This article is to introduce readers to NYSARC Trust Services, which administers a group of trusts operated by NYSARC, Inc. NYSARC, Inc. (formerly New York State Association for Retarded Children), is the largest non-profit organization in America supporting people with intellectual and other developmental disabilities and their families since 1949. They have offered trust services for this population in New York since 1972. The three examples which follow show the variety of the services which allow individuals receiving governmental benefits to enjoy a better quality of life by protecting funds for their benefit from being declared as available assets to be recovered by governmental agencies for services rendered through Medicaid.
Example 1: You are the parent of a son with a disability who is receiving Social Services assistance. You want to be sure that your son will still have use of funds after you die. Maybe the income from $50,000 to $100,000 is all that is needed. You can’t leave it outright to your child because Social Services will claim the money to offset the aid provided. You could leave it to your child’s siblings, if there are any, and ask that they use the money for your child’s benefit. That may not be practical or wise. You could set up a trust with a banking institution as Trustee, but the amount would be too small for them to administer it, and to make a family member the Trustee which may prove to be too burdensome. Is there is an alternative?
Example 2: Your daughter, a person with intellectual or other disabilities, who is receiving Social Security assistance, has been injured in an automobile accident and is about to receive a recovery of $75,000. You want to ensure that those moneys can be used for her future needs in excess of what she is receiving from Medicaid and SSI. If she receives the money outright, it will be used to reimburse Social Services for services she is receiving. Is there some way this money can be protected so that she can enjoy a better quality of life during her lifetime?
Example 3: Your mother is retired. She lives in her own apartment and wishes to continue to do so. She receives $2,500 a month in the form of Social Security and a pension. She is disabled as defined under the Social Security law, lacking at least two daily living skills and therefore receives home health care provided through Social Services. She can only keep approximately $800 of her monthly income, and has to pay the balance which is called the spend-down, toward the services she receives. With only $800 per month she will not have enough funds to pay rent and her other monthly expenses to enable her to remain in her apartment and therefore may have to go into a nursing home. Is there a way to allow her to live out her life in her apartment?
Addressing the first example, New York law allows the establishment of a Supplemental Needs Trust (“SNT”) for persons with severe and chronic or persistent disabilities. If properly drafted, assets in such a trust can be retained without adversely affecting the ability to receive governmental benefits, nor require a payback at the death of the disabled person. NYSARC established a pooled trust called the “Unrestricted Trust” whereby a fund could be established for such individuals, either during the lifetime of the creator or by Will. It is managed as an SNT and the person establishing the fund can set out how the moneys are to be spent for special needs not covered by governmental benefits, as long as no direct payments are made to the beneficiary. During the lifetime of the beneficiary there are no trustee fees charged against the fund. On the death of the beneficiary, the first $25,000 stays with NYSARC to help defray administration expenses; however, the balance of the fund will be distributed as the creator directs.
The 1993 Omnibus Budget Reconciliation Act (“OBRA ′93”) enabled persons with disabilities to retain their resources without having those assets disqualify them from receiving government benefits. OBRA ′93 established several exempt trusts called Self-Settled Supplemental Needs Trusts (“SSNT”) or First Party Trusts since the moneys belonged to the person with disabilities. Two of the trusts were known as “A” and “C”.
The “A” Trust commonly referred to as a Self-Settled Payback Trust was limited to persons with disabilities who were under 65 and under which the balance remaining in the trust at the death of the beneficiary, would have to be paid back, up to the total medical assistance received.
The “C” Trust commonly referred to as a Self-Settled Not-for-Profit Pooled Trust has no age limitation. It must be established as a pooled trust by a not-for-profit corporation by or for an individual who is disabled as defined by Social Security Law. The “C” Trust language further provides that upon the death of the individual the moneys left in the pooled account can be kept by the not-for-profit if retained for the uses of the trust.
Using this law NYSARC established two types of “C” Trusts entitled Community Trust I and Community Trust II, the difference being that Trust I was generally for one-time payments such as personal injury awards or inheritance, while Trust II was established to receive the periodic spend-down amounts from which the individual’s rent, utilities and other expenses could be paid directly, allowing those folks to remain in the community as long as they were able. Thus, in Example 2, Community Trust I could best be used to protect the award, while in Example 3, Community Trust II would be the appropriate vehicle for the mother.
NYSARC Trust Services currently services over 6,600 accounts with funds in excess of $55,000,000. It is located at 318 Delaware Avenue, Delmar, New York, 12054 and can be reached by telephone at (800) 735-8924 or by email at email@example.com.
Warren H. Heilbronner is of counsel to the law firm of Boylan Code LLP and is Chairman of the Trustees of the NYSARC Trusts.