Community Pooled Flexible-Spending Trust.
Third-Party Flexible Spending Pooled Trust:
This trust is created with money provided by anyone other than the beneficiary, such as parents, other relatives, or friends of the beneficiary. The beneficiary cannot create their own third party trust, nor can any monies they have ever owned be deposited into the trust. The trust can be created during the grantor’s lifetime or as a part of the last will and testament. Since the monies never belonged to the beneficiary, upon their death, there is no Medicaid Payback, and the remainder beneficiaries may receive the funds. Examples of funding include gifts directly to the trust, an inheritance the Grantor wishes to leave to the beneficiary (the beneficiary has not yet received the inheritance), or life insurance policy proceeds, all directly directed to the trust.
Learn more about Third-Party Flexible Spending Pooled Trust.
While these Trust option&rsquos may be used to fulfill an individual’s basic necessities (i.e., food, clothing or shelter), they may provide for the "extras" in life, such as travel, hobbies, pets, recreation, medical equipment and services not covered by Medicaid. Assets held in either Trust may not counted for Medicaid or SSI purposes, so long as the monthly payments are used for the individual’s supplemental needs.
By designating a personal representative to oversee the account, your client has peace of mind that their disabled loved one’s best interests are being looked after now and in the future.
Your client may establish an account in either Trust to supplement the individual’s needs immediately, or an account can be deferred and funded through your client’s estate plan. For more information about the specifics of both trust options, please visit our website at www.disability-foundation.org.
The following two examples should illustrate how The Disability Foundation can help your clients provide for the future care and happiness of their loved ones with disabilities.
Transferring a disabled individual’s inheritance to help him pursue his hobbies and, one day, take the trip of his dreams
Establishing a deferred charitable gift annuity to continue a child’s favorite activities, long after her parents have passed away
Attorney Brittany O’Diam explains in The Dayton Foundation’s advisor newsletter Futures how The Disability Foundation’s 2014 Ohio Community Pooled Flexible-Spending Trust helps families of individuals with disabilities.
Brittany O’Diam Horseman & Estess Law Group, Elizabeth Durnell-Maier, Durnell Maier, Law, Tom DeRoss, Ashley Burke, Burke & Pecquet LLC; Joe Baldasare, The Dayton Foundation; Marian Jackson; Kathy Rearick, Goodwill Easter Seals Miami Valley; Joe Zoke; Shari Cooper, Goodwill Easter Seals Miami Valley; Blair Cornell, UBS Financial Services; Jessica Jenkins, Montgomery County; Pamela Combs, Montgomery County Board of Developmental Disabilities Services; Owen Sizemore, Brady Ware & Company^ top of page
HERE TO HELP
The Disability Foundation staff would be happy to talk about this planning option or other resources that might be available for your client’s family.
–Greg Darling, executive director of The Disability Foundation, (937) 225-9939.