POOLED SPECIAL NEEDS TRUSTS

A pooled SNT (pooled SNT) is administered by a nonprofit organization. Most pooled trusts organizations are local, but there are a number of larger pooled trusts that operate on a national level. In Massachusetts, we currently use The Arc of Bristol County, and in other states we use Secured Futures . The nonprofit organization usually acts as Trustee but sometimes they contract with another entity to be the fiduciary. The pooled trust organization makes decisions on how funds from the trust are disbursed and who manages and invests the trust funds, as well as fulfills reporting requirements to government agencies. But they do this on a liberal basis, since it is the beneficiary’s money. They also stay abreast of changing regulations such as the Social Security Administration’s Program Operations Manual Systems (POMS) and the various state Medicaid policies in order that benefits are not jeopardized.

The client’s money is “pooled” with others for investment purposes and an accounting is maintained in each beneficiary’s sub-account. Pooling funds provides for greater investment opportunities and lower administrative fees. All earnings based on a beneficiary’s share of the principal are allocated to each beneficiary’s sub-account. Regular financial statements are provided to the beneficiary.

For pooled SNTs, the enrollment and administrative fees are lower than professional for-profit trustees. Management fees can be as low as one percent or slightly lower on an annual basis. Funding requirements are also low given the nonprofit status of the pooled trust organization. For example, it is not unusual for a bank or financial services firm to require a minimum of $350,000 to $750,00 to fund a stand-alone SNT. Pooled SNT funding requirements can be as low as $5,000 or less. While the minimum amount required to fund the trust is small, pooled trust organizations can serve beneficiaries with accounts that vary in size, from those with modest funds to those with considerable wealth.

A self-settled SNT is funded with the disabled individual’s own money. The source of funding varies greatly among beneficiaries: accumulated assets of their own, a litigation settlement or award, an inheritance left directly to the beneficiary, worker’s compensation award, excess Social Security, or an award of marital property or spousal support. A self-funded pooled SNT is irrevocable.

In some states, (not Mass.) there is a penalty for transfer of assets into a pooled SNT for individuals who are 65 years or older and are receiving Long-Term Care Medicaid Assistance. Telephone me for your particular state’s rules Pooled trust administrators are knowledgeable about the Medicaid rules for a particular state. If you wish to actually read the federal law, you can go to the Omnibus Reconciliation Act of 1993 (OBRA ‘93) at 42 U.S.C. § 1396(d)(4)(c).

Remainder Policy

What happens to the remainder – the funds that remain in the pooled trust upon the death of the beneficiary – Some pooled trusts retain as much as 25% of the balance, while others retain nothing at all. .

For beneficiaries of the pooled trust who receive Medicaid, most states (including Mass.) have a provision to pay back Medicaid for medical claims paid on behalf of the beneficiary. Each state’s rules vary, so it is important to keep abreast of the rules governing Medicaid payback by state. Then, and only then do heirs receive anything; this is not a trust for heirs, it is for the injured and disabled.

Setting up a Pooled SNT

Each person joins the pool by completing a Joinder Agreement assisted by me. The Trust Agreement allows the nonprofit organization to administer the trusts under its the umbrella.

It is critical that the trust administrator acts prudently when making disbursement decisions and is knowledgeable about the complicated and changing rules governing SSI and Medicaid to ensure that the disbursements from the trust do not jeopardize these benefits. As such, disbursements made from the trust can pay for important and often vital expenditures such as eye glasses, dental care, hearing aids, assistive devices and technology, caretaker costs, furniture, clothing, dental care, education, recreation, travel and transportation.

We have compiled a great list of items the trust can supply the client, as well as a list of disallowable items. You can view them and print them out by going to www.attorneythomasrmullen.com and hitting the big red button marked FREE TRUST GUIDE.