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The Florida Bar Journal
May, 2007 Volume 81, No. 5
Q & A: Introduction to the State of Florida Public Guardianship Pooled Special Needs Trust

by Rebecca Berg, and Scott Solkoff, and Lauchlin Waldoch, and Michelle Hollister, and Ronald Morgan

Page 64

    A new quasi-governmental pooled special needs trust provides a safer and more transparent solution for disabled persons to set aside funds to legally and ethically but still maintain eligibility for public assistance. By using a trust protector model and directing any and all retained funds back to the Statewide Public Guardianship Office, the new State of Florida Public Guardianship Pooled Special Needs Trust advances good public policy and safer judicial and day-to-day administration.

    What is a special needs trust?
    A special needs trust is a trust agreement, authorized by federal law,1 which excludes certain assets and income from being counted against eligibility for certain need-based government benefits. If an otherwise impoverished disabled person comes into money, that person will lose his or her Medicaid health insurance. Because Medicaid is often the only health insurance a disabled person can obtain, the new money is often absorbed totally by health care costs. The disabled person then has no recourse other than discontinuing health care until the “new” Medicaid may be obtained upon “reimpoverishment.” It is, therefore, critical to keep Medicaid eligibility intact. Special needs trusts allow disabled people to keep the benefit of their savings but only to supplement government benefits which fall short of actual need. The disabled person is able to keep the benefit of the money and the Medicaid health insurance subject to state and federal law. Under some special needs trusts, the government then gets paid back upon the death of the disabled person.

    What is a pooled special needs trust?
    A pooled special needs trust is a big “master” special needs trust with many subaccounts, one for each disabled person who enrolls in the pooled trust. By “pooling” together these subaccounts, enrollees benefit from the economies of scale. Pooled trusts can accept accounts of any size, whereas banks and other professional trust companies cannot ordinarily accommodate smaller accounts. Pursuant to federal law, pooled trusts must be administered by a not-for-profit trustee.2

    What are some of the differences between an individual special needs trust and a pooled special needs trust?
    An individual special needs trust is a trust created for the sole benefit of one disabled person. Individual special needs trusts that accept deposits of the disabled person’s own funds are called “first-party” trusts.3 First-party individual special needs trusts are irrevocable documents in which almost any adult person or trust company may be appointed. Pooled special needs trusts must be administered by a not-for-profit trustee and are created for many disabled persons at once. With first-party individual special needs trusts, the government must be repaid any monies remaining in the trust upon the death of the disabled individual. With pooled special needs trusts, the government also may be repaid but only to the extent not retained by the pooled trust itself.4

    Congress created this rule so that the not-for-profits could retain the funds to further their not-for-profit purpose of assisting the disabled. The pooled special needs trust allows the monies to benefit disabled persons during their lifetimes and for any remaining monies to be available to fulfill the not-for-profit’s mission. Used properly, it is a true public-private partnership where the public good is served.

    What is the purpose of the State of Florida Public Guardianship Pooled Special Needs Trust?
    The State of Florida Public Guardianship Pooled Special Needs Trust was developed to benefit disabled Floridians by allowing supplemental funds to lead to a higher quality of life and to allow all retained funds to pass to the Statewide Public Guardianship Office, a state agency existing under the auspices of the Florida Department of Elder Affairs.

    What is the mission of the Foundation for Indigent Guardianship, Inc.?
    The Foundation for Indigent Guardianship, Inc., (FIG) is a not-for-profit created by the Florida Legislature.5 The foundation’s mission is to provide financial support for the Statewide Public Guardianship Office. Through its by laws, the foundation must direct all monies it raises to the Statewide Public Guardianship Office. The foundation is the co-trustee of the State of Florida Public Guardianship Pooled Special Needs Trust and a 501(c)(3) charitable corporation.

    What is special about the State of Florida Public Guardianship Pooled Special Needs Trust?
    The State of Florida Public Guardianship Pooled Special Needs Trust is designed and guided by public policy. The structure of this trust provides disabled beneficiaries a level of oversight, protection, and safeguards not previously available in Florida. The very architecture of the trust was created to answer concerns and accomplish the public good of serving the disability community in a certain and transparent way. Some of the highlights:

    • All trusts have a trustee and a beneficiary; but for the State of Florida Public Guardianship Pooled Special Needs Trust to accomplish its goals of safety, certainty, and transparency, there is a corporate trust protector and two not-for-profit co-trustees.

    • The trust protector is Berkshire Trust Advisory Services Corporation (berkshiretrust.com). Run by three past-chairs of The Florida Bar’s Elder Law Section, the company has been supporting the proper formation and administration of individual and pooled special needs trusts since 2002. As trust protector of the State of Florida Public Guardianship Pooled Special Needs Trust, Berkshire Trust Advisory Services Corporation helped in establishing the trust with greater accountability and transparency than was previously possible in Florida and the trust protector has a continuing role with significant oversight responsibility.

    • The two co-trustees have complementary roles. FIG acts as one co-trustee — the “founding” co-trustee. FIG is mandated to support the work of the Statewide Public Guardianship Office and acts as a fiduciary over the pooled trust. FIG will continue its efforts in educating the disability community, lawyers, and judges about this new pooled special needs concept. The Center for Special Needs Trust Administration, Inc., is the other not-for-profit co-trustee of the pooled trust — the “administrative” co-trustee. The center has vast experience in administering pooled special needs trusts throughout the U.S. The center has the responsibility of handling the day-in and day-out administration of the pooled trust. By operation and design, each co-trustee looks over the other trustee’s shoulder and the trust protector provides an overall umbrella. The actual roles and responsibilities are spelled out, at length and very specifically, in the master trust agreement.

    • With the State of Florida Public Guardianship Pooled Special Needs Trust, there is 100 percent certainty and transparency as to how money is handled after the death of a special needs beneficiary. If a sub-account holder dies and there is money left in that account after payment of all legal debts and obligations, any and all retained funds go to the Statewide Public Guardianship Office.

    • There is an inherent conflict in a trust where the trustee determines whether a distribution request is appropriate and then retains all funds that remain upon the death of the beneficiary. This is what ordinarily happens in a pooled special needs trust. This conflict occurs because the trustee must say “yes” or “no” to distribution requests and, by law, the trust is then able to retain the funds that were not distributed prior to death. This problem is resolved in the State of Florida Public Guardianship Pooled Special Needs Trust by bifurcating the responsibilities among the two co-trustees and by utilizing the trust protector. Here is how it works:

    * After payment of all legal debts and obligations, the founding trustee (FIG) controls the disposition of any retained funds that remain upon the death of a beneficiary.

    * The administrative trustee is charged with saying “yes” or “no” to distribution requests.

    * The founding trustee is not involved in any day-to-day distribution decisions. Likewise, the administrative trustee receives no control over any of the retained funds upon the death of a beneficiary. All retained funds are directed by FIG to the Statewide Public Guardianship Office.

    * If ever a beneficiary feels a distribution request or administrative issue is not handled to his or her satisfaction by the administrative trustee, the trust protector is available to the beneficiary (or the guardian, court, or other representative) with the authority to mediate or otherwise intervene without necessarily resorting to time-consuming and expensive legal action to correct the concern.

    What is the Statewide Public Guardianship Office?
    In terms of public guardianship, the Statewide Public Guardianship Office, housed within the Florida Department of Elder Affairs, appoints local public guardian offices as directed by statute to provide guardianship services to persons who do not have adequate income or assets to afford a private guardian and there is no willing family or friend to serve. The Statewide Public Guardianship Office is the recipient of 100 percent of any retained funds remaining upon the death of a beneficiary and after payment of all legal debts and obligations. As informed by the administrative trustee as to the county of residence of the disabled decedent, the Statewide Public Guardianship Office plans to allocate any retained funds directly to the cause of public guardianship for that particular county’s most vulnerable residents.

    What is the enrollment process?
    The Center for Special Needs Trust Administration, Inc., the administrative co-trustee, maintains a toll-free number for information and enrollment in the various trusts it administers. Interested persons can call (877) 766-5331 and ask for information or enroll by specifically referring to the State of Florida Guardianship Pooled Special Needs Trust. The master trust declaration and its joinder agreements may be viewed at www.berkshiretrust.com/services.html.

    1 42 U.S.C. §1396p(d)(4)(c).
    2 Id.
    3 Individual special needs trusts are codified at 42 U.S.C. §1396p(d)(4)(a).
    4 42 U.S.C. §1396p(d)(4)(c).
    5 Fla. Stat. §744.7082 (2006).
Rebecca Berg, Scott Solkoff, and Lauchlin Waldoch hold board certifications from The Florida Bar as elder law specialists, have served as past-chairs of The Florida Bar’s Elder Law Section, and are separately in the private practice of elder and disability law as well as being shareholders of Berkshire Trust Advisory Services Corporation, the Trust Protector of the State of Florida Public Guardianship Pooled Special Needs Trust.

Michelle Hollister is executive director of the Statewide Public Guardianship Office and has earned a law degree as well as a Master’s in business administration. She is a member of the Elder Law Section of The Florida Bar and of the Executive Council of the Real Property, Probate and Trust Law Section of The Florida Bar.

Ronald Morgan is the president/chief operating officer of the Foundation for Indigent Guardianship, Inc.

This column is submitted on behalf of the Elder Law Section, John W. Staunton, chair.

[Revised: 02-10-2012]