State-of-Ohio_2What is The Disability Foundation?
The Disability Foundation is a 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 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.When a parent/grandparent wishes to include a disabled child/grandchild in their estate plan.When 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 be eligible for such protection, the beneficiary must be considered disabled within the Social Security Act’s definition of disability (42 United States Code Section 1382c(a)(3)).

Who can establish an account?
Qualified donors include:  individuals with disabilities, their parents or grandparents, legal guardian.  An account may also be established through a court orderA fund may be current (Intervivos) or deferred (Testamentary).  So 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.

Why 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 maintain 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?No initial set-up fees to establish an account with the Foundation and no annual maintenance fees are charged.

Why the Flexible-Spending Trust?It provides an option to 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 FS 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.

Can the quarterly disbursements from either Trust be used for purposes other than supplemental needs?
No. 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 make life worth living, 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?
This could include:A personal representative selected by the family who oversees the distributions to ensure that the individual’s best interests are being met.A personal representative will submit a request to the Distribution Committee of The Disability Foundation.The 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 individuals 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.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 principle 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.” Each trust recipient receives a K-1 tax form for each taxable year.

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

Example #1

Joe is a 53-year-old disabled individual who 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 what will happen to her when they are gone.

Even though she 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.

Also, they 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 estates, when both have passed away. The desires they have for their daughter are carefully noted by The Disability Foundation to ensure that Sam and Dorothy’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 estates, 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.  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.