The Third Party Supplemental Trust
The Life's Plan Third Party Supplemental Trust is a pooled trust which is available to families of individuals with disabilities and the elderly to permit them to supplement current state and federal benefits by providing additional services and programs to the individual without jeopardizing their means-tested entitlements. The Trust is available to individuals who are mentally ill, developmentally disabled, elderly or otherwise eligible for services provided by the Department of Human Services. The Trust provides a mechanism to enhance the quality of life of the beneficiary and to answer the concern of many parents and families as to "Who will care for my dependent when I am gone"? The Trust can provide an individual with disabilities or the elderly enhanced care and a personal advocate while the parent or family is alive, if the parent or family needs to relocate or becomes disabled and upon the death of a parent or guardian.
Trust Asset Considerations
Families can finance their participation in the Trust by making a transfer of cash or other assets either immediately, over time or through a will. Life insurance provides another means for families to participate in the Trust.
A family can choose to provide funding for a specific service or support now and add additional services or supports as the need arises and funds are available. Therefore, services or supports for the individual that are not needed until after the death of the parent are usually funded through life insurance or a transfer by will. Once the Life Care Plan has been developed, any family member can provide the necessary funding. All assets from estate planning which are to benefit the elder or individual with a disability should be carefully coordinated. It is important that all family members from whom the individual with a disability or who is elderly might inherit (grandparents, siblings) need to plan their estates. These individuals need to know that a trust has been created.
Each family should involve their private attorney and financial advisors in developing their participation in the Third Party Supplemental Trust and the means to fund the Life Care Plan they wish implemented. Language to use in your will is available upon request to give to your attorney.
How does the trust operate?
The Third Party Supplemental Trust is a family-driven program. An individualized Life Care Plan is developed for each participant which reflects the supplemental service or support priorities of that family. The plan designates and prioritizes the specific supplemental services or supports to be provided. This plan may be updated as necessary to accommodate the changing needs of each individual.
Families who wish to insure that a set level of funding is available for the rest of the life of the individual with a disability or elder can obtain a projection of the principal amount necessary to fund the specific supplemental service or support priorities. This projection considers a variety of factors including the age of the individual with a disability or elder, a standard cost of living adjustment and an estimated interest earning. With this information, the family can consult with their attorney and financial advisor to determine how they will immediately fund or will accumulate the principal needed to implement their Life Care Plan.
The Trust accepts, holds, and invests the assets of each family participating in the Trust.
Life's Plan, Inc. Pooled Trusts
Life'sPlan, Inc. Pooled Trusts assets are commingled for investment purposes and all returns on investments are credited proportionately to each "private trust." All funds received by the Life’sPlan, Inc. Board of Trustees are invested in the Growth and Income Balance Portfolio offered through the financial institution that provides investment services for Life’sPlan, Inc. pooled trust account funds. Expenditures for specific individuals are charged against that individual's account.
Growth and Income Balanced Portfolio: The Growth and Income Balanced portfolio is designed for long-term growth of principle and income. The portfolio will usually be allocated equally between equity and fixed income securities with a small commitment to money market.
Model |
Money Market Funds and Cash |
Fixed Income Funds |
Equity Funds |
Growth and
Income Balanced |
0-10% |
30-50% |
40-60% |
To provide for input of families a Special Trustee is appointed to participate in expenditure decisions for an individual participant.
Funds expended on behalf of an individual are taxable to that individual. Most individuals who receive entitlements will not experience a tax liability as a result of their participation in the Trust. Funds retained by the Trust are taxable to the Trust. Each individual participant in the Trust is charged their proportionate share of this tax liability.
What are the fees to families?
There are minimal direct costs and no obligation to the family for Life Care Planning or for consultation with the Third Party Supplemental Trust staff regarding the development of a Life Care Plan, discussion of the ways in which the Third Party Supplemental Trust can be utilized to meet the needs of the family and discussion of potential enrollment in the Trust.
An initial enrollment fee of $775.00 is charged for the initiation of an account. An annual fee of $750.00 is charged each year thereafter.
An Annual Asset Value Fee and an Annual Bank Management Fee are charged on all accounts to cover the usual and customary services of the account.
NOTE: The Third Party Supplemental Trust Board of Trustees may charge reasonable annual fees payable from the proceeds of the Trust principal income as are necessary for the operation of the Trust.
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How does participation affect public benefits?
The Health Care Financing Administration (HCFA) of the United States Department of Health and Human Services has ruled that Trust principal and interest will not count in determining Medicaid eligibility provided that the assets used were not assets of the participant (or the spouse of the participant) prior to being placed in the Trust.
Region V of the Social Security Administration has determined that, based on current regulations, the Trust assets will not count as resources in determining eligibility under the Supplemental Security Income (SSI) program.
These two federally funded entitlement programs are the primary sources of means-tested support to people with disabilities and the elderly.
What happens to the funds remaining in the trust when the individual dies or terminates their participation?
With Life’s Plan, Inc. Individual Third Party Supplemental Needs Trust 100% of the assets remaining in the Trust Fund are distributed at the direction of the person who creates the Trust.
Summary
Option One- Life’s Plan trust will retain 25% of the remainder, 15% is designated to the trust as a 501 (c) 3 organization for self sustaining administrative costs to provide trust service s to people with disabilities, while 10% is retained to be used in a charitable fund that grants funding to other organizations that provide services to people with disabilities. Option Two- the remainder balance from the Beneficiary’s trust is distributed as the grantor designates. The remainder left is then distributed as designated by the creator of the trust. This trust meets the Social Security Administration POM SI 01120.201 rules and federal regulations under 42 U.S.C. Section. The trust has also been reviewed and approved by the Social Security Administration and the Illinois Department of Healthcare and Family Services
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