GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2009
SESSION LAW 2010-118
SENATE BILL 765
AN ACT TO amend the general statutes with respect to community third party trusts and medicaid pooled trusts, and to provide for medicaid reimbursement in certain circumstances.
The General Assembly of North Carolina enacts:
SECTION 1. Chapter 36D of the General Statutes reads as rewritten:
"Chapter 36D.
North Carolina Community Third
Party Trusts, Pooled Trusts. Trust for Persons with Severe Chronic
Disabilities.
"§ 36D‑1. Title; findings.
(a) This Article Chapter
shall be known and may be cited as the "North Carolina Community Third
Party Trusts, Pooled Trusts Act."Trust for Persons With Severe
Chronic Disabilities Act".
(b) The General Assembly
finds that it is in the public interest to encourage activities by voluntary
associations and private citizens that will supplement and augment those
services provided by local, State, and federal government agencies in discharge
of their responsibilities toward individuals with severe chronic disabilities.
The General Assembly further finds that, as a result of changing social,
economic, and demographic trends, families of persons with severe chronic
disabilities are increasingly aware of the need for a vehicle by which they can
assure ongoing individualized personal concern for a severely disabled family
member with a disability who may survive that disabled person'shis
or her parents or other family members, and provide for the efficient
management of small legacies or trust funds to be used for the benefit
of that person with a disability.disabled person. In a number of
other states, voluntary associations have established foundations or trusts
intended to be responsive to these concerns. Therefore, the General Assembly
finds that North Carolina will benefit by the enactment of enabling legislation
expressly authorizing the formation of community trusts Community Third
Party Trusts and Pooled Trusts in accordance with 42 U.S.C. § 1396p(d)(4)
and criteria set forth by statute and administered by the Secretary of State,State
under Chapter 55A of the General Statutes. These community trusts permit the
pooling of resources contributed by families or persons with philanthropic
intent, along with the reservation of portions of these funds for the use and
benefit of designated beneficiaries.
(c) This Article Chapter
shall be liberally construed and applied to promote its underlying purposes
and policies, which are, among others, to:
(1) Encourage the
orderly establishment of community trusts for the benefit of persons with
severe chronic disabilities;
(2) Ensure that community
trustsCommunity Third Party or Pooled Trusts for the benefit of persons
with severe chronic disabilities are established and administered
properly and that the managing boards of the trusts are free from conflicts of interest;interest.
(3) Facilitate sound
administration of trust funds for persons with severe chronic disabilities by
allowing family members members, persons with disabilities, and
others to pool resources in order to make professional management investment
more efficient;efficient.
(4) Provide parents
of persons with severe chronic disabilities peace of mind in knowing that a
means exists to ensure that the interests of their children who have severe
chronic disabilities are properly looked after and managed after the parents
die or become incapacitated;incapacitated.
(5) Help makeAssist
in making guardians available for persons with severe chronic disabilities
who are incompetent, when no other family member is available for this purpose;purpose.
(6) Encourage the
availability of private resources to purchase for persons with severe chronic
disabilities goods and services that are not available through any governmental
or charitable program and to conserve these resources by limiting purchases to
those that are not available from other sources;sources.
(7) Encourage the inclusion,
as beneficiaries of community Community Third Party or Pooled Trusts,trusts,
of persons who lack resources and whose families are indigent, in a way that
does not diminish the resources available to other beneficiaries whose families
have contributed to the trust.trust; and
(8) Remove the disincentives
that discourage parents and others from setting aside funds for the future
protection of persons with severe chronic disabilities by ensuring that the
interest of beneficiaries in communityof trusts that meet the
rules set forth by the Department are not considered assets or income that
would disqualify them from any governmental or charitable entitlement program
with an economic means test.
(9) Require, pursuant to 42 U.S.C. § 1396p(d)(4), the payback of monies from Pooled Trusts up to an amount equal to the total amount of assistance paid for by the Department on behalf of or to the beneficiary from any funds remaining in the beneficiary's individual trust account upon the death of the individual or the termination of the individual trust account.
(d) Nothing in this Chapter shall affect the establishment, interpretation, or construction of Pooled Trust instruments which do not conform with the provisions of this Chapter, nor shall this Chapter impair the State's authority to be paid from or seek reimbursement from any Pooled Trust which does not conform with the provisions of this Chapter or to deem the principal or income of any nonconforming 36D Trust an available resource under any program of government benefits or assistance.
"§ 36D‑2. Definitions.
As used in this Article,Chapter,
unless the context clearly requires otherwise:
(1) "Beneficiary"
meansBeneficiary. – Any of the following persons:
a. Any person of
any age any person with a severe chronic disability who has
qualified as a member of the Community Third Party Trust, funded with assets
of a third party or by will.
b. Any person who
meets the definition of disability as defined in 42 U.S.C. § 1382c(a)(3) on
whose behalf an individual Medicaid Pooled Trust subaccount was established by
the parent, grandparent, or legal guardian of the individual, by the
individual, or by a court.community trust program and who has the right
to receive those services and benefits vested with the management of the
business and affairs of a corporation, formed for the purpose of managing a
community trust, irrespective of the name by which the group is designated.
(2) "Community trust"
means aCommunity Third Party Trust. – A trust funded with the assets of
a third party for the benefit of a person of any age with severe chronic
disabilities, that is administered by a nonprofit organization corporation
that offers the following services:
a. Administration of special
trust funds for persons with severe chronic disabilities;disabilities.
b. Follow along services;services.
c. Guardianship for persons
with severe chronic disabilities who are incompetent, when no other family
member or immediate friend is available for this purpose; andpurpose.
d. Advice and counselInformation
and referral services to persons who have been appointed as individual
guardians of the persons or estates of persons with severe chronic
disabilities.
(2a) Department. – The Department of Health and Human Services.
(2b) Family members. – Persons who are related by blood or marriage within the sixth degree to the beneficiary.
(3) "Follow along
services"Follow‑along services. – Includes the following:
means (i) those services offered by community trustsCommunity Third
Party or Pooled Trusts that are designed to ensure that the needs of each
beneficiary are being met for as long as may be required and may include
periodic visits to the beneficiary and to the places where the beneficiary
receives services, (ii) participation in the development of individualized
plans being made by service providers for the beneficiary, and (iii) other
similar services consistent with the purposes of this Article.Chapter.
(3a) Medicaid Pooled Trust, pooled trust, or umbrella pooled trust. – A trust pursuant to 42 U.S.C. § 1396p(d)(4)(C) and the rules set forth for pooled trusts by the Department that meets all of the following requirements:
a. The trust is irrevocable.
b. The trust contains a separate subaccount for each beneficiary of the trust, but the funds in the accounts are pooled for the purpose of investment and management of funds. Investment of funds pursuant to this subdivision shall be in accord with G.S. 32‑71, the Prudent Person rule.
c. The beneficiary is disabled as defined by 42 U.S.C. § 1382c(a)(3).
d. The trust is established solely for the benefit of the beneficiary by a parent, grandparent, legal guardian, by the beneficiary, or by a court.
e. The trust was created on or after April 1, 1994.
f. The trust provides that upon the death of the beneficiary the State will receive all amounts remaining in the beneficiary's account up to the total amount of medical assistance paid on behalf of the beneficiary as set forth in G.S. 36D‑6.
g. Trust language governing each Medicaid Pooled Trust shall be approved by the Department.
h. A Medicaid Pooled Trust shall be established by a nonprofit corporation that offers any of the following:
1. Administration of trust funds for persons with a disability as defined in 42 U.S.C. § 1382c(a)(3).
2. Follow‑along services.
3. Guardianship for individuals with a disability pursuant to 42 U.S.C. § 1382c(a)(3) who are incompetent, when no other family member or immediate friend is available for this purpose.
4. Information and referral services to persons who have been appointed as individual guardians of the persons or estates of persons with a disability pursuant to 42 U.S.C. § 1382c(a)(3).
(4) "Severe chronic
disability" meansSevere chronic disability. – A disability which
impairs one or more areas of independent functioning. a physical or
mental impairment that is expected to give rise to a long‑term need for
specialized health, social, and other services, and that makes the person with
the disability dependent upon others for assistance to secure these services.
(5) "Surplus
trust funds" means funds accumulated in the trust from contributions made
on behalf of an individual beneficiary that, after the death of the
beneficiary, are determined by the board to be in excess of the actual cost of
providing services during the beneficiary's lifetime, including the beneficiary's
share of administrative costs.
(6) "Trustee"
means any member of the board of a corporation, formed for the purpose of
managing a community trust, whether that member is designated as a trustee,
director, manager, governor, or by any other title.
(7) Sole benefit. – No individual other than the beneficiary benefits from the trust, either directly or indirectly.
(8) Surplus trust funds. – All funds remaining in the trust upon termination of the trust, whether by death of the beneficiary or otherwise.
(9) Trustee. – An original, additional, or successor trustee, and a cotrustee, whether or not appointed or confirmed by a court. The term does not include trustees in mortgages and deeds of trust.
(10) 36D Trust. – Any trust governed by this Chapter.
"§ 36D‑3. Scope.
This Article Chapter applies
to every community trustCommunity Third Party Trust or Medicaid
Pooled Trust established in this State. In addition to meeting the other requirements
of this Article, Chapter, every board that administers a Community
Third Party Trust or Medicaid Pooled Trust community trust shall
incorporate as a nonprofit corporation under Chapter 55A of the General
Statutes. Except as otherwise provided in this Chapter, Chapter 55A of the
General Statutes applies to community trusts.all trusts governed by
this Chapter. Article 9 of Chapter 36C of the General Statutes, the Uniform
Trust Code, applies to 36D Trusts in the same manner that it applies to trusts
under the Uniform Trust Code, with the exception of the following: the trustee
of a pooled trust is liable to the Department to the extent the trustee
administers the trust in a way that is not for the sole benefit of the
beneficiary, regardless of the terms of the trust. The terms of the trust shall
not contradict the meaning of "sole benefit" as defined in G.S. 36D‑2(7).
"§ 36D‑4. Administration of Community Third Party and Pooled Trusts; powers and duties.
(a) Every community
trust Community Third Party or Pooled Trust shall be administered by
a board. The board shall be comprised of no less than nine and no more than 21
members, at least one‑third of whom are parents or relatives of persons
with severe chronic disabilities. No board member shall be a provider of
habilitative, health, social, or educational services to persons with severe
chronic disabilities or an employee of such a service provider. The board may,
however, allow service providers to serve on the board in an advisory capacity.
Board members shall be selected, to the maximum extent possible, from
geographic areas throughout the area served by the trust.
The certificate of incorporation filed with the Secretary of State under Chapter 55A of the General Statutes shall, in addition to the requirements set forth in that Chapter, demonstrate that the requirements of this section have been met.
(b) Notwithstanding any
other law, no trustee may be compensated for services provided as a member of
the board of a Community Third Party or Pooled Trust. community
trust. No fees or commissions shall be paid to these trustees; however, a
trustee may be paid for necessary expenses incurred by the trustee and may
receive indemnification as permitted under Chapter 55A of the General
Statutes. Statutes as it applies to nonprofit organizations.
(c) For every Community
Third Party or Pooled Trustcommunity trust incorporated under this
Article, Chapter, the corporation itself is considered the trustee
of any funds administered by it. No individual board member is considered to be
trustee of any fund deposited on behalf of any individual beneficiary with
severe chronic disabilities.
(d) The board shall adopt bylaws that include a declaration delineating the primary geographic area serviced by the trust and the principal services to be provided. The board shall file the bylaws with the Secretary of State.
(e) The board may retain paid staff as it considers necessary to provide follow along services to the extent required by each beneficiary.
(e1) The Community
Third Party or Pooled Trust community trust may authorize the
expenditure of funds for any goods or services, including recreational
services, which the board, in its sole discretion, determines will
promote the well‑being ofand is for the sole benefit of the
any beneficiary. The Community Third Party or Pooled Trust community
trust may pay for the reasonable burial expenses of any beneficiary.beneficiary;
however, if the beneficiary receives SSI benefits, burial expenses may be paid
for only as allowed by Social Security Administration regulations. The Community
Third Party or Pooled Trustcommunity trust, however, may not expend
funds for any goods or services of comparable quality to those available to any
particular beneficiary through any governmental or charitable program,
insurance, or other sources. The Community Third Party or Pooled Trust community
trust may expend funds to meet the reasonable costs of administering the Community
Third Party or Pooled Trust.community trust.
(f) The Community Third
Party or Pooled Trust community trust is not required to provide
services to a beneficiary who is a competent adult and who has refused to
accept the services. Further, the Community Third Party or Pooled Trust community
trust shall not provide services of a nature or in a manner that would be
contrary to the public policy of this State at the time the services are to be
provided. In either case, the Community Third Party or Pooled Trust community
trust may offer alternate services that are consistent with the purposes of
this Article Chapter and in keeping with the best interests of
the beneficiary.
(g) The Community Third
Party or Pooled Trust community trust may accept appointment as
guardian of the person, guardian of the estate, or guardian of both on behalf of
any beneficiary. If the Community Third Party or Pooled Trust community
trust accepts appointment as guardian of the person of an individual, it
shall assign a staff member to carry out its responsibilities as the guardian.
The Community Third Party or Pooled Trust community trust may,
upon request, offer consultative and professional assistance to an individual,
private or public guardian of any of its beneficiaries.
(h) The Community Third
Party or Pooled Trust community trust may accept contributions,
bequests, and designations under life insurance policies to the Community
Third Party or Pooled Trust community trust on behalf of individuals
with severe chronic disabilities for the purpose of qualifying them as
beneficiaries.
(i) At the time a contribution,
bequest, or assignment of insurance proceeds is made,made to a
Community Third Party Trust, or to a beneficiary of a Pooled Trust, the
trustor shall receive a written statement of the services to be provided to the
beneficiary. The statement shall include a starting date for the delivery of
services or the condition precedent, such as the death of the trustor, which
shall determine the starting date. The statement shall describe the frequency
with which services shall be provided and their duration, and the criteria or
procedures for modifying the program of services from time to time in the best
interests of the beneficiary. In addition, there shall be a properly
executed trust agreement between the Community Third Party or Pooled Trust and
the trustor.
(j) No trustee, board member, or paid staff member of a Community Third Party or Pooled Trust shall undertake legal representation or other professional services on behalf of the trust or its beneficiaries.
(k) The Department shall be given a minimum of 30 days notice if there is to be a change in trustee.
"§
36D‑5. Community Third Party and Pooled Trust Accountability.accountability.
(a) Along with the
annual report filed with the Secretary of State under Chapter 55A of the
General Statutes, the Community Third Party or Pooled Trust community
trust shall file an itemized statement that shows the funds collected for
the year, income earned, salaries, other expenses incurred, and the opening and
final trust balances. A copy of this statementthe annual individual
accounting statement of each beneficiary's subaccount shall be made
available,available by the trustee, upon request, to the
Department, any beneficiary, guardian, trustor, or designee of the
trustor. In addition, once annually, each trustor or the trustor's designee
shall receive a detailed individual statement of the services provided to the
trustor's beneficiary during the previous 12 months and the services to be
provided during the following 12 months. The Community Third Party or Pooled
Trust community trust shall make a copy of the individual statement
available to any beneficiary, upon request.
(b) The Department or its agents may perform annual audits of any Community Third Party or Pooled Trusts existing in the State.
"§ 36D‑6. Gifts, Community Third Party or Pooled Trust surplus trust funds.
(a) Community Third Party and Pooled Trusts may accept gifts and use surplus trust funds to meet reasonable start‑up costs and reduce the charges to the trust for the cost of administration and for the purpose of qualifying as beneficiary any indigent person whose family members lack the resources to make a full contribution on that person's behalf. A maximum of fifty percent (50%) of the surplus trust funds may be retained in the Community Third Party or Pooled Trust account for this purpose as well as to cover administrative costs. Gifts made to the Community Third Party or Pooled Trust for an unspecified purpose shall be used by the trust either to qualify indigent persons whose families lack the means to qualify them as beneficiaries of the trust or to meet any reasonable start‑up or administrative costs that the trust incurs.
(b) For Community Third Party Trusts, remaining surplus trust funds may be distributed to additional beneficiaries as specified in the Trust Agreement.
(c) For Medicaid Pooled Trusts, upon termination of an individual trust account, the surplus trust funds remaining in the individual account shall be used to satisfy any claims or liens of the Department, up to an amount equal to the total medical assistance paid on behalf of or to the disabled individual by the Department. The amount retained by the trust shall be determined on a sliding scale calculation, based upon the number of years the disabled individual received services from the nonprofit corporation, but in no instance shall the trust retain more than fifty percent (50%) of the surplus trust funds, unless the claims or liens of the Department are less than fifty percent (50%) of the surplus trust funds.
(d) A Medicaid
Pooled Trust may not distribute surplus trust funds to any remaindermen
identified in the trust document unless there are funds remaining after all
claims or liens of the Department have been satisfied, nor shall it use surplus
trust funds to make any charitable contribution on behalf of any beneficiary or
any group or class of beneficiaries.The community trust may accept gifts
and use surplus trust funds for the purpose of qualifying as beneficiary any
indigent person whose family members lack the resources to make a full
contribution on that person's behalf. The extent and character of the services
and selection of beneficiaries are at the discretion of the community trust.
The community trust may not use surplus trust funds to make any charitable
contribution on behalf of any beneficiary or any group or class of
beneficiaries. The community trust may accept gifts to meet start‑up
costs, reduce the charges to the trust for the cost of administration, and for
any other purpose that is consistent with this Article. Gifts made to the trust
for an unspecified purpose shall be used by the community trust either to
qualify indigent persons whose families lack the means to qualify them as
beneficiaries of the trust or to meet any start‑up costs that the trust
incurs.
"§ 36D‑7. Special requests on behalf of beneficiary.
The community trustCommunity
Third Party Trust may agree to fulfill any special requests made on behalf
of a beneficiary as long as the requests are consistent with this Article Chapter
and provided that an adequate contribution has been made for this purpose
on behalf of a beneficiary. The Medicaid Pooled Trust may only disburse
subaccount trust funds if such disbursement is in the sole benefit of the
beneficiary. The community trust may agree to serve as trustee for any
individual trust created on behalf of a beneficiary, regardless of whether the
trust is revocable or irrevocable, has one or more remaindermen or contingent
beneficiaries, or any other condition, so long as the individual trust is consistent
with the purposes of this Article.
"§ 36D‑8.
Irrevocability; impossibility of fulfillment.
A community trust for persons
with severe chronic disabilities is irrevocable, but the trustees in their sole
discretion may provide compensation for any contribution to the trust to any
trustor who, upon good cause, withdraws a beneficiary designated by the trustor
from the trust, or if it becomes impossible to fulfill the conditions of the
trust with regard to an individual beneficiary for reasons other than the death
of the beneficiary.
"§ 36D‑9. Beneficiary's interest in trust not asset for income eligibility determination.
Notwithstanding any provisions
of Chapter 108A of the General Statutes, theThe beneficiary's
interest in any community trust 36D Trust is not considered to be
an asset for the purpose of determining income eligibility for any publicly
operated program, nor shall that interest be reached in satisfaction of a claim
for support and maintenance of the beneficiary. The Department shall not
reduce the benefits or services available to any individual because that person
is the beneficiary of a 36D Trust. The Department may authorize termination of
an individual's eligibility for medical assistance or impose sanctions as
necessary for failure of a purported 36D Trust to comply with the requirements
of this Chapter and any rules adopted by the Department pursuant to this
Chapter. The Department may authorize termination of an individual's
eligibility for medical assistance or impose sanctions as necessary for failure
of the trustee to administer the 36D Trust in a manner consistent with this
Chapter, the rules adopted by the Department pursuant to this Chapter, and
federal law and policy. No agency shall reduce the benefits of services
available to any individual because that person is the beneficiary of a
community trust.
"§ 36D‑10. Trust not subject to law against perpetuities; restraints on alienation.
A community trust36D
Trust shall not be subject to or held to be in violation of any principle
of law against perpetuities or restraints on alienation or perpetual
accumulations of trusts.
"§ 36D‑11. Settlement; trustee limitations.
The community trust shall
settle a community trust by filing a final accounting in the superior court. In
addition, at
(a) The trustee of a Medicaid Pooled Trust shall provide a final disbursement and accounting for an individual Pooled Trust subaccount to the Division of Medical Assistance, Third Party Recovery Section, within 30 days of the receipt of an accounting of charges from Medicaid, after the death of the beneficiary or other termination of the trust. An individual Pooled Trust subaccount shall terminate upon the death of the beneficiary and the satisfaction of all outstanding charges.
(b) At any
time before the settlement of the final account, the community trust,Community
Third Party or Pooled Trust, the Secretary of State, or the Attorney
General may bring an action for the dissolution of a nonprofit corporation in
the superior court for the purpose of terminating the trust or merging it with
another charitable trust.
(c) No trustee or
any private individual is entitled to share in the distribution of any of the
trust assets upon dissolution, merger, or settlement of the Community Third
Party or Pooled Trust. community trust. Upon dissolution, merger, or
settlement, the superior court shall distribute all of the remaining net assets
of the Community Third Party or Pooled Trust community trust in a
manner that is consistent with the purposes of this Article.Chapter.
"§ 36D‑12. Administrative rules.
The Department shall adopt rules pursuant to Chapter 150B of the General Statutes governing the eligibility of beneficiaries for State medical assistance and State‑County Special Assistance, and to supplement and expand upon the general requirements set forth in this Chapter, including, but not limited to, rules that may be more restrictive than the general requirements of this Chapter. With respect to Medicaid Pooled Trusts, a subaccount is irrevocable. The State shall be paid an amount up to the total medical assistance paid on behalf of the beneficiary by the Department from funds remaining in the individual trust subaccount upon the death of the beneficiary or termination of the trust as described in this Chapter. If the pooled trust is to be funded with the proceeds of a settlement of a lawsuit against a third party, the settlement proceeds are subject to the Department's subrogated rights of recovery as set forth in G.S. 108A‑57, and all such subrogated rights of recovery shall be satisfied in full prior to execution and judicial approval of the trust, or both."
SECTION 2. This act is effective when it becomes law.
In the General Assembly read three times and ratified this the 9th day of July, 2010.
s/ Walter H. Dalton
President of the Senate
s/ Joe Hackney
Speaker of the House of Representatives
s/ Beverly E. Perdue
Governor
Approved 3:24 p.m. this 20th day of July, 2010