A disabled elderly person may benefit from a particular kind of trust known as a self-settled Pooled Trust. This type of trust is created and funded by the elder with their own money. A pooled trust is a made up of a number of smaller sub-trusts that are typically "pooled" together to make up one larger or master trust, for management and investment purposes. A pooled trust is operated by a non-profit agency, which creates a separate account for the elderly person. The Trustee of the Pooled Trust spends and distributes the disabled elder's money in a way that is consistent with the purpose of the Trust, consistent with the federal law authorizing the use of a pooled trust, and that benefits the elder.
Establishing a pooled trust may be appropriate for a disabled elder as part of an individual's overall plan. The pooled trust may provide significant benefits in certain circumstances for those receiving, or going to receive, public benefits, such as Medicaid. For example, if an elder receives a modest inheritance or personal injury settlement, a pooled trust may be appropriate. Likewise, an individual applying for or receiving public benefits may be able to transfer funds to a pooled trust, depending on the circumstances. Before creating and funding such a pooled trust account, an elder should consult with an elder law attorney to determine whether such action is appropriate.
A pooled trust will provide a disabled elder with the benefit of a trustee to manage and distribute their funds in the Trust. It is often difficult to find a person or corporation to act as a trustee, unless the amount of money to be put into trust is very large. By creating a pooled trust account, the elder will have the benefit of a professional trustee to manage and distribute for their benefit. With a professional trustee to manage their money, the elder has someone distributing their funds in a way that may maintain their quality of life without disqualifying them from public benefits. It is also important to recognize that there are different pooled trust organizations, and each will have its own set of rules, and may differ as to the types of expenditures the Trustee will make on the elder's behalf.
No one should fund such a trust until they understand fully the costs and benefits of creating such a trust account. Different pooled trust agencies have different limits for how much money is needed to fund the Trust, as well as different on-going costs for annual Trust administration. Most pooled trusts also maintain a certain percentage of the account balance when the account holder dies, usually for charitable purposes. Each trust will repay the government for public benefits paid on behalf of the account holder. Finally, if there is money left in the account after these expenditures, the elder may designate beneficiaries, such as family members or friends, to receive any remaining funds. The beneficiaries of the trust will be paid directly by the trust, rather than having the payments go through probate.
During the elders' life, the funds in the account will be used in ways that benefit and maintain their quality of life. While the expenditures are made in the discretion of the Trustee, expenditures may be made for the elder's needs that are not otherwise covered by public benefits. Expenditures to benefit the elder (at the discretion of the Trustee) might include, but are not limited to, clothing, entertainment, home/room furnishings, haircuts/salon services, dental work not covered by public benefits, specially equipped vehicle to transport the elder, therapies not covered by public benefits, supplemental nursing care, and travel expenses to meet with family members. Before funding a pooled trust account, you should ask the agency for details about the type of expenditures the Trustee will consider making for you.
Deciding to use a pooled trust account often involves complex considerations. Before opening and funding a pooled trust, an elder should consider any impact transferring assets away will have on the elder's welfare. As always, transferring money should only be undertaken after very careful consideration of the elder's circumstances. If you are privately paying for nursing home care or expect to need nursing home care in the near future, or if you have received or expect to receive a settlement, you should consult with an elder law attorney to determine whether a pooled trust account should be part of your planning.
