Where to Start
The Illinois Disability Association has a long history of commitment to persons with disabilities. We recognize the unique challenges they face and the limitations of public assistance programs. We also want family members to understand this is an irrevocable relationship between the trust beneficiary and our organization and we want to ensure it is the right fit for both. Because of the important nature of this trust relationship, we do require the family member/ grantor of the trust utilize the services of an attorney in setting up the trust. If you do not have an attorney who specializes in this area, please contact our office and we would be happy to recommend a few attorneys we have worked with previously.
The following is a list of “frequently asked questions” which may help you decide if a special needs trust is the right fit for your family member. Please feel free to call or email our office with additional questions. We are here to help!
What types of benefits do many of the IDPT participants receive?
- Supplemental Security Income (SSI)
- Illinois Dept. of Human Services benefits, including mental health and developmental disabilities services, rehabilitation services, subsidized housing programs, aging services, and custodial care services
What is the definition of “disability” needed to qualify for participation in the IDPT?
The Social Security Administration’s definition requires the individual to be diagnosed with a medical impairment resulting in his or her inability to engage in substantial gainful employment.
What types of things can the trust pay for to benefit the person with disabilities in my life?
The SNT can pay for a variety of expenses, including:
- Medical, dental or podiatry services not covered by government benefits
- Cell phone
- Cable service
- Companion care
- Caregiver expenses not covered by government benefits
- Educational and vocational training
- Psychological therapy
- Recreational activities
- Personal hygiene (e.g. haircuts)
Is there anything the trust cannot pay for?
The Trustee cannot make disbursements:
- directly to the Beneficiary;
- to an account bearing the Beneficiary’s name or Social Security number, including a patient trust fund at a nursing home; or,
- to reimburse an individual who has given the Beneficiary cash or has deposited funds into an account bearing the Beneficiary’s name;
- that is a gift or donation to others.
What kind of Assets can I transfer to the trust?
Only sole assets of the grantor/beneficiary can be transferred to the trust. In other words, upon the death of the beneficiary, the asset cannot, by operation of law, transfer to a third-party and must stay in the trust.
Are there assets that cannot be transferred into the trust?
The IDA, in concert with our co-trustee, reviews assets on a case-by-case basis to determine if it is appropriate to transfer an asset in-kind to the trust, rather than liquidate it.
One asset that cannot be transferred in-kind is an IRA. If the special needs trust (“SNT”) is being funded with the grantor/beneficiary’s IRA, then the asset must be distributed from the IRA into the SNT. This will result in potential income tax consequences; however, the 10% punitive tax for early withdrawal from an IRA will not apply due to the exception for disability.
There are also special rules regarding annuities. If the SNT is being funded with the income stream from an annuity, the annuity owner and beneficiary should be retitled in the name of the SNT.
What is meant by “pooled” or “pooling of assets”?
Assets, to the extent possible, are pooled or combined for investment and management purposes, which helps reduce fees and maximize investment return.
What is meant by “payback”?
For self-settled trusts, upon the death of the beneficiary, the trustee is required to reimburse the state for medical and financial assistance paid on the beneficiary’s behalf.
What is the bank’s role in the IDPT?
The bank’s primary responsibility as Co-trustee is to serve as custodian and investor of the assets. The bank maintains an accounting of all expenditures for the benefit of each beneficiary, the court (in guardianship cases), and the Illinois Department of Human Services.