Pooled Master Trust I

The Arc of New Mexico Master Trust – Trust I

The Arc of New Mexico Master Trust I allows people with disabilities to fund a special needs trust with their own money and maintain eligibility for government benefits such as Medicaid, SSI and other government benefits.

People receiving an inheritance, a lump sum back-payment from Social Security or a lawsuit settlement have put their money into a Special Needs Trust rather than spend the money quickly just to stay eligible for government benefits.

The Arc Trust I is ideal for, but not limited to, the following situations:

Social Security lump-sum, back payments.

  • Personal injury and medical malpractice settlements.
  • Avoiding monthly spend-down in order to keep under the  $2,000 SSI and Medicaid resource requirements.

 

Enrolling in The Arc Master Trust I

We work to make enrolling in The Arc Master Trust as understandable and as easy as possible. Our Trust program staff can meet with families, individuals, attorneys and financial planners at whatever location is best for you to discuss the trust and assist in preparing the paperwork to establish the trust.

Trust I Fee Structure

There is a one-time set-up fee of $250 for Master Trust I and any self-settled trust where The Arc serves as trustee.

There is an Annual fee charged for updating profiles and cost of maintaining a trust account:
The Arc charges four percent (4%) of the value of a trust sub-account on an annual basis.
These fees are subject to change at any time.

Trust I and Medicaid Payback

Public benefits agencies, like those who administer Medicaid and SSI place a cap on a recipient’s income and assets in order for the recipient to become or remain eligible for benefits. Individuals who receive Medicaid cannot have more than $1,500 in assets. A person who receives SSI cannot have more than $2,000 in assets. These types of benefits are referred to as “means-tested” benefits.

When a recipient of means-tested benefits receives a lump sum of money, that money can make him or her ineligible for assistance. Fortunately, The United States Congress passed a law in 1993 allowing persons to fund their own Special Needs Trust. This law is called the Omnibus Budget Reconciliation Act of 1993, (or OBRA ’93 for short).

Today, a trust, funded by a person with his or her own money is called a Self-Settled Trust or a Medicaid Payback Trust. This is because when Congress passed OBRA ‘93, it required that when the recipient Beneficiary passes away, any funds left in the trust must go back to the State to reimburse the state’s Medicaid program for the money it spent on the beneficiary during his or her lifetime. Any money remaining after the State has been reimbursed can pass to the recipient beneficiary’s estate or heirs. It is rare for any money to be left after the State has been reimbursed for Medicaid expenses.

However,  the law allows a non-profit organization like The Arc of New Mexico  to retain up to 100% of the remaining balance.  This is type of trust is called a “pooled D4c trust” which is The Arc Master Trust I established in 1998.  The Arc of New Mexico retains 100% of any remainder funds and is used to help individuals with disabilities.

If The Arc did not retain any of the trust remainder funds, the State would claim it all.  Remainder funds remain in the trust and benefit other people with disabilities.

Frequently Asked Questions

What is the basic purpose of Trust I?

The primary purpose of Trust I is to enhance the quality of life of individuals with disabilities without jeopardizing government benefits like Medicaid, SSI and Medicaid Waiver programs

Is there a minimum or maximum amount that can be put into Trust I?

There is no required minimum.  An account can be started with as little as the cost of our Enrollment Fee of $250.00

What would it cost if I went to a local attorney to have a trust drafted?

For a precise answer, you need to ask the attorney who would draft the trust. However, a trust comparable to ours is likely to cost several times more.

My child is a minor. I have applied for the Medicaid Waiver for him. He would be eligible for the waiver, but he has assets over the allowable limit to meet Medicaid financial eligibility. Can Trust I help?

Yes. You can put his or her money into Trust I. Once the money is in our trust it no longer counts as an asset in determining his or her other financial eligibility for the waiver.

Because my child is a minor, are disbursements from his Trust I account considered differently than if he were an adult?

Yes, parents of minor children have a legal duty to provide basic support for their children, including food, clothing, shelter and basic educational expenses until age 18. Using the child’s trust fund to pay for what parents are legally obligated to provide would not be in the child’s best interest.

Disbursements from your child’s trust are reserved for extraordinary expenses, such as expenses unique to parents whose minor children are disabled, or very large medical expenses not covered by insurance or Medicaid and not easily afforded by the parents.

Every situation is somewhat different. However, as a general rule, if the requested disbursement is for something that our laws and cultural norms generally expect parents of a minor to provide for their children, then The Arc Trust will be reluctant to use funds from the child’s Trust I account for such requests.

If my child is a minor or an incapacitated adult, can I, as his parent or guardian, enroll for him?

The law allows the parent, guardian, court or the person with the disability to open the trust. There may be times when a court order is required to open the Trust I account.

By using Trust I, does a beneficiary incur taxes?

Generally, Trust I accounts do not generate a taxable event.   The Trust files a tax return for all individuals with a sub-account in the trust and issues a K-1 to the individual beneficiaries.