A Little Background: 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 and regulations permit assets, which would otherwise disqualify an individual from receiving SSI (Supplemental Security Income), or Medical Assistance (some states use MA, Medicaid, or have other names for this benefit), to be placed in a trust account and not render the individual ineligible. The trust accounts can then be used to supplement the funds and services received from SSI and/or MA. Since these trusts were established by statue, they must meet very specific criteria:
- The trust must be established and maintained by a non-profit organization.
- Assets are pooled for investment purposes but accounted for in separate sub-accounts.
- The account is for the benefit of an individual with a disability as defined in 42 USC § 1382 c(a)(3).
- 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.
- 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.
They Are Supplemental
A supplemental needs pooled trust can be self-established as well as self-funded. The individual can transfer assets that would otherwise make them ineligible for government benefits into a sub-account that is opened in a pooled trust. (There is no look-back period on the transfer of an individual’s assets into a pooled trust, and assets placed in a pooled trust are no longer considered available assets that can negatively affect an individual’s eligibility to receive government benefits.) The funds in the pooled trust can then be used throughout the beneficiary’s life to supplement governmental supports. The trustee for the pooled trust must exercise extreme caution that the funds are never spent in any way that could reduce or eliminate the individual’s eligibility. Basically, the trustee can never spend funds for any supports that a government benefit supplies. Due to the requirements of the governing statutes, only a non-profit organization can act as the trustee of a supplemental needs pooled trust account.
They Are Pooled
Since the assets must be pooled, this type of trust has pre-approved form documents. This should substantially reduce the cost of establishing a trust for a beneficiary, as well as reduce any fees associated with the administration and maintenance of the trust. Usually, there is a Joinder Agreement which the Settlor (person establishing the trust) completes. There is also a standard Master Trust Agreement that contains the legal language that complies with any and all governing statutes and describes how the trust is set up as well as how the trust will be administered. Once the Settlor has completed, dated and signed the Joinder Agreement, read, dated and signed the Master Trust Agreement, and the Agreements have been signed by an authorized representative of the pooled trust, funds are transferred into a sub-account and are appropriately sheltered for the beneficiary.
A Financial Planning Tool
While this type of trust is often created in reaction to an individual with disabilities having received funds unexpectedly, River Community Fiduciary Services will accept Supplemental Pooled Trust Joinder/Master Trust Agreements that have been completed, dated, and signed, but are not immediately funded. This is a great financial planning tool that is immediately available to accept any and all excess assets that could render an individual ineligible.
At the time of a beneficiary’s death, a pooled trust may choose to retain up to 100% of any funds remaining (the residual) in the sub-account. It is possible that the pooled trust retains 100% of the residual amount and uses it for the benefit of disabled beneficiaries of this pooled trust; that the pooled trust retains nothing, or a small percentage of the funds, and/or that the state, or states, could be paid back for any MA benefits that were paid to the beneficiary’s benefit over their lifetime. If there are substantial enough funds remaining so that the MA benefits can be re-paid in full, any additionally remaining funds could be disbursed as the trust dictates.
Have questions?
Need Help?
Our team has extensive experience in trust administration, social services, and government benefits. We can help you preserve and manage your assets and find human services and supports.
Contact RCFS
Topics
Advance Health Care Directives
Education Trusts
Irrevocable Trusts
Long Term Care
Trust Funds
Substitute Decision Making
Supplemental Needs Payback Trusts
Medical Assistance
Guardianship
Special Needs Trust
Third Party Supplemental Needs Trusts
staff
Substitute Health Care Decision Maker
Health Care Representative
Medicaid
Financial Planning
Representative Payee
Health Care Agent (POA)
Supplemental Needs Pooled Trust
Estate Planning
Supplemental Security Income (SSI)
Terms of Use (Disclaimer):
The information and materials provided on this website, specifically “Trust Matters”, are intended for general informational purposes only and do not constitute legal, financial, or tax advice. Any content on this website should not be relied upon as a substitute for advice from a professional fiduciary or other qualified financial or legal professional….