Pooled Special Needs Trust
A Pooled Special Needs Trust, or Pooled Trust, is administered much like a special needs trust, or disability trust. A Pooled Trust is designed to protect and preserve public benefit eligibility for disabled individuals who may be at risk of exceeding the income and asset limits of their public benefit programs. Means-tested public benefit programs, such as SSI and Medicaid, have income and assets thresholds which a beneficiary may surpass if they are the recipient of an inheritance or legal settlement. The Pooled Trust serves as a tool to maintain current and future public benefit eligibility while allowing the trust assets to supplement the services provided by these public benefit programs and improve the overall quality of the beneficiary's life.
Similar to a Special Needs Trust, the Pooled Trust was created under federal law, but authorized under 42 U.S.C. 1396p(d)(4)(C) in 1993 as part of the Omnibus Budget Reconciliation Act. Participation in this type of trust can be authorized by a legally competent adult beneficiary, their parents, grandparents, legal guardian or representative, or the court. The funds deposited into an account must belong to the beneficiary and can only be used for their sole benefit. The assets of a Pooled Trust are used to fill the gap between the basic care and services provided by the public benefit programs and the supplemental needs of the trust beneficiary.
Why a Pooled Trust?
Pooled Trusts are unique because there are no age restrictions for those who can join in most states. While other Special Needs Trusts only allow individuals under the age of 65 years old to join without penalty, in most cases the Pooled Trust is available to disabled individuals of all ages. This becomes particularly valuable for those seeking, or are already receiving, long-term care in a nursing home or assisted living facility. For many nursing home residence and their families, state Medicaid programs are essential to making long-term care affordable and preserving Medicaid eligibility is of the utmost importance.
Another advantage of Pooled Trusts is the ease of joining and setting up an account. The trust is established by the non-profit organization that manages the accounts and individual beneficiaries. Since the trust is already established, there is no need for an attorney to draft a completely new document. Instead, individuals joining the Pooled Trust must create a Trust sub-account by completing and fully executing a simple Joinder Agreement. Once the Joinder Agreement is fully executed, a Trust sub-account is created and ready to be funded.
There are many advantages to using a Pooled Trust, but the most important is knowing you and your family have a qualified, experienced Trustee and administrator guiding and supporting you through the entire process. Effective administration of Pooled Special Needs Trusts is the sole purpose of a non-profit organization like The Directed Benefits Foundation, Inc. Finding the right Trustee can often be overwhelming. Because a Pooled Trust can only be established and managed by a non-profit organization whose focus is to provide comprehensive administrative service to their beneficiaries, there is assurance and comfort that each beneficiary's trust account is qualified, capable hands.
What Does "Pooled" Mean?
A Pooled Trust is created by a non-profit organization through a document called a "Declaration of Trust", or "Master Trust". This document establishes the existence of the Pooled Trust and allows for sub-accounts to be created for individual beneficiaries. The Joiner Agreement is the document used by each individual beneficiary to sign and complete in order to create their own sub-account within the Pooled Trust.
Assets of Trust sub-accounts are pooled, not shared. The Trust must maintain separate accounts for each beneficiary, but the assets of each account can be pooled for investment and management purposes. No beneficiary would ever be entitled to the funds or assets of another beneficiary's sub-account. The assets are pooled for management and investment purposes only.
Key Points
The Pooled Trust must be established and administered by a non-profit organization.
- There are no age restrictions to participate in a Pooled Trust.
- Each beneficiary has their own separate account, but assets are pooled for investment and management purposes.
- Trust assets are held by the Trustee and used to supplement the items and services provided by the beneficiary's public benefit programs.
- Upon the death of the beneficiary, remaining trust assets are first used to repay any State Medicaid liens, and the remaining balance is retained by the non-profit for the purpose of supporting other non-profits in the disabled community.
Proper administration of a Pooled Trust is essential to ensuring the beneficiary's public benefit eligibility is preserved. The Trustee must ensure the following rules and guidelines are met before every distribution:
- The distribution is for the sole benefit of the trust beneficiary.
- The distribution does not affect the beneficiary's public benefit programs and future eligibility.
- The distribution is a wise financial decision based on the goals outlined in the trust document.
For more information or questions about The Directed Benefits Foundation, Inc. Pooled Trust, please read the Joinder Agreement, or contact our team to schedule a free consultation.
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Learn more about our Pooled Trust by reviewing the Joinder Agreement and reach out to the DBF team to get started.
