General FAQ

The Dilemma:  If a person 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.

Attorneys and Advisors are being asked to help individuals with disabilities plan for the receipt of a lump sum.  The lump sum may come from a personal injury settlement, a bequest from an estate or trust or a back payment from Social Security.

Many times, it is the family that seeks counsel about including a disabled child in their estate plan.

Solution:  The Disability Foundation provides solutions in all of these situations. We offer a method for helping families ensure the quality of life for the disabled individual without jeopardizing his or her governmental benefits.

The Disability Foundation is:
The Disability Foundation is a supporting organization of The Dayton Foundation

The Disability Foundation administers two Pooled Trusts:  Ohio Community Pooled Annuity Trust (OCPAT);

Annuity

and the 2014 Ohio Community Pooled Flexible-Spending Trust.

2014 Flexible Spending Trust

The Disability Foundation is the Distribution Trustee for both Trusts.  Both trusts provide a distribution option for supplemental needs (as defined in Ohio Admin Code §5123:2-18-01) without causing loss of Medicaid and SSI benefits.

These Trusts are Medicaid Payback Disability Pooled Trusts, set up pursuant to 42 United States Code Section 1396p(d)(4)(C).

Who qualifies as an individual (trust recipient)?

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)).  Each participant is unique. Examples: Down-Syndrome, CP, MR, Autism, Head trauma or Bipolar, Schizophrenia.

 How it Works:

Individuals with disabilities and their families can deposit assets safely into the Trust to pay for the individuals’ supplemental needs.

In the case of the OCPAT, the assets are exchanged for a charitable gift annuity for the benefit of the disabled individual.

The Annuity Rates designated to the OCPAT are suggested by the Charitable Gift Annuity Rates assigned by the American Council on Gift Annuities.  OCPAT trust recipients receive fixed, monthly annuity payments, based upon these suggested rates, paid into a Spending Account, held within the trust for distribution for supplemental need items.  Distributions are available on a quarterly basis.

In the case of the 2014 Flexible-Spending Pooled Trust (which replaced the original Flexible-Spending Trust), assets are placed into a Pooled Trust for distribution, on an as needed basis, to acquire Supplemental Needs.

Assets of trust participants, for both of our trusts, are pooled for investment purposes, however, a separate account is maintain for each beneficiary

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 order.

A fund may be current or deferred. Currently we have established 174 OCPAT funds. Of these, 133 are being administered as active (Intervivos) gift annuities, and the other 41 accounts have been established as deferred gift annuities, which will be funded following the death of the donor.

In the 2014 Flexible-Spending Trust Pool (this includes all trusts established under the original Flexible-Spending Trust), we have established 377 funds.  Of those 377, we have 357 active funds and 25 deferred trusts.

Is there a minimum to place within a Trust?

Minimum recommended contribution of $5,000 for the OCPAT.

No Minimum contribution for the Flexible-Spending Trust.

Individuals in the OCPAT (Annuity) will:

Have a Spending Account established within The Ohio Community Pooled Annuity Trust

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

How do I know payments 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?

There are no set up fees associated with the Pooled Annuity Trust (OCPAT).  A quarterly administrative fee, of 1.25%, is taken from the Pool of Accounts; however, this quarterly fee does not affect the monthly annuity payment as it is a fixed payment.  There is a $5,000 recommended minimum investment for the initiation of an annuity through The Disability Foundation.

In regards to the Flexible-Spending Trust, there is a $1000 set up fee and an annual fee of $250 charged to the individual trust.  No minimum has been set for the establishment of a Flex.-Spending Trust.

Can the quarterly fixed amount be used for purposes other than supplemental needs?

No.  By law, the amounts may only be used for items other than basic food and shelter as defined by Ohio Admin. Code §5123:2-18-01, i.e. funds may not be utilized to pay rent/mortgage, purchase groceries for the home, pay for a land phone-line or pay for medical costs covered by Medicaid.

While the Trust cannot provide for an individual’s basic necessities, such as food 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 that Medicaid and other governmental programs do not cover or been denied payment (State budget: eliminate dental and vision services) and

Other expenditures used to provide dignity, purpose, optimism and joy to the beneficiary

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. 

A “Personal Representative” will submit request to the Executive Director of The Disability Foundation.

The Executive Director will review all requests and submit them to the Disability Foundation for approval, if there is a question as to whether or not the request meets the definition for a Supplemental Need and thus ensure the protection of the individual’s public benefits.

For each fund recipient the need is different:

For example for one participant whose mother died, the Trust was able to purchase earrings, a teddy bear, a video and holiday decorations for the first Christmas season without her mother

Another Trust has allowed another individual to pick out a new puppy, enjoy a day at the spa, attend a family reunion, spend a week at a dude ranch and enjoy a night at the Opera.

For others, the Trust has provided for payment of dental bills, adult diapers, transportation, professional services and pre-payment of funeral expenses

Often the largest benefit to the family is not in the items purchased, but in the knowledge that someone will care for their son or daughter after the current support systems disappear

What happens to the individuals account upon death?

For the OCPAT (Annuity), any accumulated funds remaining in the individual’s spending account after he or she dies must be paid to the State of Ohio.  Any principle remainder ‘in trust’ remains in the trust and help support programs and services for other individuals with disabilities.

For the Flexible-Spending Trust, 25% of the trust remainder remains in the trust to help support programs and services for other individuals with disabilities.

For the remaining 75%, the donor has two (2) options:

 Option #1:  All funds may be designated to remain within the Trust to help support programs and services for other individuals with disabilities.

Option #2:  All remainder funds, first, must be utilized to re-pay Medicaid, as reimbursement for benefits provided to the Individual with Disabilities.  If funds remain after Medicaid is reimbursed in full, such funds may be designated to Beneficiaries.          

Tax Consequences:

Donations qualify as:

For the OCPAT, 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.

Also, each payment includes a portion which is treated as “taxable income” to the fund recipient for income tax purposes.  There is no charitable gift component to the Flexible-Spending Trust

How do I get Started?

To learn more about The Disability Foundation, contact Greg Darling, Executive Director, by mail:  500 Kettering Tower, Dayton, OH  45423; by phone at (937) 225-9939; by fax at (937) 222-0636; or by email: gdarling@daytonfoundation.org.  Additional information about The Disability Foundation, and the trusts that it administers, is also available at the organization’s website:  www.disability-foundation.org.

Why Work with Us?

Caring for the financial well-being for an individual with disabilities can come with many challenges. The responsibility of making sure yourself, or a loved one with a disability, will be financially secure, while ensuring the protection of public, asset-capped benefits, such as Medicaid and SSI, can be a daunting task.  The Disability Foundation offers a compass to help guide you, or a loved one, through the journey of ensuring a protected financial future.  Our Pooled Disability Trusts are effective tools for maintain lump sums, through estate gifts, social security pro-rated payments, injury awards, etc. and still maintain eligibility for public benefits.

When choosing a Pooled Trust Administrator, there are some important questions that one should ask:

1. How the assets will be stewarded now and into the future?

At the Disability Foundation, we meet our stewardship obligations with layers of checks and balances in place:

a) Accounting:  A spending account spreadsheet is maintained for every individual trust recipient.  It shows all debits and credits, to each account, that occur through our office.  In addition, we receive a monthly statement from US Bank to show all investment activity, i.e. assessed fees, interest and distributions made from each individual account.  Quarterly account statements, for each individual, are mailed to that trust recipient’s personal representative to show all quarterly activity in the account (from KeyBank).

b) Investment of Pooled Funds:  KeyBank is the investment manager for the pool of trust funds.  KeyBank must adhere to, and sign off to, the Investment Policy of The Dayton Foundation.  In addition, the performance, of our investment managers, is reviewed quarterly by an independent auditor, the Fund Evaluation Group, out of Cincinnati.

c) Fiduciary Trustee:  KeyBank is the Trustee for all the accounts.  KeyBank is responsible for filing the K-1’s for each individual account and filing a tax return, on the pool as a whole, each year.

d) Auditing/Tax filing – as a supporting organization of The Dayton Foundation, The Disability Foundation is audited each year, by a local accounting firm, as one of the 3,000 plus funds managed by the foundation.  In addition to the audit, as a 501c3, we are required to file a 990 on both The Disability Foundation and the Ohio Community Pooled Annuity Trust.  The Trustee, KeyBank is responsible for all tax filings on the pool of funds for the Flexible-Spending Trust and The Disability Foundation for filing the Annuity and organization 990’s.

e) Longevity – the Disability Foundation is under the auspices of The Dayton Foundation, which was established in 1921.  We have been around for 90+ years and we will be here for many decades to come.

2. How will the trust administrator ensure the trust requests are eligible for distribution?

a) Disability Foundation, Inc. as Distribution Trustee:  The Disability Foundation is charged with ensuring that all distribution requests are reviewed and approved/denied based upon Ohio Admin. Code §5123:2-18- 01 (Attached), which restricts the use of trust distributions to ‘Supplemental Needs’.

b) All distribution requests are reviewed by the Executive Director and given final approval by the Disability Foundation Board of Trustees.  Distribution requests must meet the definition of a Supplemental Need item or service, such as those defined by Ohio Admin. Code §5123:2-18- 01.

c) Proper record keeping of Supplemental Need purchases.  Any funds released, from the trust, must have accounting provided for the services/good purchased.

3. How will you ensure the continuation of public benefits?

a) Communications – with Social Security and Job and Family Services. It is the responsibility of The Disability Foundation to communicate details, with authorization of the trust recipient, or his/her legal guardian, any financial information applicable to the continued eligibility for Medicaid and/or SSI benefits.

b) Annual Review – Disability Foundation provides a Trust Explanation packet for all annual reviews, where requested, to Social Security and DJFS.

4. What services do you provide?

– Information sessions – individual or group
– Trust preparation
– Accounting
– Communications with Public Benefit Agencies
– Legal
– Clerical – ensure timely reporting of balances, requests, communications, etc.

5. How are you different from other Pooled Trust Administrators:

– We are the only organization to offer a Pooled Charitable Gift Annuity option.
– We are the least expensive, and most cost effective, administrator in Ohio.
– We are a Supporting Organization of a Community Foundation, which means our greater goal is to enrich and enhance our region and state.
– We work with clients of any age
– We can setup your trust in 1-2 business days

Administering Pooled Trusts is not one of a myriad of services offered here at the Disability Foundation. Pooled Trusts is what we do.  And our approach to our mission will always be Good – Better – Best.  We won’t stop working until our Good is Better and our Better is Best.  We provide the best services today, but our goal tomorrow will be to be even better.

Greg Darling, Executive Director, The Disability Foundation, Inc.