How It Works
IRC is the Trustee of all of the trusts in Master Trust. Each trust established with Master Trust is a separate individual trust with its own tax identification number. The assets held in each trust can only be used for the special needs of the named beneficiary of that trust. Federal and State Fiduciary Tax Returns are filed annually and each trust is subject to taxes according to its earnings and expenses. Most of the assets held in each individual trust are pooled together for investment and management purposes.
Master Trust uses a standard Master Trust Agreement, in most cases, for all of the trusts. The Joinder Agreement, which is filled out by prospective Trustors, contains all of the personal information for the trust, such as the names of the Trustor and the Beneficiary, how distributions are to be made, and who will receive the balance of the trust's assets upon death of the beneficiary or other termination of the trust. In some cases, Master Trust will agree to act as Trustee of trusts drafted by others as long as the trust agreement meets all the qualifications to be a SNT.
Master Trust is managed by the Trust Committee. Members of the Trust Committee are familiar with the operations of regional centers, are knowledgeable about other public and private programs available to people with developmental disabilities, have experience working with people with developmental disabilities, are aware of their special needs, and are aware of what distributions can be made without jeopardizing the beneficiary’s eligibility for public benefits. Their expertise helps ensure that the beneficiary will receive the maximum benefits allowed under the law while preserving their trust funds for their special needs that are not covered by other programs.
The Trust Committee meets monthly to review and consider new trusts, to discuss and decide on disbursement requests, and to review the performance of the investment portfolio of the Master Trust Pooled Investment Fund and other assets held in trust.
When making disbursements from a trust, the Trust Committee considers a variety of factors, such as:
- Appropriateness of the requested item for the Beneficiary
- Other funding sources which could pay for the request
- Any disbursement restrictions on the trust
- Current principal balance in the trust
- Future trust income
- Future needs of the Beneficiary
- Current age and life expectancy of the Beneficiary
The Trust Committee sets, and periodically reviews, the Investment Policy for the Pooled Investment Fund. The primary investment goal of Master Trust is to minimize the risk of loss of principal while achieving modest growth. Consequently, the rate of return on trust funds will be the prevailing rate available on investments with low risk.
Master Trust is audited annually by an independent Certified Public Accountant.
Annual financial statements are provided to each Trustor and Beneficiary. These financial statements include a report of the activity for the trust, a report on the Pooled Investment Fund, and a copy of the most recent audited financial statement. For those trusts that are court supervised, Master Trust files a petition with the court for approval of the transactions and other activity during the accounting period on an annual basis or for such other term as may be ordered by the court.
Distributions upon the death of the beneficiary or other termination of the trust are designated by the Trustor on the Joinder Agreement and may be subject to liens by Federal, State, or local government agencies in accordance with applicable laws.
The fees paid to Master Trust of California include the initial establishment of the trust and management of the trust to maximize it's benefits.
Testamentary Trust Fee:
No fees are assessed until the assets are transferred to the trust
Initial Set-up Fee:
Annual Management Fees (assessed quarterly on market value of financial assets):
Current Market Value
$1,250 on the first
2.00% on the next
1.65% on the next
1.50% on the next
1.25% on the balance over
Other Asset Management Fees:
Tax Return Preparation Fee:
Fees charged by the CPA firm preparing the annual fiduciary tax returns.
Investment Management Fees
Fees charged by an Investment Manager, if not charged against the earnings, will be prorated to individual trusts according to each trust’s share of the investment(s).
Trust Termination Fee
Fees to be prorated through the date of the expected Preliminary distribution date
Allowable Distributions from a SNT
Generally, assets in either a First Party or Third Party SNT cannot be used to provide “food” or “shelter” for the beneficiary. SNT assets are to be used to supplement the beneficiary’s basic needs for food and shelter that are provided by public benefits, not supplant them. Use of the assets of a SNT to provide “food”, “shelter” or “in-kind support and maintenance” for the beneficiary may cause the beneficiary’s public benefits to be reduced or eliminated.
In California, there are two main types of needs-based public benefits which are the focus of a SNT, namely Supplemental Security Income (SSI) and Medi-Cal (called Medicaid in most other states). SSI and Medi-Cal are available to individuals with developmental disabilities. To be eligible to receive benefits under these programs, the applicant must meet certain asset and income tests.
Generally, in order to be eligible for SSI a person must be under the age of 65, blind or disabled, earn or receive less than a certain amount of monthly income, and may not have more than $2,000.00 in countable assets. Several types of assets are not counted in determining eligibility, such as a principal residence, an automobile, household items, personal effects, burial and life insurance policies, and certain pension plans.
The qualifications for Medi-Cal are similar in nature to SSI. If a person is receiving SSI, they will be automatically qualified for Medi-Cal as well. Persons qualifying for Medi-Cal will be entitled to various health care benefits depending upon their age, qualifications and situation.
Because SSI and Medi-Cal are needs based public benefits, many developmentally disabled indiviuals will be eligible for both SSI and Medi-Cal because they have no assets and no means of receiving or earning a monthly income. However, if the disabled person receives a personal injury settlement, inheritance, etc., they may lose their eligibility. Assets held in a SNT will not be treated as an asset of the individual and the trust income will not be treated as income of the beneficiary, thereby preserving eligibility for SSI and Medi-Cal. Because Master Trust is a pooled trust which satisfies the requirements of 42 USC §1396p(d)(4)(C) and California Code of Regulations §50489.9(a)(4), certain types of trusts that are funded from the disabled person’s own funds are exempt from being counted as a resource or income of the disabled person for purposes of determining eligibility for SSI and Medi-Cal if they meet the following requirements:
- The trust is established and managed by a non-profit association.
- A separate account is maintained for each beneficiary of the trust, but for purposes of investment and management of funds, the trust pools these accounts.
- Accounts in the trust are established solely for the benefit of individuals who are disabled (as defined in 42 USC §1382c (a) (3)) by the parent, grandparent, conservator or legal guardian of such individuals, by such individuals, or by a court.
- To the extent that amounts remaining in the beneficiary’s account upon the death of the beneficiary or other termination of the trust are not retained by the trust, the trust pays to the State from such remaining amounts in the account an amount equal to certain government benefits paid on behalf of the beneficiary, subject to certain limitations.
The following is a list of generally permissible distributions from an SNT that will not affect eligibility for public benefits (See Special Needs Trusts: Planning, Drafting and Administration (Cal CEB), §14.67). It is not meant to be an exhaustive list:
- Accounting services;
- Appliances (TV, VCR, DVD player, stereo, microwave, stove, refrigerator, washer/dryer);
- Books (hardcover, paperback, e-books), e-book reader;
- Bottled water or water service;
- Bus pass/public transportation costs;
- Camera, memory cards, the cost to print digital pictures, and a digital video recorder;
- Clubs and club dues (record clubs, book clubs, health clubs, service clubs, zoo, advocacy groups, museums);
- Computer hardware, software, programs, Internet service, and online streaming video service;
- Courses or classes (academic or recreational), including books and supplies;
- Curtains, blinds, and drapes;
- Dental work not covered by Medi-Cal, including anesthesia;
- Down payment on home or security deposit on apartment;
- Dry cleaning and/or laundry services;
- Durable medical equipment not covered or replaced frequently enough by Medicare or Medi-Cal, such as wheelchairs, modified strollers, walkers, canes, and braces;
- Elective surgery;
- Fitness equipment;
- Funeral expenses;
- Furniture, home furnishings;
- Gasoline and/or maintenance for automobile;
- Haircuts/salon services;
- Hobby supplies;
- Holiday decorations, parties, dinner dances, and holiday cards;
- Home alarm and/or monitoring/response system;
- Home improvements, repairs, and maintenance (not covered by Medi-Cal or Regional Center), including tools to perform home improvements, repairs, and maintenance by homeowner;
- Home purchase (to the extent not covered by benefits);
- House cleaning/maid services;
- Insurance (automobile, home and/or possessions);
- Legal fees/advocacy (may need court approval of legal fees if court-supervised);
- Linens and towels;
- Magazine and newspaper subscriptions;
- Musical instruments (including lessons and music);
- Nonfood grocery items (laundry soap, bleach, fabric softener, deodorant, dish soap, hand and body soap, personal hygiene products, paper towels, plastic wrap, plastic bags, napkins, Kleenex, toilet paper, and household cleaning products);
- Over-the-counter medications (including vitamins and herbs);
- Personal assistance services not covered by Medi-Cal;
- Pet and pet supplies, veterinary services;
- Physician specialists if not covered by Medi-Cal;
- Private counseling if not covered by Medi-Cal;
- Repair services (e.g., for appliances, automobile, bicycle, household, or fitness equipment);
- Snow removal/landscaping/gardening (lawn) services;
- Sporting goods/equipment/uniforms/team pictures;
- Stationery, stamps, and cards;
- Storage units;
- Telephone service and equipment, including cell phone, smartphone, pager;
- Therapy (physical, occupational, speech) not covered by Medi-Cal;
- Tickets to concerts or sporting events;
- Transportation (automobile, motorcycle, bicycle, moped, gas, bus passes, insurance, vehicle license fees, gas, car repairs);
- Utility bills (satellite TV, cable TV, telephone—but not gas, water, or electricity);