What the Hell is a Pooled Trust: Part 2

December 26, 2016

In Part 1, Attorney Steven Rubin explained the basics of Pooled Trusts. This week, Attorney Franklin Drazen, certified as an Elder Law Attorney by the National Elder Law Foundation, explains the options available to Connecticut residents who want to participate in a Pooled Trust.

In August 2016, the “What the Hell is a Pooled Trust” blog post explained the basics of Pooled Trusts; what they are, how they work, and how trust funds are used. This follow-up article offers a closer look at Pooled Trust options for Connecticut residents and explains how the options vary.

Pooled Trusts in Connecticut

In 1993, Connecticut state legislature granted an organization called the Planned Lifetime Assistance Network (PLAN) the authority to act as trustee of Special Needs Trusts in the state. PLAN of Connecticut offers several different trust options depending on the beneficiary’s situation. It is effectively the only organization in the state that can administer a Special Needs Pooled Trust. PLAN is unlike any other trustee in Connecticut in that they accept trusts of any monetary amount and focus solely on special needs trust management.

It’s worth noting that Federal Medicaid law requires the use of a Pooled Trust established and administered by a charity. But unlike the rest of the country, Connecticut residents’ choices are effectively limited by statue to using PLAN of Connecticut.  

Benefits of a Pooled Trust

The PLAN Pooled Trust is the only trust in Connecticut that can be used by an individual over the age of 65 who has a disability. The PLAN Pooled Trust allows an individual with a disability to fund a trust account with his or her own assets, retain a lifetime benefit from those assets, and still qualify for government benefits like Medicaid and Supplemental Security Income (SSI). Many individuals using a Pooled Trust are depositing their excess income into the trust each month to qualify for benefit programs administered by the Department of Social Services. It’s inexpensive compared to the cost of setting up a Special Needs Trust for an individual. The administrative cost are generally modest in comparison. Funds in the Pooled Trust earn interest of dividend income.

Who Should Use the PLAN Pooled Trust?

The PLAN of Connecticut Pooled Trust is for a person of any age who has a disability (or for their family to set aside modest amounts of money for the disabled person:

  • Wants to stay in his/her home with home care services, but is over the asset or income limit for that program
  • Is told by the state that they do not qualify for a Medicaid Waiver program because their income/assets exceed the cap
  • Inherits money but is already receiving home care or long term care services through a Medicaid Waiver
  • Is in an assisted-living arrangement where the State of Connecticut provides the home-care portion of the cost
  • Would like to establish and fund his/her own trust, yet remain on benefits with money received from a windfall like an inheritance, accident, divorce or back payment from Social Security.

The PLAN Pooled Trust is also used when the amount to be set aside is relatively small because PLAN trust administration costs are usually lower than that of other trust options.

Is Creating a PLAN Pooled Trust Something You Can Do on Your Own?

We don’t advise it. This is not a do-it-yourself project. It’s extremely complicated.  PLAN of Connecticut partners with attorneys who work with individuals and families to participate in a Pooled Trust because the PLAN Pooled Trust is just one piece of a very complex puzzle. If you are a person with a disability or you are the primary caregiver for someone with disabilities, it’s vital to work with an experienced estate planning or elder law attorney who can help you develop the best course of action for your situation. Anyone with disabilities who is trying to qualify or preserve eligibility for public benefits while maximizing quality of life needs a comprehensive plan to make sure that all the pieces fit together.

Does the Beneficiary’s Age Matter?

Yes. If you are disabled, live in Connecticut, and under 65, things are fairly straight forward and you have options. However, if you’re disabled and over 65, you’re limited to participating in a Pooled Trust managed by Plan of Connecticut. It’s important to keep in mind that for someone over 65, a contribution to a Pooled Trust can be considered a transaction for less than fair value (i.e. a gift) resulting in a penalty period unless you have a well thought out plan for the money. This can be tricky so it’s important to get help from an attorney who works with this every day.

What Happens to the Money after the Beneficiary Dies?

According to federal regulations, upon the beneficiary’s death, any residual funds are either left to the PLAN Charitable Trust for the benefit of other individuals with disabilities, or paid back to the state that provided services as reimbursement.

Remember, if you do this wrong, you risk losing eligibility for public benefits. The professional you rely on needs to be able to design a plan that will satisfy the eligibility criteria for public benefits. The pieces must fit together and timing can be critical.

This is just the tip of the iceberg. The rules and the economics associated with public benefits and special needs trusts change without warning. The strategies we might employ today might not be effective in the future. That’s why it’s vital to get help from an experienced elder law attorney. Drazen Law Group attorneys deal with these situations every day. We have decades of experience and can help you determine whether participation in a Pooled Trust is right for your situation. Just give us a call at 203.877.7511.

 

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