If you’re involved in estate planning and you have a loved one with special needs, you may want to learn more about a pooled special needs trust. This trust is administered by a nonprofit organization dedicated to managing funds for disabled individuals. This special type of trust has given special needs individuals the ability to control the funds in their estate since 2016. If you are a Washington, D.C., resident and want to know more about this type of trust, here is some important information.
More on pooled trusts
The funds in the trust are pooled together so that the money can be invested. This allows the trust to provide lower administrative fees and more potential for growth. During the estate planning process, you’ll learn that the funds in a pooled trust are used for goods and services that are designated for the trust beneficiary. The assets are not classified as countable resources like Medicaid and Supplemental Security Income. Pooled trusts can be third-party or first-party; there are no two pooled special needs trusts that are the same.
Pooled special needs trusts also come with remainder policies, which are an essential part of estate planning for an individual with special needs. The remainder policy is the predetermined method of distributing any remaining funds in the trust when the beneficiary passes away.
Before the remainder policy goes into effect, it is important to note that funds in the trust must be used solely for the beneficiary and that financial disbursements are made based on the beneficiary’s discretion. Medicaid must be paid once the beneficiary passes away.