Pooled Special Needs Trusts: Low-Cost Asset Management for Injured Workers

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Transcript

Workers Comp Matters

Pooled Special Needs Trusts: Low-Cost Asset Management for Injured Workers

11/04/2019

 

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Intro: This is Workers Comp Matters, hosted by attorney Alan S. Pierce, the only Legal Talk Network program that focuses entirely on the people and the law in workers’ compensation cases. Nationally recognized trial attorney, expert, and author, Alan S. Pierce, is a leader committed to making a difference when Workers Comp Matters.

 

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Alan S. Pierce: Welcome to Workers Comp Matters. This is Alan Pierce on the Legal Talk Network bringing you another edition of our show. We are actually recording today’s podcast at the Bacara in Santa Barbara, California, where we are attending the annual meeting of the Workers’ Injury Law and Advocacy Group, and we have two special guests today to talk about Pooled Special Needs Trust Administration for settlements where the assets or the monies from that settlement need to be managed because of the particular circumstances of the injured worker.

 

Before we begin I want to thank our sponsor PInow. If you need a licensed private investigator anywhere in the United States, contact pinow.com for more information.

 

As I mentioned we have a couple of guests. One is a returning guest, attorney Andrew Reinhardt. Andy is from Richmond, Virginia. He is an attorney who handles Workers’ Compensation claims on behalf of injured workers. He is a graduate of St. Lawrence University and Syracuse Law School in New York. He is a member of the D.C., Maryland and Virginia Bars. He is well-recognized as an expert in workers’ compensation. He has been named and recognized by best lawyers, by Super Lawyers. He has been a leader in Virginia and nationally he is a past President of WILG.

 

Our next guest is Joanne Marcus. She is the Executive Director of the Commonwealth Community Trust, a nonprofit organization that administers pooled special needs trusts across the country. She has over 35 years of experience in nonprofit administration and served as the Executive Director of CCT for 19 years. She speaks nationally into professional groups and community organizations such as the National Academy of Elder Law Attorneys and others.

 

So, I want to welcome Andrew and Joanne to Workers Comp Matters.

 

Andrew Reinhardt: Thank you, Alan.

 

Alan S. Pierce: Before we begin, Joanne, I would like to ask you what exactly is a Pooled Special Needs Trust and why are they helpful to those of us who practice workers’ comp law?

 

Joanne Marcus: A Pooled Special Needs Trust administers funds for people with disabilities and particularly for people who are receiving government means-tested benefits such as SSI and Medicaid. We have the expertise to protect those benefits and then also for folks who may need a special needs trust because of the nature of their disability, they cannot manage the funds themselves or there is no responsible person to help them in that role.

 

So we’re a nonprofit organization and all Pooled Special Needs Trusts are nonprofit organizations and the reason we use the word “Pool” it’s the funds of pools for investment purposes, but each sub-account is maintained separately, so each client or beneficiary has their own sub-account.

 

Alan S. Pierce: Andy, as a fellow practitioner representing injured workers for all types of injuries from the not so serious to the catastrophic, give me an idea in your practice how the utilization of a special needs trust especially a Pooled Special Needs Trust is helpful in a particular type of case that you might resolve or settle on behalf of your client?

 

Andrew Reinhardt: Sure. So, Alan, as it turns out we have handled thousands of cases for injured and disabled folks, and among those cases are folks who have three types of problems that prevent them from being able to handle their own money. One is physical, an example would be paraplegic, quadriplegic, who possibly can’t handle his or her money.

 

Another problem might be mental incapacity, from a brain injury for instance, and a third problem is perhaps that someone may not be able to hold or handle the money because in doing so by having the money they would be disqualified from various government services and moneys like Medicaid and SSI.

 

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So in order to get around that problem lawyers like us, Alan, often will have the money paid into a trust, it’s money that is for the benefit of our client, but they don’t actually have the money in their name, they don’t actually manage the money.

 

And one of those sub sort of parts of trust would be a Special Needs Trust. We could have a medical bill paying trust, but a Special Needs Trust is unique and that the Federal Government and CMS will say and each State’s Medicaid laws may be different but will basically say that because that money is in a trust you could still qualify for Medicaid to pay your bills and SSI.

 

However, Special Needs Trusts present their own unique problems, in that Special Needs Trusts can be expensive to set up. You are still going to need a trustee, a trustee may charge a lot of money to manage the trust and you may not have a family member that will do it for free or can be bonded.

 

So that’s where we get into a unique circumstance where Joanne’s company Commonwealth Community Trust provides a service that solves the first problem of having a trust, a Special Needs Trust, but the second problem of having it be affordable, because what they do is they pooled all their various clients’ monies and they provide a very affordable service and amazingly they will not only be reasonable in their charges and invest the money, but they will set up a pooled special needs trust for one of your clients even though it’s as little as $5,000. So it’s difficult to find somebody that does that and they do it on a national basis for our folks. So it’s tremendously helpful.

 

Alan S. Pierce: Okay, now are the assets of the monies that go into this pooled trust settlement proceeds or let’s say I have a client who is getting $800 a week in workers’ compensation benefits and the receipt of those monies somehow are counted as assets for Medicaid or Medicare or other purposes, can weekly checks be delivered to the trust or only the proceeds of a lump-sum?

 

Andrew Reinhardt: It’s going to be either a lump-sum or a stream of payments like an annuity. In either event the annuity could be set up so that those monies are payable or the lump sum set up, so those monies are payable to the pool trust and by virtue of the money being held by them, they can then manage the money, they can invest the money, they can pay bills for our clients. And so, we’ve handed our folks over to somebody that treats them and their fiduciary much like we would hope a family member would do.

 

Alan S. Pierce: Okay, so when you mention that the proceeds could either be turned directly over from the settlement or from an annuity, do I take that to mean because of the utilization of structured settlements in a workers’ comp case where we might settle the case for $300,000 to the claimant, but because the claimant can’t or shouldn’t handle $300,000 we might structure that so that they might — the insurance carrier will purchase an annuity that might pay them $1,500 a month for life guaranteed 20 years, something like that. Would that annuity or that structure be payable to the pooled trust or does the claimant have to purchase the annuity that then goes into the trust?

 

Andrew Reinhardt: The annuity is going to be purchased by the insurance company that is closing the file. The right to receipt of payments is our client, but an order will be entered approving the settlement that will state that on the claim on injured worker’s behalf the monies are paid to the trust. So that includes either the lump-sum stream of payments that we might do one or the other or some combination thereof, depending upon each case and the financial needs that our clients might have.

 

Alan S. Pierce: So, Joanne, let’s take it from there that Andy settles the case and monies, let’s say a $100,000 comes to CPT for administration, you say there’s a sub-account created with the name of the claimant as I determine of him or her beneficiary.

 

Joanne Marcus: The beneficiary, yes.

 

Alan S. Pierce: Okay, and the trustee is whom?

 

Joanne Marcus: The trust, we call most community trusts as the trust administrator, and as a nonprofit organization we have contracted with a trustee and in this case we have Capital First Trust Company as the trustee effective January 1, 2020.

 

Alan S. Pierce: And these are all appropriately licensed, bonded fiduciary, reputable?

 

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Joanne Marcus: Absolutely. We have a board of directors, attorneys and certified financial planners and CPAs and stuff, a comprehensive board of directors that chooses the trustee.

 

Alan S. Pierce: All right. We are going to take a short break and when we come back, we are going to talk further with Andrew Reinhardt and Joanne Marcus. So stay with us, we will be right back.

 

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Alan S. Pierce: Welcome back. We are again joining with Andrew Reinhardt and Joanne Marcus talking about Pooled Commonwealth Community Trust, that’s the name of the company, but Pooled Special Needs Trust Administration.

 

Andy, give us a real world example, give me an idea of one of your cases that you settled and why you chose or at least felt it was in your client’s best interest for the client himself not to have full possession of these funds and why CCT or Commonwealth Community Trust was a vehicle of choice to accomplish your goal?

 

Andrew Reinhardt: Sure. So I will just give the name of not our real client, I will call him Billy, and in our case Billy settled his workers’ comp case for let’s say half a million dollars, it’s a lot of money.

 

Alan S. Pierce: Congratulations to you for negotiating that.

 

Andrew Reinhardt: But the problem is Billy is brain injured. He has no family members that can manage the money for him, because even though they may love him and care for him, they are not equipped to manage the money, they are not equipped to invest the money, they can’t be bonded.

 

So we have to have a solution to that. We know the money has to go into a Special Needs Trust for a number of reasons. We know that we have to also fund as part of it a Medicare Set-Aside account, so the payments to pay the professional administrator and pay the bills have to go through the trust. So we are looking for somebody that can do a great job at a reasonable price.

 

So Commonwealth Community Trust has been in business for 30 years. They have got injured, disabled clients in 42 of the 50 states and amazingly they can provide this service very economically, provide a great service. They have got people to answer calls that come in, they will manage the money, they will invest the money, and as it turns out over time it’s the best choice for our client, because they don’t have a family member that can do this.

 

Alan S. Pierce: Okay. So Billy’s $500,000 goes into this trust. How much does Billy receive on a weekly or monthly basis, how does he receive it, and can it be varied? If Billy wants to purchase a home or a vehicle or use a larger sum of money than whatever he may be getting per month, how does that happen?

 

Andrew Reinhardt: Well, of course the Pooled Trust acts as a fiduciary and over time they will make decisions that is in our client’s best interest, but up front we are going to come up with a game plan that may be adjusted.

 

For instance, we are going to know what is his monthly budget, how much money does he need on a regular basis, is there enough money to buy a home, which could also be an exempt asset so you could still qualify for Medicaid and SSI. Will he need somebody to serve as a nurse case manager? Will he need in some of these cases a very large home healthcare? Who is going to pay the home healthcare provider?

 

So we may set up a combination of lump sum and annuities and maybe a couple of different annuities all geared to over time providing all of our clients financial and other needs and it can be done through a settlement where the money ultimately is going to be administered by Commonwealth Community Trust.

 

Alan S. Pierce: And let me just sort of give you another situation. I had a case not that long ago where one of my clients received a fairly significant lump sum settlement, not in the area that your client Billy received. And it wasn’t long after that that there was some trouble in the marriage, a divorce ensued, and all of a sudden the other spouse was seeking a portion of the lump sum settlement which was in the joint checking account of the household. Would something like this especially in a marriage relationship protect the assets from something like divorce or creditors or other entities?

 

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Andrew Reinhardt: Yes, I believe so, because again, keep in mind that this money is in the trust for the benefit of the claimant, but it’s not actually in the claimant’s name, so he doesn’t control that asset.

 

Alan S. Pierce: And if the claimant got really sick and had to go into a nursing home, is there a look back period? In other words, if a month after the Special Needs Trust was set up and he had to go in a nursing home, could there be a look back window that they could go after those assets?

 

Andrew Reinhardt: Well, if complications develop down the road, it’s always possible that we could perhaps go back to the Workers’ Comp Commission in my state or your local tribunal to seek some type of amendment of what is in the best interest of the injured worker.

 

Alan S. Pierce: Okay. Now, do you have any questions to Joanna, I know you and Joanne have worked together?

 

Andrew Reinhardt: Well, maybe I have undersold their services. I think they do such a great job. But Joanne, what other things can you tell folks that you do and how it is that you are able to do your work for such a reasonable price?

 

Joanne Marcus: Well, as a nonprofit organization, we are committed to what is in the best interest of our beneficiaries, and we are very fortunate to have staff with that same focus in mind. We have professional staff that serve the beneficiaries and the beneficiaries’ advocates.

 

So primarily we are working very closely with people to determine what the needs of the beneficiary are for the funds in their trust, and they will have access for those funds for various purposes, but the trust is for the sole benefit of the beneficiary and we always keep that in the forefront of our minds. They call. They get a person that answers the phone.

 

We have an amazing website, where the attorneys that work with us have access to documents and a process of joining. They can also call and get questions answered as needed when they are going through the process of setting up an account with us.

 

We are very aware of our responsibility to provide the best quality services and we always look forward to working with new attorneys and returning attorneys and new clients.

 

So again, we are a charity, a nonprofit organization. We have an attorney on staff that’s available to help as needed, and our primary responsibility is as far as managing, investing the funds and disbursing the funds for the benefit of the beneficiary.

 

Alan S. Pierce: Which brings to mind Andy a couple of questions that just sort of came to me. Frequently unfortunately we have death cases in workers’ comp where a stream of benefits go to the surviving spouse and if there are dependent children under 18, the spouse generally will accept those benefits on behalf of his or herself and the children, but frequently, or at least not uncommonly, sometimes the surviving spouse no longer qualifies for dependent benefits under a workers’ comp statute. She or he may remarry, or in my state may be self-supporting without the workers’ comp benefit, but the children could be eight, nine, ten years of age. Do you see utilization of a Pooled Special Needs Trust important, for example, the benefits of children?

 

Andrew Reinhardt: Well, it certainly could be. As I mentioned, there are three types of categories, whether it’s physical, mental or legal problems with managing and holding money and that could include minor children, because they are for legal purposes incompetent and disabled from handling money.

 

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Alan S. Pierce: Okay. Another question and either of you could answer this. Frequently those of us who handle workers’ comp also handle other types of civil cases and more often than not, it may have a client that is tenuous financial grounds, might be on SSI, might be receiving Medicaid; in other words, receiving a stream of benefits that are dependent on their — or elder housing or subsidized housing where monetary benefits might disqualify them.

 

So if I were to receive, for example, a $30,000 settlement from a rear-end collision and the amount of money that that client would receive might cause their housing costs to go up, might get them off SSI until it was spent down. Could I arrange to have the proceeds of that settlement go into a Pooled Special Needs Trust as opposed to then being delivered directly to my client and find that he or she loses other services?

 

Andrew Reinhardt: And we did that recently with Joanne. We have a client who is going to receive enough money that he will have some money set aside for the future, but will also purchase a home. Even though the home itself may be an exempt asset, and this varies by state, the mere receipt of money will disqualify him in Virginia for the first month. So even though it may be a short-term usage of the trust, Commonwealth Community Trust Pooled Trust, it’s still vital to have that option that we would not otherwise have at a reasonable price.

 

Alan S. Pierce: Yeah. And I think this kind of underscores for our listeners, especially those of us out there that practice workers’ comp and deal with monies on behalf of our clients that we sometimes have to fight very hard to achieve. And I have always taken a position, our responsibility as an attorney doesn’t end when we have these signed stamp settlement papers and the fee and the other checks are disposed of. We are not doing our job with respect to the monies our clients receive unless we think these things out.

 

And years ago when I started in this business, it wasn’t like this at all. We would finish a case and we would go on to the next one, and we are not doing our clients a service if we are not aware of all of this.

 

Andrew Reinhardt: That’s why oftentimes the back end in our cases, we are effectively engaged and hire other lawyers to assist with, in effect estate planning. We are planning their financial wellbeing with the assistance of other experts, like an estate planning expert, a Medicaid expert, a Medicare expert who we work with, and then someone like Commonwealth Community Trust. They have a full financial plan for the future.

 

Alan S. Pierce: So Joanne, if somebody wanted to get in touch with you and Commonwealth Community Trust, just give us the contact information.

 

Joanne Marcus: Absolutely. So our phone number is 804-740-6930 and our website is trustcct.org.

 

Alan S. Pierce: All right, well, I want to thank you both, Joanne and Andrew for being a guest on Workers Comp Matters, and I want to thank those of you out there who listen and thank you for listening. Look forward to our next show.

 

In the meantime, go out and make it a day that matters. Bye-bye.

 

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Outro: Thanks for listening to Workers Comp Matters today on the Legal Talk Network, hosted by attorney Alan S. Pierce, where we try to make a difference in workers’ comp legal cases for people injured at work. Be sure to listen to other Workers Comp Matters shows on the Legal Talk Network, your only choice for legal talk.

 

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