Pooled Master Trust II

The Arc Master Trust – Trust II (Third Party Trust) Overview

The Arc of New Mexico Master Trust II was established in 1999 as a way for families who have a loved one with a disability provide for them after they are gone.

The Bank of the West Wealth Management  Department manages funds invested in Trust II accounts . The trust corpus is invested in a highly diverse, well-performing, yet prudent portfolio consisting of global stocks, fixed income, alternatives and a small percentage of money market funds.

Funding and Financial Planning

Families participating in The Arc Trust come from many different economic backgrounds. Some may be able to fund the account with a large sum of money, while others may be able to contribute a modest amount. The most important factors to consider when funding an account are how much you can afford, the type of lifestyle to which the trust beneficiary is accustomed and what his or her needs may be.

Families usually fund the trust with proceeds from their estate, life insurance death benefits, 401ks, retirement accounts or other means. The most common methods by far are through the estate via a will or living trust and life insurance benefits. However, sometimes other relatives may wish to contribute to the trust account.

There is no minimum amount to fund a Trust  account.

Trust II Fee Structure

There is a one-time set-up fee of $600 for Master Trust II and any third party 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.

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. Learn more about The Arc Master Trust II enrollment process.

Frequently Asked Questions

What is the primary purpose of Trust II?

The primary purpose of Trust I is to enhance a person’s quality of life without jeopardizing benefits like Medicaid, SSI and other government benefits. As a parent or trust donor, you supplement these benefits.

Why should I consider The Arc Master Trust II instead of using my bank as trustee?

  • Banks are reluctant to administer trusts of under $500,000. There is no minimum amount to fund a trust through The Arc Master Trust.
  • We charge less. Our annual fee is  always substantially less than the annual fee banks or trust companies charge for individually managed trust accounts.
  • A bank trust department might be compelled to terminate a trust if the trust’s principal or income is insufficient to justify the annual fee. This is something The Arc Trust will not do. As long as funds remain, we continue administering the beneficiary’s trust account.
  • Few bank trust departments know the regulations for Medicaid, SSI, SSDI and other means-tested benefits. The Arc has a thorough knowledge of the regulations for means-tested benefits.
  • When a donor establishes a trust, they frequently want more than just professional management of the trust funds. They want insight into meeting the beneficiary’s personal needs. Few banks have this insight. The Arc of New Mexico does.
  • Families who are enrolled in The Arc Trust have the  backing of The Arc of New Mexico and what we have to offer in the way of  advocacy and expertise in the area of special needs issues.

I have a trust for my child, with one of my other children serving as trustee. Why should I consider switching to The Arc Master Trust II?

  • Parents want continuity. They want the trust they create to last the beneficiary’s lifetime. That continuity could be at risk if the trust is being administered by a Beneficiary’s brother or sister, because siblings might move away, lose interest in administering the trust or die before the Beneficiary. The Arc of New Mexico’s Trust II is professionally administered, providing the lifetime continuity parents want.
  • Reliability. In planning for the beneficiary’s future, you want a service that lasts. Trust II has a proven history of reliability.
  • Expertise. If one of your other children serves as Trustee, his or her most challenging responsibility may be learning and staying current with Social Security and Medicaid regulations Our staff has the knowledge and expertise to make these reports.

How much money should I put into the trust?

No single answer is correct for everyone. Every family’s situation is unique. We can, however, provide examples of what a trust, funded at a specific level, might provide. These examples are not guarantees. They are for the purpose of illustration only.

Does Trust II allow family members to be involved in deciding how the trust will be used?

Yes. We encourage active participation and advice from Key Persons, who often are family members. Family members do not, however, need to learn government regulations regarding trust matters. These responsibilities are The Arc’s. Although the Key Person does not have an official legal role in the administration of the trust, The Arc Trust pays great deference to the opinions, insights and directions given by Key Persons when making decisions on behalf of the beneficiary.

How are requests for disbursements made?

Requests can be made through the online form available on our website, www.thearctrust.org, or by mail or fax and can only be made by the Key People, or, when appropriate, by the beneficiary.

What are examples of how Trust II can be used?

Trust II can pay for care not available through Medicaid or medical insurance. Payment for school tuition, communication aids, cable television, phone service, vehicles for transportation, clothing, housewares, furniture, vacations, outings, dental and eyeglasses are  examples of how the trust is often used.

Can Trust II pay shelter expenses, such as rent, mortgage and utilities?

Generally, no.  The trust fund is intended to supplement, not replace, such assistance.  Most of the time, the amount a donor can leave is not sufficient to routinely pay shelter expenses over an extended period of time.

When must the account be funded?

In most cases, the Trust will be funded at the death of the trust donor. Generally, it will be funded through a will, a living trust, a retirement plan or a life insurance policy specifically designated for this purpose.

What if I want to fund the account in advance?

If you want to fund the account in advance, you can do so. If you fund Trust II while you are still alive, you are making Trust II a living, irrevocable trust. Keep in mind that once the trust is funded, the money no longer legally belongs to you. It can only be used for the trust beneficiary.

How many people can fund a single account?

There may be one or multiple donors to a beneficiary’s account. Typically, if both parents are alive, both parents will be listed as Donors. Multiple Donors might also include other family members, such as grandparents and siblings. Regardless of the number of Donors, only one Enrollment Fee is charged.

What if I need to go into a nursing home myself. Can I fund my child’s account at that time?

Yes. The Omnibus Budget Reconciliation Act of 1993 (OBRA ’93) allows you to fund a Special Needs Trust for your child and immediately qualify for Medicaid without being subject to the look-back period.

What if I enroll, but realize later I don’t have enough money to fund the trust? Do I bear legal liability to contribute to the trust?

No. Your enrollment lets you fund the Trust II if you want to,  but it does not obligate you to do so. Some parents may enroll as a hedge against other plans not working out as planned.

When my child dies, what happens to money remaining in the account?

Our intent is to spend the entire amount for the beneficiary’s benefit during his or her  lifetime. Should any money remain, you, as the Donor, designate how this money is distributed.

Does The Arc require that a percentage of any remainder in Trust I stay with The Arc?

No. There is no mandatory remainder to The Arc for Trust II. You can, of course, voluntarily designate a remainder percentage to The Arc of New Mexico.

What if my child moves to another state?

If a similar trust is operating in the state to which your child moves and if that trust is willing to accept responsibility, a transfer can be made from our trust to the new trust. If the new trust is not willing to accept assignment, or if there is no similar trust, we retain responsibility for administering your beneficiary’s trust account.

Can a government agency challenge in court my child’s eligibility for public benefits by virtue of his or her participation in Trust II?

We have taken every step to create and maintain a trust that is not likely to be challenged or, if challenged, is likely to survive any potential challenge.