First Friday Feedback: May 2025

May’s First Friday Feedback is here! In this episode, Phil Buchanan sits down with Jaci Riorden, Senior Fiduciary Officer for ESL Trust in New York and adjunct faculty member with Cannon. Together, they explore the intricacies of special needs trusts.

Jaci delves into the purpose and importance of special needs trusts, explaining how they allow individuals with special needs to receive financial support without affecting their eligibility for government benefits. She also highlights common misconceptions and shares insights on tools like ABLE accounts and True Link accounts. Additionally, Jaci recounts impactful stories from her career, illustrating the profound difference these trusts can make in the lives of individuals with special needs.

Resources:

Please send Comments, Questions, and Feedback to: mojo@cannonfinancial.com

Please send First Friday Feedback submissions to: mojo@cannonfinancial.com

Transcript 

Hi, I am Phil Buchanan with Cannon Financial Institute. We produce the podcast series Monday Morning Mojo, the Cannon Curve, and Cannon Connect. Each of these podcasts invites listeners to email or text their feedback, comments and questions. They are all answered right here on First Friday Feedback. If you're new to our podcast, go ahead and subscribe to all four and get engaged by sharing your perspective.

Life is about the journey, so let's go for the ride. Greetings kind of nation. It is Phil here with First Friday feedback for May 2025. Hope everybody's having a fantastic spring. A lot of energy, a lot of chaos going on in the financial markets, and I know that it has had. Your attention as it has ours.

One of the things that we always try to do as part of our podcast episodes is give you relevant information that is both timely but also useful with regard to your clients and based on some comments and some questions that we've been having from you today, we are joined by Jaci Riorden. Jaci is an adjunct faculty member with Cannon.

We'll talk a little bit about her specialty in just a couple of moments, but as her full-time gig. She is the Senior fiduciary officer for ESL Trust in New York. Jaci, welcome to First Friday feedback. Thank you, Phil., I'm glad to be here. It's great to have you here. Jaci. You have had a very distinguished career in fiduciary services.

Your concentration has been across the gamut in the world of, of trust and wealth management. But one area in particular that you have have developed a a deep expertise and just a credible knack for advising clients is in the area of special needs trust and that. That gives a little bit of the, the feedback that I wanna start with.

We have had a couple of people reach out to us wanting some additional information and understanding about this very unique area of fiduciary services and one individual for privacy purposes, we will call her Beth, but Beth has been part of two organizations that actually. Sold or transferred their special needs trust group to another institution.

And her comment was, this was an area that she felt that their firm had provided tremendous value in and why would somebody get out of the special needs trust area? So I want us to unpack that, but why don't you begin with just a general overview for our listeners. What, what is a special needs trust and why do we need to know about it?

Great question. Special needs trust, or a supplemental needs trust. They're interchangeable terms. Some areas of the country call them. One term, some call them the other, it means the same thing. They are tomato, tomato, right? Correct. They're a type of trust that was, it's relatively new to the trust world, and when I say new, because trust has been around since the beginning of time, William Shakespeare referred to them, you know, so they've been around for a minute or two, but special needs trust have only been around since 1993 and got their start.

With the OBRA laws that were there in 1993 and were set, the trusts were set aside for individuals that had special needs so that money could be carved out by, you know, the family members, a, a lawsuit, things like that, so that this money could be set aside for the individual with special needs and still allow them to be on government benefits.

That's the short definition of a special needs trust. Okay. The money is set aside. It's, it's their money. But it's set aside for them and doesn't count against them if they're on means tested government benefits. Got it. Alright. So I can't think of a, a, a more appropriate use of, of those funds. Just very quickly though, you mentioned means based testing and, you know, government support.

Unpack that just a little bit or there, I, I assume there are gonna be certain rules that these trusts have to follow so that they aren't. Included as part of the scope for means based testing. Right? Right. If you're on SSI, you're only allowed to have $2,000 of accountable resources. For example, a bank account.

Okay. You can't have more than $2,000 in your bank account. If you do, then your government benefits will be decreased by a, by a ratio and. What sub Special needs trust allows is that that money could, anything above 2000 could go into a special needs trust and not adversely affect your government benefits.

So, okay, so what happens is someone, for example, someone gets their monthly SSI payment of say, you know, 800 and something dollars, they, you know, they're expected to live on that. They're expected to pay rent, buy groceries, and buy clothing for $800 a month. Okay? As you alluded to in your intro, it's not gonna happen.

So the beautiful thing is that parents loved ones can set aside money for the individual with special needs and can augment their life and enhance their life with goods and services that they can't afford to pay for with their government check every month, for example. Yeah. You know, for example, you know, what if they, what if they have, they have a special need, but they can work and whatever, paying for gas, you know, the, the, the trust could pay for gas for them.

They could. And now with the current, the recent changes in September of last year, the trusts can now pay for food, which was, didn't used to be allowed. So it's a, it's a new, it's a new change. It gives the individual with special needs, just the ability to have a more enhanced rich life. Got it. Okay. Now you, you mentioned a couple of scenarios right there.

One in which family, friends, supporters want to set money aside, but you also mentioned lawsuits, and I think that that's where we often see some of the. If you will, larger settlements or, or, or larger amounts that wind up in special needs trust originating. Is there anything particular that is different about that type of special needs or supplemental needs?

Trust? There's two, two basic types of special needs trust. A third party trust, which is the typical mom and dad pass away, they set aside money for junior. In a third party special needs trust, that's money is Mom and dad's money never belonged to Junior. In a lawsuit type environment where there was medical malpractice, personal injury lawsuit settlement, that money would be Junior, would be entitled to take it outright, but for the fact that he's on government benefits and that money goes into a first party Special Needs Trust administered exactly the same way.

But the first party Trust has a clawback provision that has to be included to reimburse the government agencies that provided assistance to that person during their lifetime. Okay. That's the only, so, alright, so let's unpack this, this question that Beth posed, and that is, she has been part of two different institutions who.

If you will, were in the Special Needs Trust business and then got out of the Special Needs trust business. Her comment was, you know, they were providing tremendous value in, in her opinion, but they chose to exit the business. Why would, why would a financial institution, why in the business, make a determination that it doesn't make sense for them long term?

Uh, I think it's, it's a misunderstanding of the administration of. Special needs trusts. It's, I think they envision a negative realization that being too much time putting put into the special needs trust administration versus what they're getting paid. Lots of, you know, special needs trusts require record, you know, detailed record keeping and whatnot.

But I think they may be looking at it in the, maybe pre. 2010 world. You have so many tools available now as a trust administrator that you can efficiently and effectively administer special needs. Trust within the rules and the confines that are are given to us and still make a profit as a trust company.

Okay. That's where, that's where learning about the administration, you know, really is so valuable, Phil, because if you don't realize the tools that are available as a trust company, you still might be looking at it. You know, in the old way of going, God, we don't have enough manpower to effectively and efficiently administer these things and keep records and everything, and it's just not worth our time.

We we're gonna get out of that business. Got it. Got it. Okay. So you referenced tools and resources. You actually run a specialized program for Cannon to help educate advisors, trustees, advisors, other people that are in and around the business of special needs trust. Tell me a little bit about some of the, some of the questions that come up or some of the challenges that come up.

What are the, what are the things that you find are, are. Common misnomers like, like the one we've just discussed. I think the biggest aha moment is when I'm sitting in a classroom and I start talking about these tools that, you know, people coming from trust companies have never have, never heard about, never utilized.

I actually was talking with one trust company, they have never used able accounts and you know, we're very unfamiliar with them. Enable accounts achieving a better life experience are, again, relatively new to our world, our special needs trust world. But what they do is they allow the individuals with special needs who have the ability to manage certain.

Certain amount, you know, certain aspects of their own finances to take control, you know, to, to take the wheel and, and to buy things. As long as there are qualified disability expenses. When I talk about that aspect, you, you can honestly see the students in class, you know, look and exhale thinking, oh my God, if we use this, it makes our life as an administrator easier, and it also provides so much more autonomy for the beneficiaries of that trust.

You know? Mm-hmm. It's a win-win series, you know, scenario. You see that and they go back and they're all excited that, you know, they, they can, you know, figure out a better way to do it, you know, better and more efficient way to do it, and everybody got it. You know, it gives the, it gives the, the individual with special needs.

You know, that intangible feeling of, of, of independence. And I had a client who came to me a few years ago and one of the first questions I said, you know, do you use your ABLE account? They had never been, it had never been discussed with them before they came to our, our company. And when I check in with her, you know, on a regular basis, I always check and see how things are going with that.

And she can't say enough. How this makes her feel so much more independent and, and how it adds value to her life. I really wish that our podcast listeners could see the expression on your face right now as you talk about that, because I can, I can literally see the smile and the, the emotional satisfaction that you have gleaned from that particular relationship, helping someone to live a better life.

You know, we, we talk a lot in our, our programming about. Certain aspects that are the, they're, they're very tangibles, but we sometimes refer to them as the, as the intangibles. You know, example we, we talk about in the personal trust side is that, you know, solid families really do promote the dignity of work among their beneficiaries and, and work to ensure that even families that have more money than they.

Could, could ever need the, the dignity of of work and being involved in, in contributing is, is so important to the emotional wellbeing of wealthy individuals. And sometimes I think we forget the dignity that comes with the ability of someone who has unique. Challenges, who has unique issues to be involved in the decision making and to be involved in, in being able to control certain aspects of their life when, for mental or physical reasons, they, they aren't able to control other things, right.

Exactly, and the example I share in class is a gentleman who was institutionalized at age 20 for no fault of his own. It was, you know, the parents had made really bad financial decisions. They couldn't care for him any longer. He went into a nursing home for 15 years, from age 20 to age 35 when he came to our company.

We worked with him and with a team of advisors outside in our community to help him buy a home, modify the home for his wheelchair. He's, he's quadriplegic, nonverbal. He lives independently. His home and the trust can pay for certain, you know, things. He has. He's self-directed. He has a self-directed budget and he manages, to your point, you know, he has physical limitations, but he has no mental, you know, limitations whatsoever and can communicate very, very clearly.

Let me tell you, if he doesn't like something and he is the dignity, he is been given back, the dignity that he is robbed of. For 15 years while he was in that, that nursing home. And that is probably one of the proudest moments of my career is seeing that come to fruition and being part of that chain.

You know, because it is a chain. It, it started with the people in the nursing home that were helping him develop his budget and all of the people in the community that worked together to make sure that he's living there, he's safe. He has, you know, his aide scheduled. A lot of it comes from the assistive technology that exists now that didn't exist 20, 30 years ago.

Got it. Alright. So I am actually familiar with several organizations that do nothing but concentrate in the special needs arena. I'm familiar with a couple of organizations that are being stood up right now with a focus on situations where individuals have unique challenges, whether it's traumatic.

Head injuries or, or other types of things. What does a day in the life of a, a special needs trustee? What, what does that look like? You made reference earlier that a lot of organizations may be, you know, harkening back to, to a prior time when really the administration of these were incredibly time consuming.

What, what are some of the new tools and resources that you were mentioning that are available out there? Well, first and foremost, it's, it, it, it is collaborative and communication. That's, that's the foundation of any, I think any good trust administration is communicating with your beneficiary, with their families.

You know, what, what's going on now? What's a regular, what's regular situation? What are things that might happen? For example, you know, purchase of a, a large purchase like a car or wheelchair accessible van, things like that. That's the first part is, is having that communication. Right, and then you plan for what they're doing.

The, the individual I told you that was so grateful to be introduced to Able Accounts, we established with her mom a budget and we have given her the. Tools and we send money to her able account. She uses her able account to buy those things that I would've otherwise had to have reimbursed either her or her mother for.

And, you know, you're talking about maybe copays, you know, a $5 copay for this type of therapy, a $10 copay for this doctor visit, you know, reimbursing her for, you know, paper for her copy or things like that, that, you know, she can do all that. Now she has that autonomy and I don't have to. Have my admin assistant, you know, issuing, you know, 20 checks a month.

Right. Got it. She has the list of what is a qual, you know, the list is very long. Actually, the list of qualified disability expenses is what you can't buy is shorter than what you can buy, but she knows the rules. She operates within the rules. So the ABLE account is the, the, the big tool. The second one is, is the True Link account, which we use for individuals who maybe can't manage that much responsibility.

I use that with, with some of my beneficiaries who are just not, they're just not good with money. They can't follow those rules. So I will set them up with a true link account that will have limited spending authority at certain places and and for certain amounts. And that's another tool. And some people have both.

Some have an ABLE account and some people have an ABLE account and a true link, and some people just have a true link. It just depends on what they need and what their, what their ability to handle responsibility, you know, what their level is. Wow. Fantastic segments right there. And again, I really wish that this was a, a video cast because I can just see in the, the satisfaction.

Quotient for you that this is a very meaningful part. Let's shift gears just a little bit because you know your work, and as I said in the intro, encompasses all areas of financial services. May is mental health awareness month. And, you know, we don't, we don't spend a lot of time, I don't think as an industry maybe as much time as certainly we should on this concept of, of mental wellbeing and the mental health quotient as far as it, it pertains to wealth management.

Tell us a little bit about, you know, your experience and, and how mental health intersects with the, the world of, of estate planning, the world of trust administration. I think fear is a huge, you know, a huge element because they're afraid of things they don't know, afraid of what's going to happen if they let go of control, things like that.

I think fear is huge. Educating the your, your clients. Understanding what your clients are trying to tell you. You know, I always sit down and ask the clients first. Talk to me. Just, just have a conversation with me first. I have a huge toolbox. I can pull out every single tool that I have, but I wanna make sure that the tool, the tools I pull out of my toolbox are addressing your particular need.

Okay? I, I deal with individuals who believe honestly and truly, they're going to live forever. I had an eight, 6-year-old woman who was honest to God just hell, Ben on never dying because she was taking care of her 60 something year old dis, you know, developmentally disabled daughter. And it, it was a team effort to try to work with her so she could.

Except the fact that at some point in time she was gonna die and she needed to make a plan because without the plan, there was gonna be a preconceived plan for her, and it might not be what she wanted. You know? So I, I think communicating and listening and, and then telling, you know, telling them that they have, you know, their concerns are valuable.

Value and, and as well as their, the individual with special needs. They, as you had said, you know, the word is dignity giving, making sure that you are respecting the dignity of that individual with special needs no matter what, you know, level or what degree of special needs they have. I, I think those are probably the biggest challenges is understanding it.

So you are speaking to. The client and or the individual with special needs in, in such a way that you respect them, you, you preserve the, the dignity that they, you know, deserve and, and help them achieve their ultimate goal. And you know, we always say in our classes, you know, the beginning of, you know, any of our Cannon classes, it's intent.

You know, what are they, what are they trying to accomplish? You know? And that's, that's the goal. Kid people and say, I'm like your GPS. Where are you now? Where do you wanna be? And I can help you navigate to that goal. Boy, that's a, that, that's a great, great metaphor. So let me, let me pose this question, just thinking about mental health and anxiety levels, and I chuckled a little bit when you, you mentioned the, the 86-year-old lady that couldn't face mortality.

I had a client tell me one time, he said, well, if ever do die, I guess this is what I want to happen. And I remember my, my comment and it was, it was off the cuff, but it seemed to work. I said, well, just in case that does ever occur, let's, let's set forth what you would want to happen. And it, it shifted, you know, his mental mindset and we were able to have a, a pretty decent conversation after that.

Are there any, any other aspects of, of mental health that you think are important either from. The wealth advisor side or the client side, maybe also the thing that, you know, people don't focus on is the caregiver stress. You know, and I think that the, you know, especially people that are in it, you know, they're living it day to day, that they, they don't even sometimes realize the stress that they're in.

And again, you know, having that communication with them, helping them maybe understand that there are options out there for them to use now while they're alive to alleviate some of the, the stress and the burden. Teaming them. Having a great network of individuals in your community that can, you can reach out to and say, Hey, I have this client who needs, fill in the blank, can, can really help your client and, and you, I think as a, as a, as the advisor, as being able to, you know, educate yourself.

Because the, the more education you have in whatever field it is, you know, and this, this particular field is very challenging 'cause there's so many areas to, to reach out knowing, you know, social Security administration, knowing your state's rules as far as Medicaid goes and whatnot. Having those individuals on whom you can lean and rely.

Will relieve your stress, I think, as, as an, as an advisor. Yeah, that's great insight. You know, belonging to your, your local association, your estate planning council. I belong to the elder law section of our bar association, the trust and estate section, and our local estate planning council and, and team with a bunch of really, really brilliant people to help give better service to my clients.

Well community. It, it certainly matters. So, a another question that popped up. It's, it's not directly related to special needs, but directly related to you and your experience. Had somebody pose a question recently, why do people choose to teach particularly in the area of trust? The, the question was from somebody that was that.

Thought that he was, you know, potentially interested in, in teaching some coursework for Cannon. He was asking the question, you know, practitioners that are in it every day, why, why would they choose to do this? You are in a unique position to do that. This is, this is what I do full-time. It is, you're an adjunct faculty member.

You've got a a, a thriving practice. What is it about teaching that, that was a calling for you, and tell us a little bit, has it, has it helped or hurt what you do on a day-to-day basis? You know, this is, you said you wish you, you had the video that's, you know, you asked me why I teach and, and I couldn't help but smile because it is truly such a fulfilling opportunity.

You meet the most incredible people and to be able to share my love and passion for this particular area, it's the only area I ever wanted to do. It's the area that I focused in and truly. I was talking to somebody this morning who's, who was thinking of branching out on their own, and I said, you know what?

Make yourself unique and learn as much as you possibly can, because that makes you so much more valuable. And as an individual, as a, as an employee, as a professional, and, you know, helping people that are coming into this field and, and sharing your passion for this area is, is why I love being able to, to teach and, and, you know.

Sharing that, sharing that love for, for this is, is why I do it, and it enhances my day. It, it, I learn from the students all the time and, and I share some fun stuff with them. And we have a lot of fun in class too. Well, you definitely do. You're one of the most beloved adjunct faculty members we have. And on behalf of your, your colleagues on the faculty, thank you for everything that you do.

Jaci, we're going to include contact information for you in the show notes if people have, have follow-up questions. But I would be remiss if I didn't give you an opportunity to remind our listeners of your special Needs trust program that you, you teach for us. Anything you'd like to share there? Yeah, it, it's, it is so much fun.

We, we pack a lot of information into our, the, the, the two days that we're in Nashville. But I welcome anyone who has, even if you've never done it Bo before, you're thinking about doing it. We, we do learn a lot and have a lot of fun and I think it will be well worth your, your time should you be able to join us.

All right, and information about the Special Needs Trust program that comes up this August in Nashville, Tennessee. Not a, not a bad place to, to spend a few days learning about the intricacies of special needs trust able accounts, and all the technology that's available to support what that will be in the show notes as well.

Jaci, on behalf of your, your clients in the industry, I just wanna say again, thank you for the, the work that you do and, and certainly for the work. That you do in helping to educate the rising generation of advisors that are, are tackling these very, very valuable tools and resources. Oh, well thank you for the opportunity and thanks for talking to me today.

Absolutely. Jaci Riorden, uh, senior Fiduciary Advisor, ESL Trust Company. First Friday Feedback is a production of Cannon Financial Institute. Executive producer of all podcasts at Cannon is Sarah Jones. Editing and mixing is done by Danny Brunner. So, until next month, I'm Phil Buchanan. Have a fantastic week.