Executors Prepare Themselves for Pooled Trust Administration

When your loved one passes away, administering his or her estate may also involve administering a trust. Most people are inexperienced when it comes to recognizing the different types of trusts and understanding how each one works. One type of trust that you may come across when a person dies is known as a pooled trust. These trusts are used in limited situations involving a person with a disability.

An Overview of Pooled Trusts

Why do people with disabilities use special needs trusts? One reason is because a person with a disability may come into money at some point in life that could jeopardize the ability to continue qualifying for benefits. For example, the person with the disability may receive an inheritance, money from a divorce settlement, or a settlement from a personal injury claim. To keep this new-found money from impacting the disabled person’s right to receive benefits, pooled trusts are sometimes used. The following is a helpful overview about this type of trust:

  1. The pooled trust is established and administered by a non-profit organization.
  2. Pooled trusts are often used for people with disabilities who receive public benefits. Examples include Supplemental Security Income or Medicaid.
  3. A pooled trust is an irrevocable trust so that it is not treated as a resource when a person with a disability is applying for government benefits.
  4. A separate account is established for each beneficiary of the trust.
  5. Each account is created by the person with the disability, the person’s parent, the person’s grandparent, the person’s guardian, or the court.
  6. Each account is funded with the assets of the person with the disability.
  7. The accounts are then pooled together for the purposes of investment and management of the funds.
  8. When the beneficiary passes away, the trustee may have to pay the state an amount that equals the total amount of Medicaid assistance that was provided to the beneficiary, depending on whether the trust remains in existence and state law.

The good news is that, as the executor of the estate, you may not need to worry about handling much of the administration that pertains to the pooled trust after your loved one dies. If the trust is of a different type, however, you may have additional tasks that lay ahead. For example, the trustee of a third party special needs trust has different responsibilities. We encourage you to contact us today at (888) 443-6590 for more information about the type of estate you are facing and how best to proceed.

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Scott Grossman

Scott Grossman

Attorney

The Grossman Law Firm, APC · 525 B Street, Suite 1500, San Diego, CA 92101 · (951) 523-8307