Special Needs Trusts - Advantages of a Pooled Trust

Special Needs Trusts - Advantages of a Pooled Trust

Illustration of a bank over a bluish purple background with the heading Get the Facts: Advantages of a Pooled trust

Advantages of a Pooled Trust

            Families that have a child or family member with special needs or disabilities now know that a Special Needs Trust should be set up as part of their estate plan.  Setting up a Third Party-Special Needs trust is essential if the individual with a disability is or may be eligible for means-tested government benefits. A properly set up Third Party Trust ensures that the funds left to the individual, whether through gift or inheritance, are not considered countable assets when applying for means tested benefits.   And of course, the assets in the trust are managed and protected by a trustee. 

            One of the issues that families often have is that they do not have someone that they feel comfortable in naming as the Trustee.  Some people feel that acting as a Trustee for a Special Needs Trust is a burden.  Sometimes parents feel that the only people they trust to both manage the money appropriately are the siblings of the individual with special needs.  And a sibling may very well be the right person for the job.  But sometimes taking on that responsibility creates stress on the sibling relationship.  Regardless of the reason for not having an appropriate trustee, many families are inclined to use a corporate trustee. 

            A wonderful option for people that avoids having to use an impersonal bank or trust company to take care of the funds is a Pooled Trust.  There are many different pooled trusts all over the country.  A pooled trust is essentially a master trust agreement, managed by a non-profit corporation, that allows individuals with disabilities to pool their money with the funds of other individuals with disabilities. A pooled trust is less expensive that using a corporate trustee because they are already set up to manage the funds and paying to have your own Special Needs Trust drawn up is unnecessary.  Also, because the assets of the individuals are invested together, there is a better return on the investment.  This often covers the cost of the services of the trust. 

            But the best advantage is that the staff of the pooled trust are adept at dealing with all types of individuals with disabilities and have a wealth of experience in properly managing the funds.  They know the rules for what can or cannot be paid.  They work directly with those clients with disabilities who can give input and they work toward as much autonomy for the client as possible.  And if the client does not have capacity, they will work with the family.  They encourage the family to appoint a trusted individual to be an advocate for the client.  This alleviates some of the burden on the family members while allowing them to help to create a better environment for their loved one. Certainly, one should do their due diligence in determining whether a particular pooled trust is best for them.  This may involve retaining an attorney who practices in the area of Special Needs as they often have had multiple interactions with the local pooled trusts.  And, of course, having a conversation with the director of the pooled trust or a member of their staff should give you an idea of whether they are responsive to your questions and have a professional demeanor. A pooled trust is just another tool in your toolbox.  But for families that struggle to find a trustee, they are a great option.

The best advantage is that the staff of the pooled trust are adept at dealing with all types of individuals with disabilities and have a wealth of experience in properly managing the funds. They work directly with those clients with disabilities who can give input and they work toward as much autonomy for the client as possible.

Leah Morabito