Special needs planning and pooled trusts

If you have a loved one with special needs and are worried about their financial circumstances down the road, explore all of your options with respect to your estate plan. Sometimes, people fail to take key issues into consideration and their loved one loses critical government benefits that they count on due to a disability. Fortunately, special needs planning allows many families to bypass these hardships and there are various options on the table, such as pooled trusts.

First of all, it is important to understand the legal requirements associated with pooled trusts as well as the advantages of this strategy.

The characteristics of a pooled trust

According to the Social Security Administration, pooled trusts have a number of characteristics. For example, these trusts are managed by nonprofit associations and are set up for the sole benefit of an individual with a qualifying disability. Separate accounts are arranged for every beneficiary, but these trusts are pooled with respect to the management of funds. If a beneficiary dies, the remaining balance in his or her account is often retained by the charity or repaid to the state, in some instances.

The advantages of pooled trusts

Pooled trusts are very beneficial for those who have a family member with special needs. For starters, those who lack the resources to set up other types of trusts for their loved one with a disability are sometimes able to support their family member by establishing a pooled trust. Moreover, these trusts allow beneficiaries to receive assets from the trust and retain eligibility for key government programs such as Medicaid and SSI when they are drafted properly.

FindLaw Network