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Special Needs Trust Basics

What is a Trust?

A trust is a legal arrangement. It sets aside money for a beneficiary but does not give that person direct control of the money.  A special needs trust is a trust set up for a beneficiary with special needs. Many people set them up as a way to plan for the future of a loved one.

The person or financial institution that controls the money is a trustee. The trustee controls and manages the money for the beneficiary. Trusts may have a manager to help with day-to-day tasks on behalf of the beneficiary. In The Arc of Northern Virginia's special needs trust program, The Arc is the manager, and Key Private Bank is the trustee.

Government benefits are based on a person's income, savings and other assets they control. Money in a special needs trust is not controlled by the person with a disability. As a result, money in a special needs trust doesn't affect government benefits.

Can the trustee for The Arc of Northern Virginia trust program change?

The Foundation of The Arc of Northern Virginia chooses the trustee.

Key Private Bank is the trustee.

If the Foundation needs to change the trustee, it can. The trustee may resign if it needs to.

How are revocable and irrevocable trusts different?

If you set up a revocable trust, you can change it if you choose to. Revocable means "can be changed or canceled." You can cancel it entirely, if you wish.

That's not true for an irrevocable trust. Irrevocable means "cannot be canceled."  Contributors to the trust cannot cancel the trust once it is funded.   Aside from that, several kinds of changes can be made.

The Arc of Northern Virginia's special needs trust is revocable until it is funded, which means money is put into the trust.  It is irrevocable after it is funded. Limited changes may be made after the trustee takes control of the money in our irrevocable trust.

What is a Trust Plan or Letter of Intent?

Our clients use trust plans as they care for someone with a special needs trust. A trust plan is also called a letter of intent. The plan tells the story of the life and interests of a beneficiary. It's helpful for everyone working with him or her. The plan should include information about the past and present, but also expectations for the future.

Family members work out the plan with their loved one with a disability.

It should include things about the beneficiary such as:

  • friendships and social life
  • work and hobbies
  • strategies that work and strategies that don't work
  • helpful advice for working with the beneficiary
  • circumstances that might trigger undesirable behavior
  • interests
  • living arrangements
  • medical and health situation
  • computer, cell phone and other technical skills and challenges

It's helpful to know how he or she gets around in the community.

The plan should cover services the beneficiary receives. List the name, nature and cost of each service. Trust money may be used to pay for those services.

The plan needs to include expected costs. That helps when making and following a budget.

How are family-funded and self-funded trusts different?

There are two kinds of special needs trusts.

  • A family-funded trust is set up with money from a family or friends to help a person with a disability. Parents, grandparents, and other people can add money to the trust. Friends can contribute, too. The beneficiary cannot put money in this kind of trust.
  • A self-funded trust allows the person who benefits from the trust to add money to it. Specific people, parents, grandparents, guardians and a court, can set up this trust. But only the beneficiary's own money can fund this kind of trust.
    Someone with a disability may set up a self-funded trust if they get money they weren't expecting. The money could come from a will that named the person with a disability directly to receive the inheritance, a court settlement, or alimony. The money could also come from Social Security benefits, adult child support, or work income. Military survivor benefits are often also deposited into a self-funded trust.

Money left over in a trust after the beneficiary dies is called the remainderment.

  • Money left in a family-funded trust can go to any person or organization. The Arc of Northern Virginia benefits greatly when people leave that money to its Foundation.  
  • Money left in a self-funded trust must be paid to Medicaid in most cases. It would not be paid to Medicaid if it is left to the Foundation of The Arc of Northern Virginia.
What is a joinder agreement?

Two master agreements guide the special needs trusts of The Arc of Northern Virginia. One master agreement covers family-funded trusts. The other master agreement covers self-funded trusts.

A family or individual “joins” one of these trusts by executing a joinder agreement. That agreement lists terms that apply to the beneficiary of the trust. These terms are in addition to what's in the master agreement.

Those terms include:

  • What fees will be charged
  • Who will represent the beneficiary if the beneficiary cannot represent himself or herself
  • How the trust will be funded
  • How to handle money left after the death of the beneficiary
How much money should I put in a special needs trust?

Every family’s situation is unique.  Trust staff can help you understand benefits of funding at various levels.

Who can give money to fund a special needs trust?

A grantor is a person who provides money for a special needs trust. Trust documents may name one or more grantors.

In a family-funded special needs trust, grantors may be friends or family. The person who will benefit from the trust (the beneficiary) may not add money to a family-funded trust.

Self-funded trusts are created with money from the beneficiary. See above, "How are family-funded and self-funded trusts different?" for more details.

Family or others may plan to leave money to a trust beneficiary when they die. It's important to name the trust, and not the beneficiary, in wills and insurance papers.

Does the federal government support the use of special needs trusts?
The U.S. Congress supports policies protecting people who have special needs trusts. A law Congress passed in 1993 strengthened those protections and allowed the creation of self-funded trusts. Our trust program follows practices used by dozens of similar programs across the United States. None of those programs has been challenged in court.
What if laws about special needs trusts change?

The Arc of Northern Virginia offers two kinds of trusts. Each would be treated differently if laws change.

Self-funded trusts are based on a 1993 federal law. The United States Congress would respond if a court challenges aspects of that law.

Family-funded trusts fall under a different kind of law. If some aspect of that law is changed, our Foundation Board of Directors can respond in certain limited ways.

If you have a specific question, please get in touch with our special needs trust staff.

How are my taxes affected by setting up and funding a special needs trust?

Contributions to a special needs trust are not deductible as charitable gifts.

It is important to check with a tax professional, though. There may be indirect effects of funding a special needs trust.

What fees do I need to pay?
The Arc of Northern Virginia Special Needs Trust charges fees to start and maintain a trust. Learn more in the Fees section below.

Still Have Questions?
Contact our trust director, Tia Marsili, at 703-208-1119 x 115 or TMarsili@thearcofnova.org

More Information

Here's complete information about setting up a new special needs trust.

Get forms and other information you need to set up a trust.

Ask Us Questions
To ask questions or get help, contact our trust director, Tia Marsili.

Setting Up a Trust

Does a family-funded trust need to be funded right away?

The timing of putting money into a family-funded trust is flexible. People providing money for a trust are called grantors. See the Special Needs Trust Basics section above to learn more about who can be a grantor.

Grantors may put money into a trust when it is set up, even if it won't be used right away.

Grantors may plan to fund the trust later. Wills, insurance papers or even another trust will state that money would go to the special needs trust.

If grantors set up a trust and don't put money it, we charge a $65 fee every year for maintenance. The fee is not refundable, and there is no penalty for not funding. (See the question about fees in the Special Needs Trust Basics section above.)

People often fund the trust account using a will or insurance documents. It's critical that those papers properly name the Foundation of the Arc of Northern Virginia and not your loved one who will benefit. Visit our Resources page to get information on that.

We suggest you review trust documents yearly. Please pay special attention to the trust plan. That's the comprehensive overview of the life and finances of the beneficiary. That plan guides us and the trustee in making decisions for the beneficiary.

What fees do I need to pay?
The Arc of Northern Virginia Special Needs Trust charges fees to start and maintain a trust. Learn more in the Fees section below.
I want to fund the account at my death. How do I do that?

Our trust team will help you set up your family-funded trust.

Once you are enrolled, you can choose when to fund the account. While there is no money in the account, you'll be charged an annual maintenance fee.

People often fund the trust account using a will or insurance documents. Sometimes a special needs trust is funded by another trust. It's critical that those papers properly name the Foundation of the Arc of Northern Virginia and not your loved one who will benefit. Visit our Resources page to get information on that.

We suggest you review trust documents yearly. Please pay special attention to the trust plan. That's the comprehensive overview of the life and finances of the beneficiary. That plan guides us and the trustee in making decisions for the beneficiary.

What happens if a trust runs low or out of money?

With good planning, money in a trust will last many years. Estimating how long someone will live helps plan how much money to spend each year. Sometimes people live longer than expected, and sometimes, their trusts run out of money.

Family or friends may give money to the trust if it runs low.

If that is not possible, the trust may be closed.

What happens to money in a trust after the beneficiary dies?

A special needs trust is a great way to make life better for someone with a disability. With good planning, money in a trust will last many years.Estimating how long someone will live helps us plan how much money to spend each year. But sometimes the beneficiary dies before all the money is spent. The money left over is called the remainderment.

Your special needs trust plan takes that into account. When you complete the joinder agreement, you decide what to do with money after the trust closes. Some people choose to leave leftover money to a person; others leave it to an organization they support.

We encourage people to leave money to The Foundation of The Arc of Northern Virginia. Leftover money is added to the Foundation's trust. We do not require leftover money to be given to the Foundation.

But as you plan your trust, please consider how you can help others who could benefit from leftover trust money.

Do I have to give leftover trust money to the Foundation of The Arc of Northern Virginia?

When you complete the joinder agreement, you decide what to do with money after the trust closes. Some people choose to leave leftover money to a person; others leave it to an organization they support.

We encourage people to leave money to The Foundation of The Arc of Northern Virginia. Leftover money is added to the Foundation's trust. We do not require leftover money to be given to the Foundation.

But as you plan your trust, please consider how you can help others who could benefit from leftover trust money.

More Information

Here's complete information about setting up a new special needs trust.

Get forms and other information you need to set up a trust.

Ask Us Questions
To ask questions or get help, contact our trust director, Tia Marsili.

Working With a Trust

What's the disbursement process and how does it work?

Rules limit how money from a special needs trust can be spent.

Breaking the rules could affect government benefits. We want to make sure that doesn't happen.

That's why we set up a process for requesting money from our trusts. We call it the disbursement process. A disbursement is a payment from a trust.

Requesting Money from a Trust
A beneficiary does not have direct control over the money in a trust. The Arc of Northern Virginia manages the trust and decides how money is spent. A beneficiary may ask for money to be spent on a purchase. If the request is approved, The Arc authorizes the trustee, Key Private Bank, to make the payment.

The process starts with the beneficiary. He or she may need or want to buy something. A family member or other person named in the trust agreement acts as primary representative (PR). The PR fills out a disbursement request form. Staff from The Arc of Northern Virginia can help with the forms.

The Review Process

Arc staff review every request for trust money. The review process is discretionary. That means The Arc of Northern Virginia has a choice whether to approve a request.

Approval depends on several things. If a request from a PR is within budget, is allowed by government rules and is allowed by trust rules, it will probably be approved.

Trust Money is for "Nonsupport Purposes"

The trustee follows government rules when reviewing requests. Special needs trust money is for things that government benefits do not support. That may include rent, utilities and groceries. So requests to pay for those things will be turned down. Payments for "nonsupport purposes" are allowed. There are many things in this category. The Arc of Northern Virginia will help explain the rules and how they apply in different cases.

How are family members involved in making decisions with a special needs trust?

We want family members to take part in decisions and give advice. You know your loved one better than anyone else. Our staff knows regulations and works with government agencies. Our staff also understands the needs of people with disabilities. We work together to make the best decisions for your loved ones.

How much will be spent each year for a beneficiary?

The amount of money spent from a special needs trust may vary each year. The money in the trust may need to last for many years. That is why each beneficiary needs to have a budget.

Part of setting the budget is estimating how long the beneficiary will live. We want to be sure the trust will last at least that long. So the amount of money used every year needs to be carefully monitored.

The Arc of Northern Virginia decides whether to approve requests for money from a trust. Keeping expenses within budget is one of the things our staff does well.

What fees do I need to pay?
The Arc of Northern Virginia Special Needs Trust charges fees to start and maintain a trust. Learn more in the Fees section below.

More Information

Here's complete information about all the ways to work with money from a special needs trust.

Get forms and other information you need to request money from a trust.

Ask Us Questions
To ask questions or get help, contact our trust director, Tia Marsili.

Moving a Trust to The Arc of Northern Virginia's Program

What are advantages of The Arc of Northern Virginia's trust program?

Our special needs trust program has advantages over most other trusts. You may be able to set up a trust that has some of these, but it will be hard to match them all.

Our trustee is Key Private Bank, a corporation
Having a friend or relative as trustee can work well. But not always. A person chosen as trustee could move, die or simply decide it's too much work. And it is a lot of work.

Staff at The Arc of Northern Virginia manages the trust
The people at The Arc of Northern Virginia may change, but the mission of The Arc will not. It will always be a reliable source of information. And it will always advocate for people with disabilities.

We handle regulations, reports and requirements
Being a trustee means staying up to date with regulations. It could mean sending reports to government agencies. It means monitoring monthly income. It's a complicated role. And government benefits are at stake every month.

Our trust staff handles all of that. They understand and work with these requirements every day. They monitor changes in laws and regulations. Our team is very good at it because they do it all the time.

We know and work with agencies that support people with low incomes
People with disabilities may get government benefits if they have very little income and savings. It's fair to say that most banks don't handle trusts for people with low incomes. As a result, most banks are not experts at working with those agencies. Our staff are experts. It's what we do every day.

You can start small
Most corporations won't set up a trust with less than $350,000.  We have a $10.00 minimum and no maximum. With our special needs trust, there's no need to fund the trust right away.

Better service, less stress
At The Arc of Northern Virginia we are here to help.  Together we complete the trust documents.  We remind you to follow through with updating and changing other legal documents and beneficiary designations.  Each step of the way we are here to answer your questions.  Once your document is complete and your questions are answered we keep in touch.  We are here for you.

 

Still Have Questions?
Contact our trust director, Tia Marsili, at TMarsili@thearcofnova.org

What Fees Apply?

One-Time Fees

Enrollment Fee
Applies to: Everyone creating a new trust.
What it is: This fee covers the cost of the trust plan; consulting with Trust staff; and developing discretionary trust documents.
When it is due: Pay once, interest-free, when you establish the trust. You may pay the fee (plus interest) in monthly installments in the first year of the trust.
Cost: $1050 for the first trust. $525 for each additional trust.

Closing Fee
Applies to: Trusts that are closing because the beneficiary has died or the trust has run out of money.
What it is: This fee pays for closing the account; securing a death certificate; notifying agencies and others who need to know that the trust has ended; distributing the remaining funds.
When it is due: When the trust needs to be closed.
Cost: $250

Annual Fees

Annual Renewal Fee
Applies to: Trusts that have been set up but not yet funded.
What it is: This fee covers yearly plan updates. Paying this fee keeps you enrolled in the trust program. If you don't pay the fee, the trust is considered idle. When the trust is funded, the unpaid annual renewal fees will be paid from the funding amount.
When it is due: Pay once a year on the anniversary of your enrollment until the trust is funded. After that, management fees apply.
Cost: $65.

Annual Trustee Fee
Applies to: Trusts that are funded and active.
What it is: This fee pays for work done to pay money from the trust to fund investments, keep records, prepare tax forms, and to send reports.
When it is due: It is drawn quarterly from funds in the special needs trust by the trustee, Key Private Bank.
Cost: 0.90% or 90 basis points per year.

Annual Management Fees
Applies to: Trusts that are funded and active.
What it is: This fee pays for day-to-day help for clients. Arc staff members help with disbursements, update trust documents, give advice, answer questions about a trust, and help in many other ways.
When it is due: It is drawn quarterly from funds in the special needs trust by the manager, The Arc of Northern Virginia.
Cost: 0.75% or 75 basis points per year. The Arc offers a progressive fee schedule for larger trust accounts.

SNT Trust Account Balance Annual Fee
Up to $1,000,000.00 0.75% (1/4 of .75%)
Portion of balance from $1,000,000.00 – $2,000,000.00 0.50% (1/4 of .50%)
Portion of balance over $2,000,000.00 0.40% (1/4 of .40%)

Get In Touch. We Can Help.

Photo of Tia Marsili

Tia Marsili
Director of Trusts

TMarsili@thearcofnova.org

703-208-1119, Ext 115

Tia oversees the Trust department and will be your first point of contact for new trusts.

She works with families, individuals, agencies, and attorneys throughout Virginia, Maryland, and Washington, DC. She specializes in educating the community, various organizations, and agencies about comprehensive Futures Planning and Special Needs Trust (SNT) services.

Tia is a professional with over 23 years of experience in the world of disabilities. She's the mother of two daughters with disabilities. She works one-to-one with families and individuals to plan futures and establish SNTs.

Born in the USA and educated in Denmark, China, and Germany, Tia is a graduate of The University of Copenhagen with a degree in Sinology. She is multi-lingual, well-traveled, and has a passion for creating systems that provide equality.

Photo of Tia Marsili

Evelyn Gu
Assistant Director

EGu@thearcofnova.org

703-208-1119,  Ext 103

Evelyn maintains the systems and documents supporting the SNT program. She offers Trust clients daily on-site and over-the-phone support by providing personal contact with families and individuals, troubleshooting Trust account issues, and processing Trust checks and documentation.

With a background in psychology and business operations from the University of Virginia, Evelyn has worked to support efficient, high-quality service delivery for various clients.

She enjoys helping individuals and families receive the necessary information and tools they need to plan for the best possible future outcomes.

Photo of Trinitas Nsabimana with a white background

Trinitas Nsabimana
Account Manager

TNsabimana@thearcofnova.org

703-208-1119, Ext 119

Trini is your point of contact for special needs trust spending requests.

She provides on-site and phone support to clients every day. She works closely with our clients to ensure they have timely and effective access to funds. That helps clients pay for the services they need, such as medical, dental, and vision care, vacations, clothing, furniture, and utility bills.

Trini holds a Master's Degree in Business Administration from the University of District of Columbia and has extensive experience working with a variety of clients in different sectors.

Caroline Girgenti
Advocate

CGirgenti@thearcofnova.org

703-208-1119, Ext 120

When caring for someone with a disability, you sometimes need extra help. Our professional personal advocate, Caroline Girgenti, can help in dozens of ways.

We charge an hourly rate for advocate services. Our personal advocate program is for anyone who needs the extra help in navigating disability services.

Caroline meets and works with beneficiaries and families. She helps sort through issues and goals to see what services are needed. Services range from big tasks, like finding a job, to smaller ones, like filling out forms and applications.

Caroline is an experienced Program Manager who has worked in the mental health and intellectual disabilities fields. She's skilled in nonprofit, program, and project management; as well as leadership, policy analysis, and program development. Caroline earned her undergraduate degree from James Madison University, and holds an Masters degree from George Mason University.