Frequently Asked Questions
1. What is the basic purpose of Trust II?
2. Who is the Trustee of Trust II?
3. What kind of investments are made through Trust II?
4. Must EE bonds be redeemed when a Beneficiary wants to use Trust II?
5. How long must I wait before I can redeem the bonds?
6. Can the Beneficiary designate how much of his or her trust is put into EE bonds and how much is put into the checking account?
7. Is there a minimum or maximum amount that can be put into Trust II?
8. Is there a limit to how often a Trust II account can be used each year?
9. My child will be moving into his own apartment. We will need furniture and household items. Does each purchase count as a disbursement?
10. What are the fees for Trust II?
11. What would it cost if I went to a local attorney to have a trust drafted?
12. 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 II help?
13. Because my child is a minor, are disbursements from his Arc Trust account considered differently than if he were an adult?
14. If my child is a minor or an incapacitated adult, can I, as his parent or guardian, enroll for him?
15. By using Trust II, does a Beneficiary incur taxes?
16. Will The Arc prepare the necessary tax forms when bonds are redeemed?
17. Are all Trust II disbursements reported by The Arc?
1. What is the basic purpose of Trust II?
Like Trust I, the primary purpose of Trust II is to enhance the Beneficiary's quality of life without jeopardizing benefits like Medicaid, Medicaid Waivers and SSI.
2. Who is the Trustee of Trust II?
The Arc of Indiana is Trustee and has custody of all Trust II resources.
3. What kind of investments are made through Trust II?
Interest-bearing investments are limited to U.S. savings bonds, series EE.
4. Must EE bonds be redeemed when a Beneficiary wants to use Trust II?
We recommend that enough cash be retained in the checking account to meet anticipated withdrawals. If the checking account is not adequate to make a purchase, then bonds are redeemed.
5. How long must I wait before I can redeem the bonds?
There is a government required wait of one year from the time the bonds are purchased until they can be redeemed. For example, if the bonds are bought in January, they cannot be redeemed until the following January.
6. Can the Beneficiary designate how much of his or her trust is put into EE bonds and how much is put into the checking account?Yes. The Beneficiary has full control. He or she decides how much to put into the checking account and how much to put into EE bonds.
7. Is there a minimum or maximum amount that can be put into Trust II?
There is no required minimum, but accounts are usually funded with several thousand dollars. However, an account can be started with as little as the cost of our Enrollment Fee.
8. Is there a limit to how often a Trust II account can be used each year?
Generally, a Trust II account can be used to make twelve disbursements per year. In addition to these twelve disbursements per year, a Trust II account can be used to pay a Beneficiary's monthly recurring bills, such as cell phone, cable TV, internet access, and other monthly bills, as long as paying these bills would not interfere with the Beneficiary's eligibility for benefits. The payment of recurring monthly bills does not count toward the twelve times per year limit.
9. My child will be moving into his own apartment. We will need furniture and household items. Does each purchase count as a disbursement?
No. Prior to making these purchases we would agree that all purchases to set up the apartment will count as one disbursement.
10. What are the fees for Trust II?There are two (2) Trust II fees.:
11. 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 than ours.
12. 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 II help?
Yes. You can put his money into Trust II. Once the money is in our trust it no longer counts as an asset in determining his financial eligibility for the waiver. However, per federal law, after your child's death, the state has a claim on a portion of any funds remaining in the trust.
13. Because my child is a minor, are disbursements from his Arc Trust account considered differently than if he were an adult?
Parents of minor children have a legal duty to provide basic support for their children, including food, clothing, shelter and basic educational expenses. This duty ceases at 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 should be 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 II.
14. If my child is a minor or an incapacitated adult, can I, as his parent or guardian, enroll for him?The Indiana Trust Code requires a Court Order when establishing a trust for an incapacitated person if the money funding the trust belongs to the incapacitated person. An attorney must be hired in order to prepare the petition on behalf of the parent or guardian, requesting that the Court having jurisdiction over the guardianship order the funds into the trust.
15. By using Trust II, does a Beneficiary incur taxes?
Taxes may be due on interest received when any EE bonds are redeemed. If bonds are not redeemed, then no tax is due. Because Trust II funds are held in a non interest-bearing account, Trust II accounts do not generate a taxable event. Only when we redeem EE bonds does a taxable event occur.
16. Will The Arc prepare the necessary tax forms when bonds are redeemed?
A 1099 MISC form is generated from the bank when bonds are cashed in. The 1099 is mailed to the Trust II Beneficiary. Beneficiaries then report this information, along with other income, on the tax forms they already use.
17. Are all Trust II disbursements reported by The Arc?Yes. An important part of our service for both trusts is reporting disbursements and explaining why they do not interfere with eligibility for benefits like Medicaid, Medicaid Waivers and SSI.