A pooled trust is a trust where the assets of multiple disabled individuals are held in one single Trust, which includes an individual account for each disabled individual participating in the Trust. These trusts are similar to the Special Needs Trusts discussed on our website because they are both limited to individuals with disabilities, however a distinction between the two is with a Pooled Trust there is no age requirement. Therefore disabled individuals of any age can participate in a Pooled Trust. The individual accounts of the Trust are generally funded by the disabled person, his or her parents, grandparents or other family members or legal guardian. The Pooled Trust is managed by a non-profit organization. Generally, upon the death of the disabled individual, any remaining assets will be repaid to the government program (ie. Medicaid), which paid for services for that individual throughout his or her life. However, if you elect to have the remaining assets stay in the Trust after the disabled individuals death, the pay-back requirement can be avoided. The Pooled Trust is ideal for the family who would like to see the assets that remain after the death of the disabled individual go to the other beneficiaries of the non-profit organization, rather than the government.

The other day at the ice rink I was watching my five year old fall repeatedly while attempting to “hockey stop” on his left foot. One of the other parents approached with a hesitant look and asked “you are a lawyer, aren’t you?” After I told her that I was a lawyer, she said that her family had a problem and she wondered if I might be able to point them in the right direction. One of her brothers was disabled and required extensive care. Her parents were aging and it was becoming a family concern about how they were going to make sure their brother continued to receive the level of care that he needed.

I told her that it sounded like the family needed to look into a Special Needs Trust (“SNT”). The SNT is designed to allow parents (or anyone that cares for disabled individual) to set aside money for the care of their disabled loved ones while still allowing the disabled loved one to remain eligible for public assistance. Essentially the family places whatever amount they deem appropriate into a trust for the benefit of the disabled person. That trust is then managed by a trustee who distributes the assets for the benefit of the disabled loved one. Obviously it is very important to carefully consider who you select as trustee given the important nature of their role in your disabled loved ones care.

There are rules and regulations that govern the establishment of these trusts. Following those rules and regulations is critical to maintaining the disabled person’s eligibility for public assistance. By placing the assets into a properly written trust those assets do not count toward the resource limits in determining a disabled person’s eligibility for public assistance. Additionally, the trustee is able to distribute a limited amount of money from the trust for things such as food, clothing and/or shelter without reducing the disabled person’s public assistance.

In some cases, funding the SNT can be problematic because their simply may not be sufficient assets available to cover all of the care required. Often times the family members have been providing care for their disabled loved one and that care will need to be paid for after their passing. In that instance many families will use life insurance as a means of paying a smaller amount during their life to set aside a sufficient amount to care for their disabled loved ones upon their death.

When you are concerned about a disabled loved one receiving the same level of care after their primary caregivers are no longer able to provide such assistance, the SNT can be a good tool.

An article in the local paper reminded me of the frailty with which each of us goes through life. An otherwise seemingly healthy young adult from our area was stricken in the prime of life. After working he came home to settle in and enjoy the baseball game with his roommate and brother. With no warning signs he began experiencing problems and eventually was taken to the hospital. In short order he was airlifted to a trauma center where it was determined that he had an aneurism burst and had yet another aneurism that required an operation. At this point it is not clear how much damage the initial aneurism bursting may have done. What does appear clear is that extensive therapy will be required under the best of circumstances and the young man does not have insurance to pay for any of it.

Stories such as this can leave a family devastated both emotionally and financially. In instances where a family member is going to have special needs, a special needs trust may be the vehicle to allow your loved one to receive the care they need and deserve. There are two basic forms a special needs trust can take. A first party special needs trust is where the individual with special needs places their assets into a trust so that they can qualify for benefits yet retain their assets. There is also a third party special needs trust where a family member or loved one of someone with special needs can place assets into a trust to provide for their care, but still allow them to be eligible for government benefits. One thing to keep in mind is that these trusts are two separate and distinct trusts. The assets being placed into the trust by the individual with special needs and a third party should never be combined or comingled, as doing so can jeopardize the very goals of the trust.

Parents of special needs children know that they need to plan ahead. Depending on what the child’s needs are, that child may live at home and require a caretaker for the rest of his life. What that means is that parents of special needs children need to plan not only for the immediate and long-term future—including retirement—but also to provide for the care of their special needs child after they (the parents) have passed away.

Such comprehensive planning, with no real end in sight, can be a huge challenge, as Larry and Patti Altman, parents of a son with spina bifida, well know. As this article by Kara McGuire portrays, the Altmans have been diligent about planning for their own future, the future of their special needs son Josh, and the futures of their other two sons Zach and Max. Although they have always had to take the initiative, the Altmans have not been without help; including the help of an attorney in creating a special needs trust to ensure that Josh’s ability to receive government assistance will never be jeopardized.

The Altmans taken all of the right steps, but the planning and thinking ahead still continues, and may continue indefinitely. Says Altman, “Parents of special-needs children think about their mortality more than parents that don’t have a special-needs child because you do so much for that child and you wonder ‘Who would do this stuff if I’m not here?’ “

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