Attorneys for Petitioner
IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA
IN AND FOR THE COUNTY OF ______
In re the matter of:THE ______SPECIAL NEEDS TRUST
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PETITION FOR ORDER DIRECTING ESTABLISHMENT OF A POOLED SPECIAL NEEDS TRUST, SETTING BOND, AUTHORIZING TRUSTEE’S FEES, AND APPROVING ATTORNEYS’ FEES
(42 U.S.C. §1396p (d)(4)(A); CA Probate Code §§ 2580 (b)(5) & 17200)
DATE:
TIME:
DEPT:
I. INTRODUCTION AND BACKGROUND
______, as conservator of ______, seeks an order authorizing his proposed act to establish a pooled special needs trust account with ______’s own funds and for ______’s sole benefit.
______is a ___-year-old disabled woman. Her disability is such that she requires help with daily activities like personal hygiene and grooming, cooking, housekeeping and medication management. She resides in a group home for persons with developmental disabilities, where she receives 24-hour care, supervision and assistance. Because of her disability, ______receives Social Security survivor benefits, Medicare and Medi-Cal health care services.
In ______20__, ______’s aunt died. Through her aunt’s will, ______and her two siblings are slated to receive a one-fifth share of their aunt’s estate which will be equally divided between the three of them. It is believed that upon distribution of her aunt’s estate, ______will receive approximately $______. The outright distribution of these assets to ______would render her ineligible for Medi-Cal, which is an essential component of the funding stream which provides for her group home placement. Therefore, to retain eligibility for these essential public benefits, ______’s expected inheritance must transfer into a pooled special needs trust.
II. REQUEST FOR AN ORDER DIRECTING THE ESTABLISHMENT OF A POOLED SPECIAL NEEDS TRUST ACCOUNT
Petitioner, ______, alleges as follows:
1. ______is a person with a disability. Attached hereto as Exhibit “A” is a true and correct copy of the Capacity Declaration executed by ______’s physician, ______, attesting to her disability. ______’s disability is such that she cannot provide for her personal safety and well-being. She is a client of the Regional Center and resides in a group home for persons with developmental disabilities in ______, California. ______is not capable of understanding or managing her own financial affairs. As a further result of her disabilities, she receives Social Security Disability benefits, as well as Medicare and Medi-Cal.
2. ______has neither expressed consent nor opposition to this petition, but were she to oppose the requested action her opposition would be invalid insomuch as she lacks capacity to understand the nature of these proceedings. As indicated by Dr. ______in the Capacity Declaration attached hereto, ______has moderate impairment to virtually all areas of her mental function and lacks the capacity to give informed consent to medical treatment. Moreover, the establishment of a pooled special needs trust account for the benefit of ______will favorably affect her estate in that it will preserve her entitlement to government needs-based benefits while allowing a small trust account to provide for supplemental expenditures which will improve her quality of life. Accordingly, petitioner submits that the provisions of Probate Code § 2582 are satisfied.
3. Petitioner, ______, is the brother of Ms. ______. Mr. ______has petitioned for and been appointed as conservator of the estate of ______for the sole purpose of bringing this petition to create a pooled special needs trust account for the benefit of ______.
4. A 42 U.S.C. §1396p(d)(4)(C) pooled special needs trust is a trust created and managed by a nonprofit organization. A separate sub-account is maintained for each beneficiary of the trust. The account is created for the sole benefit of an individual with disability by the individual’s parent, grandparent, legal guardian, court, or the individual. Since ______is conserved, her Conservator is petitioning the Court for an order directing establishment of an account in a pooled special needs trust for ______’s sole benefit.
5. The Golden State Pooled Trust was created and is managed the North Bay Housing Consortium, a California not-for-profit corporation located in Napa, California. Currently, there are approximately 130 beneficiaries of the Golden State Pooled Trust with sub-accounts totaling almost $10.5 million.
6. The Petitioner propose that ______’s inheritence be deposited with the Golden State Pooled Trust. The Conservator will execute the Court-Directed Joinder Agreement on behalf of ______in order for her to become a participant in the Pooled Trust. The Joinder Agreement establishes a Pooled Trust sub-account for ______’s sole benefit as required by federal and state law and regulations. Copies of the Pooled Master Trust Agreement and the Court-Directed Joinder Agreement are attached hereto respectively as Exhibit “A” and Exhibit “B,” respectively.
7. The proposed Golden State Pooled Trust meets the requirements of 42 U.S. C. 1396p(d)(4)(C), as modified by 22 C.C.R. §50489.9, in that:
a. The Trust is established and managed by a nonprofit association, The North Bay Housing Coalition;
b. 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;
c. Accounts in the trust are established solely for the benefit of individuals who are disabled (as defined in 42 U.S.C. §1382c(a)(3)) by the parent, grandparent, or legal guardian of such individuals, by such individuals, or by a court;
d. The State, receives, upon the death of the disabled individual, all funds remaining in the individual’s account, up to an amount equal to the total amount of medical assistance paid on behalf of that individual by the Medi-Cal program. The State shall receive this amount only to the extent that funds remain in that individual’s account and are not retained by the trust to cover management and investment fees associated with the account.
e. This petition and copy of the North Bay Housing Coalition Master Pooled Trust Agreement and the Joinder Aagreement have been provided to the directors of the California State Department of Health Care Services, the State Department of Mental Health, and the State Department of Developmental Services.
f. The Golden State Pooled Trust was created, and is managed, by The North Bay Housing Coalition, a California not-for-profit corporation located in Napa, California. Currently there are approximately 130 beneficiaries of the Golden State Pooled Trust with sub-accounts totaling almost $10.5 million.
8. The proposed Golden State Pooled Trust also meets all of the requirements for court-order trusts under California Rule of Court 7.903(c), in that it:
a. Does not contain a "no-contest" provision;
b. Prohibits modification or revocation without court approval; [See: Exhibit B, Section 7 on page 1-2]
c. Clearly identifies the trustee and any other person with authority to direct the trustee to make disbursements; [See: Exhibit A, Sections 1.05]
d. Prohibits investments by the trustee other than those permitted under Probate Code section 2574; [See: Exhibit A, section 5.04]
e. Requires persons identified in (3) to post bond in the amount required under Probate Code section 2320 et seq.; [See: Exhibit B, Section 14 on page 1-5].
f. Requires the trustee to file accounts and reports for court approval in the manner and frequency required by Probate Code sections 1060 et seq. and 2320 et seq.; [See Exhibit B, Section 15 on page 1-5].
g. Require court approval of changes in trustees and a court order appointing any successor trustee; [See Exhibit B, Section 8 on page 1-3]
h. Require compensation of the trustee, the members of any advisory committee, or the attorney for the trustee, to be in just and reasonable amounts that must be fixed and allowed by the court. The instrument may provide for periodic payments of compensation on account, subject to the requirements of Probate Code section 2643 and rule 7.755. [See Exhibit B, Section 11 on page 1-4]
9. Petitioner ______, the Conservator of ______shall serve as the Beneficiary Advocate. All distributions requested by the Beneficiary Advocate are reviewed by the Golden State Pooled Trust for appropriateness and compliance with benefit laws.
10. Pursuant to Probate Code §2643, Petitioner requests that that the Court authorize the Trustee to receive an initial $1,500.00 set up fee, and annual payments on account at the rate of one and one-half percent (1.5%) of the funds in the individual sub-account or $1,500.00, whichever is greater.
III. PETITIONER REQUESTS THAT THE TRUST BE AUTHORIZED
TO INVEST IN MUTUAL FUNDS AND GOVERNMENT
BONDS WITH TERMS LONGER THAN FIVE YEARS
11. Pursuant to California Rule of Court 7.903(c)(8), for good cause shown, Petitioner requests that the investment standard set forth in Probate Code Section 2574 be modified so that the Golden State Pooled Trust has the authority to purchase mutual funds held and traded in the United States, and purchase government bonds with maturity dates of less than five years.
12. California Rule of Court 7.903(b) provides that the Trustee shall have the authority to make only those investments that are allowed under conservatorship rules, i.e. Probate Code § 2574. These rules do not permit investment in mutual funds unless specifically authorized by the court. The Trustee, however, is obliged to comply with the California Uniform Prudent Investor Act (California Probate Code §16045, et seq.), which requires that the Trustee’s management and investment decisions reflect consideration of many factors, including general economic conditions, maintenance of a balanced portfolio and diversification of investments. Probate Code section 2574(c) provides that the conservator may seek court authorization to make investments not otherwise permitted under that section of the Probate Code.
13. Investment in mutual funds permits investment across several asset classes, subclasses and sectors, while avoiding high transaction costs. Thus, because they are highly diversified, mutual funds are inherently less risky than are individual securities listed on an established stock or bond exchange and authorized by the conservatorship rules. Probate Code §2574(a)(3) specifically permits investment in such individual securities without court authorization. The ability to invest in mutual funds will permit the trust to hold individual securities across several asset classes, while at the same time providing the flexibility to cost-effectively change its investment position in response to shifts in the market.
14. The ability to invest in government bonds, beyond those issued by the United States or the State of California, will permit the investment of trust assets in a more diversified bond market. With the ability to purchase both direct bond offerings from local and foreign state governments and professionally managed bond funds, higher total returns would be expected and greater asset protection will be realized through diversification.
IV. PETITIONER REQUESTS PAYMENT OF ATTORNEYS FEES
15. ______was retained to prepare this petition and supporting documents and provide related counseling in connection with the establishment of a pooled trust account for ______with the Golden State Pooled Trust, as well as the requisite pleadings and documents and related counseling in the matter of ______in order to effectuate the distribution of ______’s inheritance to the Golden State Pooled Trust. ______is requesting legal fees and costs as set forth in the Declaration of ______which will be filed prior to the hearing on this petition.
V. NOTICE AND OTHER MISCELLANEOUS PROVISIONS
16. The names, addresses and relationships of all persons entitled to notice are as follows:
[Beneficiary]
[Heirs at Law]
[Court Investigator]
Department of Health Care Services,
MS 4720, P.O. Box 997425, Sacramento, CA 95899-7425
Department of Mental Health
1600 9th Street, Sacramento, CA 95814
Department of Developmental Disabilities
1600 9th Street, Sacramento, CA 95814
17. As noted above, ______is a developmentally disabled woman whose testamentary capacity is questionable. She has no known testamentary documents through which any person could claim an interest in her estate. Ms. ______’s only intestate heir is her brother, ______, who is being noticed of this petition as stated in paragraph 15, above
WHEREFORE, Petitioners pray that the following orders be granted:
1. An order directing the establishment of a Pooled Special Needs Trust Account for______for receipt of the inheritance assets from ______, ______Superior Court No. ______pursuant to the attached order.
2. An order authorizing and directing the Conservator to execute the necessary documents, including the Joinder Agreement, in order to establish ______’s account in the Golden State Pooled Trust in accordance with the terms of the Court-Directed Joinder Agreement;
3. An order authorizing the Trustee of the Golden State Pooled Trust to invest
in mutual funds held and traded within the United States, and in government bonds maturing in less than five years;
4. An order setting bond in the amount of $______to be secured by the Trustee of the Golden State Pooled Trust;
5. An order authorizing the Golden State Pooled Trust a $1,500.00 set up fee, and ongoing fees paid on account at the rate of one and one-half percent (1.5%) per annum with a $1,500.00 annual minimum, with said fees to be reported and confirmed by the Court at the time of the periodic court accountings;
6. An order requiring that periodic accounts and reports of the Trustee be filed with the Court in accordance with the procedures and schedule set for in the California Probate Code;
7. An order authorizing and directing Trustee to pay ______for legal services and costs in connection with drafting this petition, and establishing a sub-account for ______with the Golden State Pooled Trust, and necessary and related services and costs in ______in an amount approved by the court, and set forth in the declaration of ______to be filed prior to the hearing on this petition.
10. For any such other relief the Court believes is appropriate.
Dated: ______
Petitioner
Dated: ______
By:
Attorneys for Petitioner
VERIFICATION
I, ______, the undersigned, Conservator for ______and petitioner herein, declare that I have read the foregoing Petition For Order Directing Establishment of a Pooled Special Needs Trust, Setting Bond, Authorizing Trustee’s Fees, and Approving Attorneys’ Fees, and know its contents, which are true and correct to my own knowledge and belief, except as to those matters stated on information and belief, and as to those matters I believe them to be true and correct.
I declare under penalty of perjury under the laws of the state of California that the foregoing is true and correct.
Executed at ______, California this day of ______, 20__.
______
Conservator for , Petitioner
PETITION FOR ORDER AUTHORIZING ESTABLISHMENT OF A POOLED SPECIAL NEEDS TRUST
______COUNTY CASE # ______2