FAQ

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If you have any questions about The Disability Foundation, our services or our trusts, please don’t hesitate to ask us. The responses below to some of the frequently asked questions we receive, will help provide answers or clarification in the event that you have a question outside of our office hours. Otherwise, please contact us via phone or email and let us help answer your specific questions one-on-one.

 

What is The Disability Foundation?

The Disability Foundation is a nonprofit organization and a type I supporting organization of The Dayton Foundation. The Disability Foundation is a public charitable organization under Section 501(C)(3) and 509(a)(3) of the Internal Revenue Service Code of 1986, as amended. The mission of The Disability Foundation is to enhance the quality of life for people with disabilities by complementing public benefits through the prudent management of financial resources.

 

The Dayton Foundation established The Ohio Community Pooled Annuity Trust (OCPAT) in 1998. The Disability Foundation established the Ohio Community Pooled Flexible-Spending Trust in 2006, updating it in 2014. The Disability Foundation is the Distribution Trustee of both the OCPAT and the Flexible-Spending Trust. These Trusts are Medicaid Payback Disability Pooled Trusts, set up pursuant to (42 United States Code Section 1382c(a)(3)).

 

When should I consider an Ohio Community Pooled Trust as a planning option?

When an individual with disabilities receives, or is set to receive, a lump sum such as from a personal injury settlement, a bequest from an estate or trust, or a back payment from Social Security, establishing a trust can protect the individual’s SSI/Medicaid disbursement.

Examples include:

  • A parent/grandparent wishes to include child or grandchild with a disability in their estate plan.
  • An individual needs to distribute assets/resources in order to qualify for public benefits such as SSI and Medicaid.

 

Who qualifies as an individual with disabilities?

To benefit from the financial planning of a pooled trust, the beneficiary must be considered disabled within the Social Security Act’s definition of disability (42 United States Code Section 1382c(a)(3)). If you have questions about qualifying disabilities, please contact us.

 

Who can establish an account?

Only a Qualified Donor can establish a pooled trust to benefit someone with a disability. Qualified donors include individuals with disabilities (of any age), their parents or grandparents, legal guardians or other family members.  An account may also be established through a court order. A pooled trust may be established during the lifetime of a qualified donor, or be included in a donor’s estate plan to be established upon the death of the donor.

 

What type of accounts are available?

The Ohio Community Pooled Annuity Trust (OCPAT) is an account that will provide a lifetime plan of payments, backed by our sponsoring organization, The Dayton Foundation. When a donor sets up an account in this trust, an annuity calculation is made and a monthly benefit determined. Each month that amount is credited to the individual’s spending account. A major advantage of this trust is that the monthly benefit is guaranteed for the life of the individual.

The Ohio Community Pooled Flexible-Spending Trust provides an option for 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. This provides more flexibility if a major purchase is required.

 

Why should someone choose the OCPAT?

The OCPAT is a life income plan for supplemental needs (as defined in Ohio Admin Code §5123:2-18-01) without causing loss of Medicaid and SSI benefits. A fixed amount will be available quarterly, from their individual spending account, to support lifetime supplemental needs or the fixed amount can be accumulated for a future activity. Assets of all trust participants are pooled for investment purposes, however, a separate account is maintained for each beneficiary.

 

How do you know payments for the OCPAT will continue once the asset is transferred to the Trust?

Each account agreement is a general obligation of The Dayton Foundation backed by the full assets of both The Dayton Foundation and The Disability Foundation.

What are the costs associated with the OCPAT?

There are no initial set-up fees to establish an account with The Disability Foundation and no annual maintenance fees are charged.

 

Why should someone choose the Flexible-Spending Trust?

The Flexible-Spending trust provides an option for individuals and families who do not want the annuity limitation as offered in the OCPAT. The only limit on the amount that can be spent is the amount in the individual’s account. The Flexible-Spending Trust can be intended for long-term use, however, it does require more financial advising by the individual and his/her Personal Representative.

What are the costs associated with the Flexible-Spending Trust?

There is a one-time initial setup fee and an annual administration fee, both very affordable.

 

Why should I choose to work with The Disability Foundation?

The Disability Foundation has been working with families in the state of Ohio for more than 20 years, establishing over 800 successful trusts for people just like you. We have the experience and expertise to navigate the complex regulations related to government benefits and we enjoy helping families find financial solutions to benefit eligibility. Because we have a standard master trust (applied to every beneficiary without alteration and reviewed by the SSA), we can offer an affordable alternative and much of the time, we are able to establish trusts without the fees required by banks and other institutions.

 

Can the quarterly disbursements from either Trust be used for purposes other than supplemental needs?

By law, the amounts may only be used for the supplemental needs of the individual. While the Trust cannot provide for an individual’s basic necessities, such as food, clothing or shelter, it can provide for the “extras” in life that greatly improve an individuals quality of life, including travel, hobbies or recreation. Under Ohio law, supplemental needs can include: items beyond necessary food and clothing, vacations, hobbies; other expenditures used to provide dignity, purpose, optimism and joy to the beneficiary; items that Medicaid and other governmental programs do not cover or have been denied payment include medical costs such as dental and vision or money to supplement rent payments.

 

Who determines the supplemental needs of the individual?

A personal representative selected by the family oversees the distributions to ensure that the individual’s best interests are being met. The personal representative will submit a request to The Disability Foundation. The Foundation’s Distribution Committee will monitor requests to ensure that an individual’s account is used for supplemental needs in order to protect the individual’s public benefits.

 

What happens to the individual’s account upon death?

For the OCPAT, any accumulated funds remaining in the individual’s spending account after he or she dies must be paid to the State of Ohio to reimburse Medicaid for all expenditures made during the lifetime of the Beneficiary. The balance or “remainder” of the Charitable Gift Annuity will remain in the trust and help support programs and services for other individuals with disabilities. For the Flexible-Spending Trust, 25% of any principal remainder will remain in the trust to help support programs and services for other individuals with disabilities and the remaining 75% can either go to designated beneficiaries (after repayment to Medicaid for expenditures made on behalf of the beneficiary) or remain in the trust to help other individuals with disabilities.

 

What are the tax consequences?

For the OCPAT, donations qualify as a charitable gift to The Dayton Foundation, if funds are contributed by a parent or grandparent. The amount of the charitable deduction varies, depending upon the age of the individual and the amount transferred to set up an account. A portion of disbursements are treated as “taxable income” to the fund recipient for income tax purposes. Each trust recipient receives a 1099 form for each taxable year. For the Flexible-Spending trust there is no charitable gift component to trust initiations. Disbursements are not treated as “taxable income.” Many trust recipients will receive a K-1 tax form for each taxable year, depending upon the size of the trust.

 

What are some examples of how and why pooled trusts are utilized?

Example #1

 

Joe is 53-years-old and has a documented disability. He is expecting to receive a $50,000 inheritance from a deceased relative’s estate. Because Medicaid regulations do not permit a Medicaid recipient to have non-exempt resources in excess of $1,500, Joe’s receipt of the inheritance will terminate his Medicaid assistance until he once again meets the resource limitations. In essence, Joe will be forced to use his inheritance to pay for the medical services and goods that Medicaid would otherwise have covered. However, Joe has another option that will allow him to receive the benefit of his inheritance: he works with the estate attorney and petitions the court to allow the Executor to pay over his inheritance to the Ohio Community Pooled Annuity Trust at The Disability Foundation. The court approves the purchase of a charitable gift annuity through The Disability Foundation for Joe’s benefit.  Joe is pleased that he is able to use the proceeds to attend baseball games, buy a color television and pursue his hobbies or plan a trip.

 

Example #2

Mr. and Mrs. Smith have a daughter, Lisa, with cerebral palsy.  They are able to take care of her at home, but as they get older, they worry about who will care for her when they are gone. Even though Lisa may have to move into a residential facility or a group home, they want to make sure that she continues her regular routine of activities. They envision a paid companion reading to her, taking her to movies, and buying her gifts, long after they are gone. They also want to make sure that she has a wheelchair that is specifically adapted to her needs and Medicaid won’t pay for some of the custom modifications that Lisa has enjoyed in the past. Their estate-planning attorney recommends that the Smith’s set up a deferred charitable gift annuity for Lisa with The Disability Foundation. The gift annuity will be funded with a bequest from the Smith’s estate, when both have passed away. The desires they have for their daughter are carefully noted by The Disability Foundation to ensure the Smith’s wishes for their daughter will be met.

 

Example #3

Bob’s parents recently passed away and their wills set up a testamentary trust for the benefit of Bob’s disabled sister, Cindy. Cindy had always been told that she would be taken care of, even when Mom and Dad were gone. The caseworker at the Department of Jobs and Family Services advised Bob that this particular trust was deemed a countable asset and, upon the trust being funded, Cindy would lose her eligibility for Medicaid. Bob’s parents had intended that this trust would provide for the extras for Cindy, but now it will pay for basic needs. Bob remembered hearing about The Disability Foundation at a presentation sponsored by the residential provider and asked his attorney about it. As executor of his parent’s estate, Bob petitioned the court to allow the executor to establish a charitable gift annuity for Cindy with The Disability Foundation in lieu of the testamentary trust and the court agreed. Because the testamentary trust was never funded, Cindy did not lose her public benefits and her parent’s promises were kept.

 

How do I get started?

To learn more about The Disability Foundation, contact Greg Darling, Executive Director, at (937) 225-9939 or at gdarling@daytonfoundation.org.

 

What is an ABLE account?

We do not administer ABLE accounts at The Disability Foundation. However, many beneficiaries have found it useful to establish an ABLE account and periodically fund it from their Pooled trust. They can do so without loss of protection of the public benefits.

If you would like to know more, you can contact the ABLE National Resource Center http://www.ablenrc.org   or Ohio’s program – STABLE https://www.stableaccount.com