Comprehensive Planning. Lifelong Solutions.

Pooled Trusts

October 24, 2008
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Oast & Hook certified elder law attorney Sandra Smith has been elected President of the Commonwealth Community Trust (CCT). Commonwealth Community Trust is one of several pooled trusts in Virginia.

What is a Pooled Trust?

A pooled trust is a trust established and administered by a non-profit organization. A separate account is established for each beneficiary of the trust, but for the purposes of investment and management of funds, the trust pools these accounts. For self-settled, or (d)(4)(C) pooled trusts, each subaccount is established by the person with a disability, a parent, grandparent, guardian, or a court, and the trust is funded with the assets of the person with a disability. The trust provides that, upon the death of the disabled beneficiary, if there are funds remaining in the beneficiary’s subaccount, the trust must pay to the state an amount up to the total amount of Medicaid assistance provided to the beneficiary, to the extent that the funds are not retained by the trust. The pooled trust should be irrevocable to avoid being treated as a resource.

Third party pooled trust subaccounts can also be established by family members who want to leave inheritances for persons with disabilities. Because these accounts are not funded with the assets of the person with a disability, they do not include a Medicaid payback provision. The remainder of this article will discuss the self-settled (d)(4)(C) pooled trust.

When is a (d)(4)(C) Pooled Trust used?

Elder law attorneys often assist persons with disabilities who receive public benefits, including Supplemental Security Income (SSI) and Medicaid, and then receive a modest inheritance, divorce settlement, or personal injury settlement or award. The receipt of these funds may make this person with special needs ineligible for public benefits. The person with special needs could purchase exempt resources, and then reapply for benefits; however, in many cases, there are no appropriate exempt resources for the person with special needs to purchase. This person would then be ineligible for public benefits until these funds are spent down. The person with special needs could give the funds away, however, the gifts would result in a period of ineligibility for SSI and Medicaid long-term care benefits. If under 65 years of age, the person with special needs could transfer the funds to a d(4)(A) Special Needs Trust (SNT); however, it is frequently difficult to find an appropriate trustee for this type of trust, and the administrative expenses may be high for a trust funded with $100,000 or less. A fourth alternative is to transfer the funds to a d(4)(C) (“Pooled Trust”) subaccount.

What are the advantages of a (d)(4)(C) Pooled Trust subaccount compared to a d(4)(A) SNT?

The person with a disability under age 65 may create his or her own pooled trust subaccount. Because the pooled trust is managed by a non-profit organization, it is not necessary to find a trustee who is willing to manage the trust. Additionally, because the trust funds are pooled for investment and management purposes, the administrative expenses of these trusts are frequently lower than those of a d(4)(A) SNT.

What are the disadvantages of a (d)(4)(C) Pooled Trust compared to a d(4)(A) SNT?

The d(4)(A) SNT is a trust managed by a trustee for the sole benefit of the disabled beneficiary. A family member or friend of the person with special needs may serve as the trustee, or a corporate or professional trustee might serve. The d(4)(A) SNT permits the trustee to customize the management and investment of the trust to meet the unique needs of the beneficiary.

Can you give me an example of the use of a (d)(4)(C) Pooled Trust?

Oast & Hook recently represented a client who needed nursing home care, and who was receiving SSI and Medicaid. This client received an inheritance from her mother of approximately $50,000. Oast & Hook assisted the client in establishing a pooled trust subaccount to hold the inherited funds. Because the client’s resources were less than $2,000 and there was no resulting period of ineligibility, the client continued to qualify for Medicaid long-term care assistance. The funds in her pooled trust subaccount may be used for goods and services for which SSI and Medicaid do not pay, such as dental care.

Where do you find a Pooled Trust in Virginia?

Self-settled and third-party trusts:

Commonwealth Community Trust
P.O. Box 29408
Richmond, Virginia 23242-0408
Tel: 888-241-6039
Website: www.commonwealthcommunitytrust.org

ARC of Northern Virginia
98 North Washington Street
Falls Church, Virginia 22040
Tel: 703-532-3214
Website: www.thearcofnova.org

Third-party trusts only:

Virginia Beach Community Trust
c/o Mental Retardation/Developmental Disabilities
Pembroke Six, Suite 218
Virginia Beach, Virginia 23462
Tel: 757-473-5223

Norfolk Community Trust
248 West Bute Street
Norfolk, Virginia 23510-1404
Tel: 757-441-5300
Website: www.norfolkcsb.org

How can I find out more about planning for the financial management and care of persons with disabilities?

You can visit the Oast & Hook website at www.oasthook.com or the Special Needs Alliance (SNA) website at www.specialneedsalliance.com. Oast & Hook is a Virginia member of the Special Needs Alliance, and certified elder law attorney Andrew Hook recently completed his term as SNA President. Oast & Hook also makes presentations about pooled trusts, special needs trusts, and other elder law issues to organizations and groups. If you would like for an Oast & Hook attorney to make a presentation to your organization, or if there is a subject that you would like to see as the subject of an article in this newsletter, then please phone Jennifer Lantz at 757-399-7506

Ask Allie

O&H: Allie, last month, you gave your readers some tips on saving money on pet care without skipping the essentials. Do you have any more tips on this subject?

Allie: Yes, I sure do. Pet families can work with their veterinarian to cut costs. Some studies have shown that some vaccinations are not necessary annually for most dogs and cats, but yearly vet checks are still important. “Well-pet exams” (annually while pets are young, more frequently for older pets) can catch problems when they are small and before they become more expensive to treat. These exams also provide an opportunity to make sure your pet gets proper parasite control. If your pet needs a medication, see if your vet will write you a prescription instead of having the vet fill it. You may be able to save on prescriptions by comparison shopping at local pharmacies. You can also ask if your vet offers discounts for multiple pets, senior citizens, and promotions, such as Dental Health Month. If your pet becomes sick, be sure to discuss all of the available options. There may be less expensive but equally effective options. Even though I don’t like to go visit the vet, I’m glad my family at Oast & Hook watches me carefully and makes sure I get the care I need.

paw

Please feel free to e-mail your pet and animal-related questions to Allie at:allie@oasthook.com .

Distribution of This Newsletter

Oast & Hook encourages you to share this newsletter with anyone who is interested in issues pertaining to the elderly, the disabled and their advocates. The information in this newsletter may be copied and distributed, without charge and without permission, but with appropriate citation to Oast & Hook, P.C. If you are interested in a free subscription to theOast & Hook News, then please e-mail us at mail@oasthook.com , telephone us at 757-399-7506, or fax us at 757-397-1267.

This newsletter is not intended as a substitute for legal counsel. While every precaution has been taken to make this newsletter accurate, we assume no responsibility for errors, omissions, or damages resulting from the use of the information in this newsletter.

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