Pooled Trusts

What is a Pooled Trust?

A pooled trust is a trust established and administered by a non-profit organization.  A separate account is established for each beneficiary of the trust, but for the purposes of investment and management of funds, the trust pools these accounts.  Each subaccount is established by the person with a disability, a parent, grandparent, guardian, or a court.  The trust provides that, upon the death of the disabled beneficiary, to the extent any funds remain in the beneficiary’s subaccount, the trust must pay to the state the amount remaining up to the amount equal to the total amount of Medicaid assistance provided to the beneficiary.  The pooled trust should be irrevocable to avoid being treated as a resource.

When is a Pooled Trust used?

Elder law attorneys often assist persons with disabilities who receive public benefits, including Supplemental Security Income (SSI) and Medicaid, and then receive a modest inheritance, divorce settlement, or personal injury settlement or award.  These funds may make this disabled person ineligible for public benefits.  The disabled person could purchase exempt resources, and then reapply for benefits; however, in many cases, there are no appropriate exempt resources for the disabled person to purchase.  This person would then be ineligible for public benefits until these funds are spent down.  The disabled person could give the funds away, however, the gifts would result in a period of ineligibility for SSI and Medicaid long-term care benefits.  If under 65 years of age, the disabled person could transfer the funds to a d(4)(A) Special Needs Trust (SNT); however, it is frequently difficult to find an appropriate trustee for this type of trust, and the administrative expenses may be high for a trust funded with $100,000 or less.  A fourth alternative is to transfer the funds to a d(4)(C) (“Pooled Trust”) subaccount.

What are the advantages of a Pooled Trust subaccount compared to a d(4)(A) SNT?

The person with a disability may create his or her own pooled trust subaccount. Because the pooled trust is managed by a non-profit organization, it is not necessary to find a trustee who is willing to manage the trust.   Additionally, because the pooled trust funds are pooled for investment and management purposes, the administrative expenses of these trusts are frequently lower than those of a d(4)(A) SNT.

What are the disadvantages of a Pooled Trust compared to a d(4)(A) SNT?

The d(4)(A) SNT is a trust managed by a trustee for the sole benefit of the disabled beneficiary. A family member or friend of the disabled person may serve as the trustee, or a corporate or professional trustee might serve.  The d(4)(A) SNT permits the trustee to customize the management and investment of the trust to meet the unique needs of the beneficiary.

Can you give me an example of the use of a Pooled Trust?

Oast & Hook recently represented a client who needed nursing home care, and who was receiving SSI and Medicaid.  This client received an inheritance from her mother of approximately $50,000.  Oast & Hook assisted the client in establishing a pooled trust subaccount to hold the inherited funds.  Because the client’s resources were less than $2,000 and there was no resulting period of ineligibility, the client continued to qualify for Medicaid long-term care assistance.  The funds in her pooled trust subaccount may be used for goods and services for which SSI and Medicaid do not pay, such as dental care.

Andrew H. Hook
Oast & Hook
www.oasthook.com
Offices in Virginia Beach, Virgina and Portsmouth, Virginia