UNDERSTANDING A POOLED TRUST IN CALIFORNIA

A pooled trust is established and managed by a non-profit organization. The pooled trust receives funding from many different, unrelated beneficiaries; the funds are earmarked into subaccounts for use by individual beneficiaries, however, all contributions are “pooled” together to be invested and managed as part of a much larger trust account. This trust crowd sharing model, as well as the professional, non-profit trustee, keeps the administrative costs down for the individuals funding the trust.

Advantages of a d4c Pooled Trust

• Disabled clients under age 65 can qualify for funds in the trust

• Professional trustees who work for the non-profit act as trustees, eliminating the need to find a suitable trustee and compensate them for their time

• Protects funds for expenses not covered by Medicaid or SSI like alternative treatments or dental care

• Allows a person to remain in their home when their income and assets are above limits for a program

• Fails to qualify for the Medicaid Waiver because of income and assets exceeding the cap

• Protects someone receiving services through Medicaid who receives a windfall e.g. an inheritance

Here’s an example of how an individual may utilize a d4c pooled trust to retain assets and qualify for Medicaid:

A 63-year-old client, Linda, has a permanent disability which qualifies her for SSI and Medicaid. Her mother dies with a will, leaving Linda over $60,000. Without proper planning, this windfall could prevent Linda from continuing to receive her much needed SSI and Medicaid. Gifting the assets away or spending them down would render her ineligible for a potentially damaging period of time.

By placing the inheritance into a d4c pooled trust, Linda can still receive the services she needs to maintain a quality of life, while still receiving benefits from the inheritance. When funds are transferred into a d4c pooled trust, Linda would remain below the threshold for SSI and Medicaid.

The money that was placed in the d4c pooled trust could be used to pay for items that Medicaid and SSI do not cover. The administrators of a pooled trust are well-informed about allowable expenditures and maintain control over the distributions.

What happens when the client dies?

Some states require any remaining funds to be paid to the state as reimbursement for the benefits the individual received for their care while alive. Other states allow the non-profit that runs the pooled trust to keep the funds to cover the costs associated with the administration.

Please contact our Redlands, CA office today at (909) 888-7100 to schedule an appointment to discuss pooled trust options as well as other estate planning tools that may be beneficial for you and your family.