How a Pooled Trust Protects Your Family

If your family member qualifies for Medicaid and SSI, how can they acquire additional income without being disqualified from these government programs? Find out how your family member can own additional assets without being disqualified.

Get peace of mind with a comprehensive estate plan

Trustpilot star rating bar
how a pooled trust protects your family

Contents

Updated on: February 14, 2023
Read time: 4 min

People with disabilities apply for programs such as Supplemental Security Income (SSI) from the Social Security Administration, and for Medicaid. In order to qualify for these benefits, the person must have a disability as well as a limited income. The disability extends to children as well as adults.

How a Pooled trust Protects Your Family

If, however, either a disabled child or adult has too much money in assets or income, they may not qualify for either SSI or for Medicaid. That's where pooled trusts and special needs trusts come in to protect your family member.

Pooled trusts

Pooled trusts, also sometimes known as community trusts, are one way for the disabled person to maintain their limited income while still qualifying for the government programs of SSI and Medicaid. These federal and state government programs are only available to people with a low income and with a designated disability. If their income exceeds the requirements of Medicaid and SSI, the disabled person cannot receive these benefits.

A pooled trust is a type of trust that allows the disabled person to continue getting government benefits because the assets in the trust are not counted as income for the purposes of qualifying for Medicaid or SSI. Pooled trusts are trusts set up for the disabled person by anyone, including by the disabled person themselves. These trusts are run by nonprofit companies or organizations by trustees who are fully acquainted with these types of trusts and know how to administer them.

Each pooled trust is different, so it's important to know what you're getting into before you sign up for one. Some pooled trusts have steep fees and limited distribution times, while others have minimal fees but could have other drawbacks. If you're not sure which type of pooled trust is right for you or your loved one, check with a wills and trusts attorney for advice. Often, though, a pooled trust will be less expensive than a special needs trust.

Pooled trust vs. special needs trust

In a pooled trust, a nonprofit organization manages the trust and creates a separate account for the disabled person. Other people join the trust, so in that sense everyone pools their contributions to the trust, but each person in a pooled trust has a separate account. If the disabled person passes on, the money left in the pooled trust is for reimbursing the state's Medicaid program for money that the person used during their lifetime. The amount remaining in the trust after reimbursing the state is often split between the nonprofit organization and whoever the person designated as their beneficiary.

A special needs trust cannot be created by the person with the disability like a pooled trust can. A parent, guardian, grandparent, or a court creates the trust. In a special needs trust, anyone—usually a family member—can be the trustee, so it's usually not administered by a professional trustee. Many times, it's difficult to find someone trustworthy or willing to manage the trust. Additionally, in a special needs trust, the disabled person cannot be more than 65 years old, while people of any age qualify for a pooled trust.

Distribution of assets under pooled and special needs trusts

Pooled and special needs trusts exist to protect your family member—the person who is disabled—so they can still receive government benefits. The rules of SSI and Medicaid require that distribution of funds is not made directly to the disabled person but that the trustee uses the funds for specific allowable purchases.

Some allowable purchases from a pooled trust are:

  • Necessary living expenses, including food and clothing
  • Housing expenses
  • Burial expenses
  • Other medical expenses that Medicaid doesn't cover
  • Legal and administrative fees
  • Vocational expenses
  • Entertainment expenses

Similar allowable purchases from a special needs trust include:

  • A home and car
  • Home decorations
  • Vocational expenses
  • Limited burial expenses
  • Life insurance policies
  • Employment expenses

These purchases by the trustee are not included as income, so they don't cause the disabled beneficiary's removal from Medicaid or SSI.

Finding a pooled trust

Check with a wills and trusts attorney to see which type of trust is best for the disabled person in your family. The attorney may know of some reputable pooled trusts to use.

Other ways to find pooled trusts are to contact groups such as The Arc or the Academy of Special Needs Planners. No matter which type of trust you use, both trusts protect your family member by allowing them to still be eligible for government programs despite having assets in the trust.

Get peace of mind with a comprehensive estate planStart my estate plan
Twitter logoFacebook logoLinkedIn logoReddit logo

This article is for informational purposes. This content is not legal advice, it is the expression of the author and has not been evaluated by LegalZoom for accuracy or changes in the law.

71 days ago
Trustpilot star rating bar

legal zoom is the way to go

The representative was very knowledgeable about how long it takes to transfer a deed from one person to the next he explained everything and he was very pleasant when speaking to him

Ross
71 days ago
Trustpilot star rating bar

I find that LegalZoom has all the…

I find that LegalZoom has all the answers if you're starting a business an LLC and incorporation or you're doing a trust or a Will. These are the people you want to trust don't go to an expensive attorney you're just throwing your money away. Legal soon gets five stars!

Sean Christopher
71 days ago
Trustpilot star rating bar

I spoke to the representative today about a Trust...

I spoke to the representative today regarding a question about an existing Living Trust. She was very helpful - told me exactly what I needed to know and how to accomplish it. As a representative in the Financial field I guide clients all the time on where to get documents done right - and its always LegalZoom - easy and effecient!

Gareth
80 days ago
Trustpilot star rating bar

We could not be more Pleased with the…

We could not be more Pleased with the help and service we had during the up dating of our Living Will and Advanced Directive

Richard Poulton
83 days ago
Trustpilot star rating bar

Legal Assistance for the rest of us

Legal Zoom has made it easy and affordable for us to create an LLC, a Will, and a Trust for our families.

K Chapman
86 days ago
Trustpilot star rating bar

pleasant and willing representatives…

pleasant and willing representatives ready to help me navigate through your system and supply attorney contact information for my legal questions for my last will & testament

Mark Impink
86 days ago
Trustpilot star rating bar

LegalZoom .com has exceptional, real, staff to help. I met one!

I purchased multiple accounts to update both our Living Wills and Estate Plans. After utilizing LegalZoom.com’s user-friendly and intuitive platform for these legal documents, I found it necessary to call for clarification on some information within our account. I spoke with Sandra Balderas, who expertly addressed the mistakes I had inadvertently made. Her professionalism and friendliness greatly enhanced the experience. I realized that LegalZoom is not only a straightforward website to navigate for such complex matters, but it also boasts exceptional employees. Thank you, LegalZoom.com, and especially Sandra Balderas, for guiding me through the process. I’m thrilled to have discovered LegalZoom.com.

Max -Phoenix, Arizona
86 days ago
Trustpilot star rating bar

Sarah was most helpful today regarding updating my estate plan

Sarah was most helpful today regarding updating my LZ docs created 3 years ago. She made sure I had all the information I needed, not just what I asked for. Thank you Sarah!

Diane Floyd
92 days ago
Trustpilot star rating bar

Quick and easy experience creating a…

Quick and easy experience creating a will package.

Kristin Steel
97 days ago
Trustpilot star rating bar

Used them past 10 years

Used them past 10 years. I needed another will and power of attorney.

MERLYN C
97 days ago
Trustpilot star rating bar

Tammy was wonderful and very…

Tammy was wonderful and very knowledgeable. It's because of her that I am going to open a living trust with legal zoom. She was great. Thank You

Erin
105 days ago
Trustpilot star rating bar

Pleasant Experience

Patience and weel given explanation about the process of how a "Living Trust" & "Deed" works after transitioning and guidance on how to contact an attorney whenever I need legal advice.

Sharron Martin
107 days ago
Trustpilot star rating bar

It was a breeze to deal with Legalzoom…

It was a breeze to deal with Legalzoom and finished my estate plan within an hour!! Thanks again

BT
111 days ago
Trustpilot star rating bar

Great team…

Mark and Legal Zoom make estate planning affordable and attainable.

Christopher Maginnis
143 days ago
Trustpilot star rating bar

Living Will & Forming my LLC

I have used Lega Zoom for several items, including my living will and items to form my LLC for my business. It's fast, easy, and thorough. The customer service is fantastic! I am working with David on a few items for my will,l and he has been a delight. He follows up when he says he will and is incredibly helpful. I highly recommend this company.

Kristen J
155 days ago
Trustpilot star rating bar

Nadia made it very easy for me to make…

Nadia made it very easy for me to make a decision to sign up and create my estate planning documents with legalsoom. She was very professional and knowledgeable about the package that I chose. She also offered her direct contact for any future questions I might have.

Melita D'Anna
164 days ago
Trustpilot star rating bar

Kylie helped me to review my history of…

Kylie helped me to review my history of trying to complete my estate plan and contacting a legal advisor that comes with my account. She was patient, knowledgable, and helpful.

Paula
168 days ago
Trustpilot star rating bar

I have worked with Mark Champ on… Last Will & Testament, Living Will, Quit Claim Deed

I have worked with Mark Champ on several documents I needed and every time he has provided me with every thing I needed and with so much graciousness and knowledge. It has always been such a pleasure working with Mark!!!!!!!!!!!!!

Cathy Donaldson
203 days ago
Trustpilot star rating bar

Most Dedicated Representative!

Patti Green was the most informative person in guiding me through the process of completing my estate plan . She was always there for me to answer my questions and give excellent advice . Also , she was very polite and considerate ! Legal Zoom is so fortunate to have Patti on their team . Thank you , Patti for all of your assistance and kindness !

Priscilla Page
281 days ago
Trustpilot star rating bar

Patti Green is GREAT!

Ms. Patti Green walked me through the Estate Planning process. She was very professional, patient and kind. Planning for when you are no longer here is very intricate and difficult. Working with Ms. Green helped give the assurance that I am doing the right thing for myself and loved ones.

TRINESSA
Rated4.6out of 5 based on23,946+ reviewson

Showing our favorite reviews