Individuals are not the only ones who can create trust documents for the future management of funds. Under a pooled trust, a non-profit organization can establish and administer trust fund accounts on behalf of individuals who may be unable to manage their own financial assets. For many families, pooled trusts can present a way to give an inheritance to a loved one with a disability.
Creation of Pooled Trusts
Self-settled (d)(4)(C ) pooled trusts typically are created by a non-profit organization that will manage the assets and distribution of the funds. There is a subaccount for each individual funded by the assets of the person with a disability. By pooling the assets of the subaccounts, trust administrators engage in collective investment.
Some pooled trusts limit the type of assets that can be added to the trust. For example, real estate or other non-traditional investments such as fine art may not be owned by certain pooled trusts. Families who wish to pass these types of inheritances to loved ones with disabilities often instead create special needs trusts.
Advantages of Pooled Trusts
Many individuals with disabilities received public benefits such as Medicaid or Supplemental Security Income (SSI). Since many public benefits are dependent on an individual’s income level, the receipt of a large sum of money can put their eligibility to receive such benefits at risk. This can occur when an individual receives a large inheritance or any type of lawsuit settlement.
Funds received from a pooled trust will not affect the amount of public benefits received. Trust funds can be used for supplemental needs including the costs of entertainment, travel expenses, private pay care services, medical procedures uncovered by public insurance, and attorney fees.
Directors of pooled trusts generally have special knowledge of common disability issues. This can give families who enroll their loved ones in these types of trusts added confidence the financial needs of their loved ones will be handled with respect and understanding.
Disadvantages of Pooled Trusts
The costs associated with pooled trusts can be significant. In addition to setup fees, families can expect annual fees related to the administration of the trust typically based on a percentage of the subaccount’s assets. Inflexibility in the amount and timing of the distribution of the payments from a pooled trust also can be problematic.
Unlike in other trusts, if any funds remain in a subaccount at the time of the beneficiary’s death, that money will be reimbursed to the state up to the total amount of Medicaid assistance provided to the beneficiary. Any remaining funds may remain with the trust fund.
To determine if the use of a self-settled pool trust is an appropriate estate planning tool for your situation, contact an experienced estate planning attorney who can help in the decision making process.
Brooklyn Elder Law Lawyers at Korsinsky & Klein, LLP Handle Estate Planning Needs
If you have additional questions about whether joining a pooled trust is the right estate planning step for you or a family member, the experienced Brooklyn elder law lawyers at Korsinsky & Klein, LLP are here to help. Our dedicated elder law litigation attorneys handle a wide range of elder law issues including those relating to pooled trusts, executorships, guardianships, and durable powers of attorney. With offices conveniently located in Brooklyn, New York and Lakewood, New Jersey, we proudly serve senior citizens and their families throughout Manhattan, Long Island, and Westchester, New York. To schedule an initial consultation with an experienced Brooklyn elder law lawyer today, call us at 212-495-8133 or submit an online inquiry form.