April 19, 2019

People with Special Needs Also Need Trusts

Photo provided by Michelle Wolf

Two years ago, I met Steven, 72, when he walked into the JFS Freda Mohr Center on Fairfax Boulevard asking for help from the Jewish Los Angeles Trust (JLA Trust), a new community-based nonprofit created to assist people with disabilities. Steven was wearing a pair of old, frayed black leather shoes barely held together by tattered shoelaces, matched by an equally worn leather belt. 

His life was constricted by poverty. He had grown up in an upper-middle class Jewish home on the Westside and excelled academically but was then brought low by severe mental illness. He had recently inherited $36,000 from a deceased aunt’s life insurance policy. Because all but $30 of his monthly Supplemental Security Income (SSI) check went toward his rent, food and medication management at a local board and care residential facility, he was never able to save any money toward new clothes or shoes. He also counted on his Medi-Cal health insurance for prescription drug co-pays and ongoing mental health treatments. 

Steven was a smart guy; he knew that SSI rules prohibited single beneficiaries from having more than $2,000 in assets. How could he legally keep that $36,000 without jeopardizing his twin lifelines of SSI and Medi-Cal? He didn’t have the money to consult with an attorney and no living relatives to turn to for help. Someone at his aunt’s insurance company suggested that a pooled special needs trust might be the right solution for him.

Created by Congress in 1993, pooled special needs trusts must be administered by nonprofits and use a “master trust” legal document. Clients enroll by signing a simple legal agreement and paying a modest enrollment fee. Private funds are deposited into a sub account for each participant and are pooled only for management and investment purposes. Clients receive professional trustee services, typically received only by the very wealthy who have in excess of $750,000 to open a stand-alone special needs trust.

“I witnessed the transformative impact of supplementing clients’ meager benefits.”

JLA Trust had only been in operation for a few months at that point, so Steven enrolled in our first party pooled trust as client No. 005. Although it may sound corny, his life really took a turn for the better after enrolling. He was finally able to buy new shoes and clothes, get a monthly bus pass and sign up for a monthly cellphone plan. Then, after he discovered an additional life insurance policy that named him as beneficiary and he added those funds to his trust account, he was able to rekindle his passion for jazz and classical music. For the first time he decades, he could go to jazz concerts, hear the L.A. Phil, even take a cruise designed for jazz aficionados. He is now a regular at local jazz clubs and has made friends with other jazz enthusiasts.

As the founding executive director of JLA Trust, I witnessed the transformative impact of supplementing clients’ meager government benefits many times. There’s the young adult who suffered from a stroke and is relearning how to do everyday tasks; he uses the supplementary funds from his GoFundMe campaign for outings in the community and for music therapy. Our oldest client has outlived all his friends and family members and uses his special needs trusts from a legal settlement to pay for private case managers who drive him to his doctors’ offices and take him out of his senior facility for the occasional lunch.

At our free monthly Open House events, I explain that government programs for people with disabilities are designed to get people only to the federal poverty level, and that the maximum SSI grant in California is $950 for most adults over the age of 18. Out of that amount, recipients are expected to pay for rent, food and basic utilities, which is completely unrealistic in our state. And to make matters worse, SSI’s byzantine rules don’t even let someone else pay for rent, food or basic utilities without penalty, typically a deduction of $250 a month. 

Our pooled special needs trusts can’t solve all the problems of our broken system, but they can offer a higher quality of life.

Michelle K. Wolf is a special needs parent activist and nonprofit professional. She is the founding executive director of the Jewish Los Angeles Special Needs Trust.