When disabled people depend on government benefits, a little money can make life a lot easier - or can cause them to lose their benefits.
A Clearwater nonprofit group has carved out a niche helping the disabled and their relatives walk that fine line.
"This is a hugely underserved population," said Leo Govoni, a money manager who joined with lawyer John Staunton six years ago to launch the Center for Special Needs Trust Administration (www.sntcenter.org).
The center serves as trustee for both individually created trusts and for pooled trusts that can take even the smallest accounts. It currently manages about $70-million in 1,200 accounts, and Govoni said it is the largest provider of its type in the country.
"We get a lot of referrals from banks" that reject the trusts as too small and too labor intensive, he said. "Managing $70-million at a bank is a part-time job; here it takes an army" of 36 people.
Staunton said one major challenge is the jumble of eligibility rules that vary from state to state for programs such as Medicaid and SSI.
"We can't give money to beneficiaries; we have to find ways to pay service providers," he said.
For one homeless beneficiary, the center sends $40 to $50 a month to a convenience store, where the man can draw against it to buy anything except food. Govoni said that exception is because the SSI check the man gets is supposed to pay for food and shelter, and getting money for those needs from another source would jeopardize his eligibility.
For nursing home patients on Medicaid, a trust can provide services that Medicaid doesn't cover.
When the disabled person dies, any money left in the pooled trust is used to make grants to other disabled people and to organizations that work with the disabled. Govoni said the center has given away $3-million in donations and sponsorships and pledged another $850,000. Individual trusts may name other beneficiaries in some situations.
Lawyers are becoming more interested in special needs trusts, said Rebecca Morgan, professor at Stetson University College of Law.
"We see lots of elder law attorneys expanding their practices to include representation of individuals with disabilities," she said. The college and the center are sponsoring a program on special needs trust administration April 27 and 28.
Govoni said the center charges a $2,500 setup fee and a 1.5 percent annual management fee, with reduced fees for accounts under $20,000. There is no minimum annual fee, which for-profit trustees use to discourage small accounts. Unfunded trusts also can be created to be used as the beneficiary of an insurance policy or estate when a relative dies.
Govoni said one challenge is obtaining financial services such as life insurance and mortgages for clients and their families, who often have low incomes and no credit history or a troubled one.
"So many young, healthy parents of disabled children are unable to buy life insurance" for themselves, Govoni said. He said mortgage lenders also have been reluctant to provide financing based on the income stream from a trust.
Q. Can I deduct the tuition I pay for my son, who is a full-time college student, but not claimed on my tax return because he is 29?
A. No. You can only claim the deduction for yourself, your spouse or a dependent claimed on your tax return.
Because he is older than 23, the only way you could claim an exemption for him is if his adjusted gross income is less than $3,300.
Helen Huntley writes about investing and markets for the Times. If you have a question about investments or personal finance, write firstname.lastname@example.org or Helen Huntley, Times, P.O. Box 1121, St. Petersburg, FL 33731.
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