If you have a loved one with a disability and wish to provide for the individual without jeopardizing his/her access to vital government benefits – Medicaid or SSI, for example – you could set up an individual Special Needs Trust. There is also another option: participating in a Pooled Trust.
With either arrangement, the beneficiary does not have direct control over the funds, and there are strict rules dictating the usage of the funds. The funds are deemed “not available” to the beneficiary for Medicaid and SSI purposes, and therefore are not counted when determining the beneficiary’s eligibility for benefits.
How a Special Needs Trust and Pooled Trust differ
Unlike an individual Special Needs Trust, a Pooled Trust contains funds that benefit many beneficiaries. When you put funds for your loved one into a pooled trust, you are contributing to a kind of superfund that other families contribute to as well. Pooled trusts are always operated by a nonprofit entity.
Advantages of a Pooled Trust
The advantages of a Pooled Trust may include:
- Reduced administrative fees.
- A better rate of return.
- Access to professional financial management.
- Access to professional legal management familiar with the rules governing disbursement of funds, thus ensuring your loved one’s access to public benefits is not jeopardized.
- If there are limited funds, creating an individual Special Needs Trust can be economically impractical, given the costs of setting it up and maintaining it. A pooled trust can be a cost-effective way to set aside funds for a special needs individual.
One potential disadvantage of a Pooled Trust
However, a pooled trust has one potential disadvantage: When the beneficiary passes away, any funds remaining in the pooled trust will not be returned to the family. The funds remain in the pooled trust, to be used by the non-profit entity for the benefit of all the other beneficiaries. This is not the case with an individual Special Needs Trust, which is established specifically for the benefit of one special needs person, using someone else’s money.
For more information on the Karp Law Firm’s Special Needs Trust, click here.
For information on Pooled Trusts, contact one of the several Florida non-profits that handle them. Below is a partial list: