When is it appropriate to choose a pooled supplemental needs trust instead of an individual special needs trust?

A pooled trust has many of the same purposes as an individual supplemental needs trust.  A pooled trust is established to provide for a beneficiaries’ supplemental needs without jeopardizing the disabled person’s government benefits.

Funds that are held in a pooled trust are available to pay for items not covered by Medicaid and SSI, including certain medical benefits.

What is a pooled trust?

The most important feature of a pooled trust is that it must be run by a not-for-profit organization. Although the assets of disabled persons are “pooled” for the purposes of investment, separate accounts are maintained for each individual beneficiary.

The pooled trust divides any earnings from its investments among the individual sub-accounts according to the percentage of assets each individual sub-account contains.

Additionally, unlike an individual special/supplemental needs trust, a pooled trust can be established for a disabled person over the age of 65.  However, any transfer of funds to a pooled trust by an individual over the age of 65 is subject to the Medicaid transfer rules.

The pooled trust is administered by a trustee who is very familiar with all the different rules and regulations of the different government benefit programs.  The trust handles requests from the beneficiary for disbursements, maintains records and reports to the various agencies that might be affected by those disbursements, and prepares tax reports.

A pooled trust offers professional management and investment by working closely with a bank or other financial institution.  Some pooled trusts coordinate care for their beneficiaries, and then pass that cost along to the beneficiary through the sub-account of the disabled person.

What types of pooled trusts are there?

  • Third party–these trusts are set up with the assets of the parents or others that do not belong to the disabled person.  The state Medicaid does not have to be reimbursed or paid back, instead the remainder can go to heirs or other organizations.  Usually the pooled trust keeps a certain percentage for the benefit of other disabled persons.
  • Self settled–This is a payback trust, much the same way an individual SNT.  However, instead of payback to Medicaid after the disabled beneficiary dies, any remaining assets are kept by the trust for the benefit of other disabled persons.
  • Income only–this is a special type of pooled trust whereby a Medicaid applicant who earns more than the allowable income can put the excess income in pooled supplemental needs trust in order to qualify for Medicaid.

When Would I Choose to Use a Pooled Trust?

It is worth considering a pooled trust instead of an individual special needs trust if the amount in the trust is small so that it would be difficult or impossible to find a corporate trustee to help with the management of the trust.  Or perhaps no one is able or willing to serve as trustee of yours or your child’s trust.  Perhaps you have no heirs to leave the trust to after the disabled person dies and you would like to see the remainder used towards other disabled persons.  These are all great reasons to use a pooled trust instead of an individual supplemental needs trust.

How Can I Help?

There are a number of different pooled trusts in New York with different fee structures and different abilities to personally handle your needs.  Please call me if you are interested in learning more about the various pooled trusts and why this might be a good option for your supplemental needs in order to become or to stay eligible for public benefits.

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