Pooled Special Needs Trusts: Preserving Assets for People with Special Needs

For families providing care and financial support for loved ones living with a disability, the thought of not being there can be overwhelming. Planning for the future is sometimes put aside to deal with the "here and now". But when an individual lives with a disability that can affect their ability to work or manage their finances, parents or caregivers must determine what assets, income, and other resources their child or adult family member with special needs will rely on in the future and who will help them to manage those resources.

A special needs trust is a tool that allows funds to be set aside for an individual with a disability to be used for supplemental needs that will improve their quality of life. Proper administration of a special needs trust can benefit an individual who needs assistance managing their finances and also ensures that the funds are available solely for their benefit.

Special consideration should be made for individuals receiving SSI and Medicaid benefits. In order to qualify for SSI and Medicaid, an individual cannot have more than $2,000 in cash assets. When an individual with a disability receives a sum of money from an inheritance, settlement due to an injury, social security back payment, monetary gift, or sale of an asset, those funds threaten the individual's eligibility for SSI and Medicaid benefits. However, funds that are placed in a special needs trust will not jeopardize these crucial benefits.

Estate planning attorneys, financial planners and case managers can give their perspectives on long-term financial planning that will best suit your particular situation. Once you are ready to establish a special needs trust, you must select a trustee. The trustee manages disbursements, invests the funds, reports to government agencies and keeps up with changing regulations. Because the regulations are complex and constantly changing, it is important to select a trustee that specializes in these types of trusts.

One option is a pooled special needs trust, which is established and administered by a nonprofit organization. A separate account is established for each Beneficiary, but the funds are "pooled" to provide greater investment opportunities and lower administrative expenses. Participating in a pooled special needs trust, such as those offered by Commonwealth Community Trust (CCT), can be an affordable and effective option for families and individuals looking to establish a special needs trust.

Karen Currie is a Trust Associate with Commonwealth Community Trust (CCT), a non-profit organization that administers third-party funded and self-funded pooled special needs trusts for individuals with disabilities.  For more information, call toll free at (888)241-6039, or visit: www.commonwealthcommunitytrust.org.