Established in 2003, Wispact, Inc., is a private nonprofit organization that maintains and administers pooled special needs trusts for nearly 4,000 individuals with disabilities throughout Wisconsin.
What Is a Pooled Trust?
A pooled special needs trust (PSNT) is a type of trust arrangement where there is one master trust document that details the pertinent definitions, powers, and duties that control all the sub-accounts created under it.
A sub-account is created under a PSNT when a beneficiary or individual acting on behalf of the beneficiary executes the PSNT’s joinder agreement (when the beneficiary agrees to all the terms and conditions provided for in the PSNT’s master trust).
Another caveat of PSNTs is that all the assets of the separate sub-accounts are combined or pooled for investment purposes.
What Makes a Special Needs Trust Special?
A PSNT holds property and is administered for the benefit of its beneficiaries, all of whom have a disability. They are commonly used to protect the beneficiary’s eligibility or qualification for government-provided means-tested benefits.
In order to be considered a noncountable asset for Social Security account purposes, a PSNT sub-account may only be used for the sub-account beneficiary’s sole benefit. Moreover, the PSNT must be irrevocable.
The governing laws of PSNTs and Wispact are:
For specific references, see the master trust lists for Wispact Trust I and Wispact Trust II.
Who’s who at Wispact:
Trust manager, director, and protector – Wispact, Inc.
Trustee – Capital First Trust Company (as of Jan. 1, 2020).
Beneficiary – the individual with a disability for whose benefit a sub-account is created and administered.
Creator – an individual who signs the joinder agreement (i.e., contribution agreement) to create a sub-account for the beneficiary’s benefit.
Advisor – the individual appointed in the contribution agreement to aid the beneficiary with the use of the beneficiary’s sub-account.
Beneficiary specialist – beneficiary and beneficiary’s advisor’s point of contact at Wispact who assists in distributions and other questions or concerns regarding a sub-account.
There Are Two Types of Wispact Trusts
The Wispact Trust I is funded with assets held solely by the beneficiary or are titled in the beneficiary’s name. Creators of a Trust I sub-account may be:
the beneficiaries themselves;
an individual acting on behalf of the beneficiary, such as the beneficiary’s parent, grandparent, or legally appointed guardian;
a financial power of attorney (i.e., agent); or
a court via a court order.
The beneficiary must meet the definition of disabled under Social Security Administration regulations. This requirement ensures the funds placed in a Wispact Trust I sub-account are exempt resources for that individual, and thus cannot be counted against their means-tested public benefits. For more details, see Wispact’s attorney instructions for Trust I sub-accounts.
Because the funds placed in a Wispact Trust I sub-account originated in the beneficiary’s name, it is subject to a conditional Medicaid payback requirement.
At the time of the beneficiary’s death, if the remaining funds in the beneficiary’s Wispact Trust I sub-account exceed the amount of Medical Assistance paid on behalf of the beneficiary under the State’s Medicaid plans (i.e., Medicaid payback lien), then the trustee will satisfy the payback lien in full and then distribute any remaining funds according to the disposition instructions in the contribution agreement.
If the remaining funds do not exceed the amount of Medical Assistance paid on behalf of the beneficiary under the State’s Medicaid plans, then the remaining funds are retained by Wispact’s charitable trust (Wispact’s Retained Fund). No funds are used to pay any of the Medicaid payback lien, nor are they distributed to remainder beneficiaries according to the contribution agreement.
The Wispact Trust II is a third-party fund – funded with assets that have never been held by the beneficiary. Creators of a Wispact Trust II sub-account may be anyone except the beneficiary.
Similar to Wispact Trust I sub-account beneficiaries, Wispact Trust II sub-account beneficiaries must also be considered disabled. However, because the funds in a Wispact Trust II account originate from third parties and not the beneficiary, the proof of disability required is more lenient than what is required for a Wispact Trust I sub-account. For more information, see Wispact’s attorney instructions for Trust II sub-accounts.
No Medicaid Payback: A Wispact Trust II sub-account is not subject to Medicaid Payback. Therefore, upon a Wispact Trust II sub-account Beneficiary’s death, the trustee will distribute any remaining funds according to the Creator’s disposition instructions detailed in the contribution agreement.
Why Choose Wispact?
Here are a few reasons to choose Wispact:
Wispact’s team consists of highly trained individuals with expertise in public benefits (SSI, Medicaid, etc.) rules and nuances.
Pooling the assets of the sub-accounts allows for lower administrative fees to hold and manage the beneficiaries’ sub-accounts, as well as an opportunity for higher returns on investments.
Wispact is strongly dedicated to improving the quality of life for all Wispact beneficiaries.
Choosing Wispact provides access to grant money from Wispact’s Retained Fund.
Keep in mind these potential drawbacks when choosing Wispact:
The beneficiary does not have ability to personalize the trust language for their specific needs or desires.
Beneficiaries and their families could feel as if they are losing control of the funds if placed in a protected (and at times restrictive) Wispact sub-account that is administered by non-family members.
How to Get Started with Wispact
When an attorney determines a Wispact trust sub-account is advisable, the attorney works with their clients to create and fund an account.
While the Wispact trust sub-account creation forms appear self-explanatory (and dare I say “easy”), there are other issues and considerations an attorney should address to protect the beneficiary’s public benefits and to serve their best interests. Therefore, the attorney assisting in the creation of a Wispact trust sub-account should have some skill and knowledge in special needs and elder law (or phone a colleague well-versed in this area of law).
On its website, Wispact provides an extensive collection of helpful materials to assist attorneys in the creation of a Wispact trust sub-account. These materials include sample documents provided by highly-skilled attorneys in the field, along with instructional packets on how to complete both Wispact Trust I and Trust II applications.
When the required forms are completed, attorneys meet with their clients to discuss any final changes or questions regarding the creation of a Wispact sub-account. The attorney then forwards all necessary materials to Wispact for review and approval.
When Wispact staff and its trustee determine the submitted materials are satisfactory, all parties execute the contribution agreement and deposit the initial funding, which officially creates a sub-account for the benefit of the beneficiary.
Wispact assigns a beneficiary specialist to the beneficiary and provides a packet of informational materials to all interest parties (the creating attorney, beneficiary or creator, advisor, and any other individuals identified to receive this communication). These materials detail how beneficiaries can use their accounts. Receipt of this correspondence may serve as notice to the creating attorney that there are no issues with the submission and that the Wispact sub-account is active.
For additional information on Wispact, do not hesitate to contact any of its staff.
Learn more about Wispact at the Wispact Update 2022 from State Bar of Wisconsin PINNACLE®, co-produced by Wispact, Inc., and the State Bar of Wisconsin Elder Law & Special Needs Section. Discounts are available for section members to attend the live webcast on April 1.
This article was originally published on the State Bar of Wisconsin’s Elder Law and Special Needs Blog. Visit the State Bar sections or the Elder Law and Special Needs Section webpages to learn more about the benefits of section membership.