Pooled Trusts

 

1st Party Pooled Trusts

  • A 1st Party Pooled Trust – also referred to as a “self-settled” or “(d)(4)(c)” Trust – is funded with the assets owned by the Grantor (person affected with a disability).
  • It may be established to protect current or future means-tested government benefits if an individual is about to receive a settlement, inheritance or other monies that will bring his or her countable assets to more than $2,000.
  • Unless these funds are sheltered in a Trust or spent down by purchasing exempt resources, the beneficiary would lose benefits and be required to pay medical bills and other expenses from the assets until those assets were under the $2,000 limit.
  • If the trust is created properly, adhering to strict government rules, assets can be used to benefit the person with special needs without jeopardizing eligibility for government benefits.

Benefits of a 1st Party Pooled Trust

  • A Sub-Trust Account is set up for each Grantor (the beneficiary who has a disability).
  • The money in each Sub-Trust Account is “pooled” together for investment and administrative purposes.
  • The Trustee (PLAN of Arizona) keeps accurate records of each sub-account through our sub-trust accounting platform and makes distributions from an individual sub-account for the beneficiary.
  • Each sub-account will receive investment income, and pay investment expense, according to the percentage each sub-account represents as part of the pool

Requirements for a 1st Party Pooled Trust

  • The Trust must be administered by a non-profit organization.
  • All distributions must be made at the sole discretion of the Trustee. Funds cannot be made available or accessible to the Beneficiary.
  • The funds are to be used to “supplement, not supplant” any government benefits. They generally cannot be used for food or shelter, or for anything that can be used to obtain food or shelter.
  • The Trust must contain specific language stating that any remainder, after the death of the Beneficiary, will be paid back to the State Medicaid Agency, to the extent that it is not retained by the Pooled Trust.

 

3rd Party Pooled Trusts

A 3rd Party Pooled Trust is a vehicle through which family members and friends can provide “inherited” money for the benefit of an individual with special needs without jeopardizing their eligibility for means-tested benefits such as Supplemental Security Income (SSI) and Medical Assistance.

Benefits of a 3rd Party Pooled Trust

  • $5,000 minimum deposit
  • Can be established by any third party (usually parents) during their lifetime or deferred until funds are distributed under an estate plan.
  • Other family and friends may also contribute to it
  • Protected from creditors and lien holders
  • Grantor may choose the remainder beneficiaries

Requirements for 3rd Party Pooled Trust

  • The Trust must be administered by a non-profit organization.
  • All distributions must be made at the sole discretion of the Trustee. Funds cannot be made available or accessible to the Beneficiary.
  • The funds are to be used to “supplement not supplant” any government benefits. They generally cannot be used for food or shelter, or for anything that can be used to obtain food or shelter.

 

Individual Trusts

 

Individual Trusts (Private Trust)

PLAN of Arizona can become the Trustee, Successor Trustee or Trust Advisor of an existing 1st or 3rd Party Trust. PLAN will hold, protect and administer money (from an inheritance, settlement or other source) for the individual with a disability in a professional, caring and cost-effective manner.

  • Individual Trusts are recommended for Trusts with a balance in excess of $500,000.00 or if the Trust will hold real estate.
  • PLAN can work with existing Bank Trust Departments and Investment Managers to make recommendations related to the SNT.  Or PLAN can become Trustee and work with the existing Investment Manager so they can focus on the investments while we use our expertise to help maintain the Beneficiary’s public benefits such as SSI and Medicaid. We can also assist a family member who wants to act as Trustee by advising them on an as needed basis.
  • PLAN will communicate with the Beneficiaries regarding the terms of the Trust and will make decisions regarding discretionary distributions to Beneficiaries.