Trust Matters  

What Is Supplemental Needs Pooled Trusts?

No, I’m not inviting you to a swim party in Western Pennsylvania in December… the “Pool” I am inviting you to jump into is the Pool(ed) Trust Fund that accepts and invests the funds deposited for the benefit of the beneficiaries of RCFS Supplemental Needs Pooled Trusts.

Supplemental Needs Pooled Trusts were created in 1993 by statutes [42 USC § 1396 p (d)(4)(C) and 42 USC § 1917 (d)(4)(A)]. These statutes permit assets which would otherwise disqualify an individual from receiving or becoming eligible for Supplemental Security Income (SSI), or Medical Assistance (MA, Medicaid) to be placed in a trust and not render the individual ineligible. The trust funds can then be used to supplement the benefits received from SSI and/or MA, or any other asset-based government benefit. Since these trusts were established by statue, they must meet specific criteria:

  1. The trust must be established and maintained by a non-profit organization.
  2. Assets are pooled for investment purposes but accounted for in separate sub-accounts.
  3. The account is for the benefit of an individual with a disability as defined in 42 USC § 1382 c(a)(3).
  4. The trust can be established by the individual (beneficiary), a parent, grandparent, legal
    guardian, or a court, all of whom are permitted to act as Settlor.
  5. At the time of the beneficiary’s death, to the extent that funds are not retained by the
    trust, any remaining funds are first used to pay back a state, or states that have provided
    Medical Assistance benefits received by the beneficiary.

The Benefits of a Supplemental Needs Pooled Trust

What makes establishing a Pooled Trust a great Christmas gift is the benefit to giver and beneficiary alike. The year-end tax advantage that may be useful to the giver and the fact that the beneficiary can save and protect those newly received assets in their sub-account in the pooled trust to supplement their valuable government supports. Additionally, RCFS encourages Pooled Trusts to be established even though funding may not be immediately available. This is a great financial planning tool that is then immediately available to accept any excess assets that could render an individual ineligible for benefits. •
Richard Howard

About the author: Rich Howard has been the President of River Communities Fiduciary Services since its inception in 2016.

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