The Arc of Indiana Master Trust II was established in 1995 in response to legislation passed by the United States Congress in 1993. (In fact, The Arc’s Trust Director at the time, Alan Kemp, was instrumental in working with staff of The Arc US to craft the legislation).
In Indiana, thousands of people have benefited from the law that made Trust II possible. People who receive an inheritance, lump sum back-payment from Social Security or lawsuit settlement can put those funds into a Special Needs Trust rather than spending the money quickly just to stay eligible for government benefits.
The other common reason we establish Trust II accounts is when individuals have too much money at the end of the month. This is generally from either their Social Security check or from earnings. Any excess at the end of the month can be put into the trust so that they can remain eligible for Social Security and Medicaid and yet have the money set aside in the trust to use in the future.
There are actually three options if someone has more than the $1,500 they are allowed to have to remain eligible for Medicaid or $2,000 for SSI.
The first option is to spend the money. The excess funds can be spent, but documentation of the expenditures should be saved.
The second option is to prepay an indivdual’s funeral and burial expenses. You can go to your local funeral home and set up what is referred to as an Irrevocable Funeral Trust. This is generally an insurance policy and will not interfere with the government benefits or count as a resource (as long as it is an Irrevocable Funeral Trust).
The third option is to establish a Special Needs Trust (The Arc Master Trust II).
You can do all of these three things if there is sufficient money and if you have time. If the person receives Medicaid you only have until the last day of the month in which they received the money or they will lose their Medicaid benefits. SSI gives you a couple of months to spend the money down to the $2,000 limit.
If you don’t have time to purchase the needed items and/or set up the Irrevocable Funeral Trust, these things will probably be eligible to be paid for out of the Special Needs Trust once it is established.
If you spend part of the money and set up the Irrevocable Funeral Trust be sure to keep the documentation on how you spent the money to show Social Security and Medicaid when they require this information.
The Arc Trust currently has approximately 1,100 persons currently enrolled in Trust II, with a total value of approximately $12 million.
If you would like more information on Trust II, please contact The Arc Trust office at 317-977-2375 or 800-382-9100. The trust’s website has a lot of valuable information: www.thearctrust.org.
I can always be reached at mjustice@arcind.org – please do not hesitate to contact me!
Melissa Justice is Director of The Arc Master Trust.