Original post from the HOOK Law Center:
by Elizabeth Q. Boehmcke, Esq.
If you have a special needs child or if a loved one has an accident that leaves him or her disabled, you may well have been advised to consider the creation of a special needs trust for the benefit of the person with special needs. However, not every family can afford to create a special needs trust on its own or has the wherewithal to properly administer or monitor a special needs trust. Due to the many issues confronting the trustee of a special needs trust designed to protect the government benefits of the special needs individual, administering a special needs trust can be intimidating for many and a professional trustee may well be advised. Unfortunately, professional help can be quite costly. Nonetheless, there is an alternative that should be considered for such families: a pooled special needs trust.
A pooled special needs trust is created and administered by a non-profit group with the goal of preserving the disabled individual’s access to government benefits and improving the disabled individual’s quality of life. The non-profit group administers each individual’s subaccount pursuant to the “Joinder Agreement” which sets out the terms of the special needs trust. The subaccounts of all the disabled individuals are “pooled” together to maximize returns and minimize costs of administration; however, each individual subaccount is separate from the rest and is solely for the benefit of the named individual. Families are able to avoid the costs of creating their own individual special needs trusts and still reap the benefits of professional management by a trustee who specializes in special needs trusts.
A pooled special needs trust can be a first-party trust in which the assets of the disabled individual are held in trust or it can be a third-party trust in which the assets of someone else, such as a parent or grandparent, are held in trust. A pooled special needs trust can be a good vehicle for an inheritance in excess of the $14,000 that can currently be invested in an ABLE account or for a disabled individual with mental capacity who has no living parent, grandparent or guardian to create a standalone special needs trust (under current law, a standalone self-settled special needs trust that is not a pooled trust must be created by a parent, grandparent, guardian or a court). A pooled special needs trust can also be named as a beneficiary under a Will or Trust agreement if the Joinder Agreement is executed during the lifetime of the decedent. Finally, a pooled special needs trust should be considered for assets of any size where the family does not have the time, ability or manpower to understand and master the intricacies of public benefits laws in order to make sure that distributions from the trust do not jeopardize the disabled individual’s eligibility for government benefits.
In any given state, there may be multiple non-profit groups which administer pooled special needs trusts. It is important that anyone considering a pooled special needs trust investigate the possibilities as they will vary, among other things, in costs, administration practices and whether they provide trusts for both first party and third party trusts. In addition, some non-profit groups retain all or some of the remainder of the pooled special needs trust subaccounts after the death of the beneficiary while others do not. The attorneys at the Hook Law Center who have worked in this area for many years can assist you in finding an appropriate pooled special needs trust provider and in working with that provider to meet your specific needs.
Working with a knowledgeable attorney is important because, in addition to providing advice about how to choose an appropriate provider, we can also assist you with making sure that the portion of the Joinder Agreement which sets out certain goals and directions for the trustee in administering the trust along with the section which designates how the funds are to be distributed upon the death of the beneficiary are properly prepared. In addition, we can ensure that your estate planning documents and beneficiary designations reference the pooled special needs trust as appropriate to implement your estate plan. The attorneys at the Hook Law Center are sensitive to the issues confronting disabled individuals and their families, and we work hard to match each client with an appropriate and cost-effective solution to the issues confronting their unique situation.