The Settlement Alliance

What is a Pooled Trust Account?

What is a Pooled Trust Account?

Feb 15, 2017

If you have a loved one with a disability, you may have heard of special needs trusts (SNTs). When a disabled individual who is on needs-based benefits (e.g. SSI, Medicaid, etc.) receives an injury settlement, a special needs trust can help preserve benefits eligibility while ensuring that the settlement proceeds are being used in the best interests of the disabled individual.

A first party special needs trust (also referred to as a (d)(4)(a) trust, in a nod to the subsection of federal law under which it was established) is available to disabled individuals under the age of 65. But what if your loved one is over the age of 65 or doesn’t receive millions of dollars in settlement proceeds? That’s where a pooled trust comes in.

How does a pooled trust work?

A pooled trust (sometimes referred to as a (d)(4)(c) trust) is established and managed by a nonprofit organization, which adds a sub-account for each individual beneficiary. The sub-account is established by signing a joinder agreement, then the assets within each sub-account are “pooled” for investment. The account is managed by a professional trustee.

After the beneficiary’s death, the terms of the trust determine how the remaining funds in the beneficiary’s sub-account are handled. In some cases, the excess funds may remain in the pooled trust, while in other cases, funds not retained by the trust must be used to reimburse Medicaid prior to being distributed to any remaining beneficiaries.

Who should consider a pooled special needs trust?

For disabled individuals who receive settlements of $500,000 or less, a first party special needs trust may not be the most prudent option. Administration and management costs, coupled with regular distributions from the trust for the individual’s needs (e.g. housing modifications, etc.) can add up quickly. A pooled trust, on the other hand, provides an option with lower overhead costs, while still allowing the disabled individual to maintain eligibility for needs-based benefits and access to the settlement proceeds. Also, unlike a first party special needs trust, there is no age restriction on pooled trusts, so individuals over the age of 65 are eligible.

Contact our experienced team today

Our settlement planners are well-versed in the various trust options available to disabled claimants, and we have access to the best trust attorneys and trustees in the nation. Contact us today to learn more.

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  • American general Life Companies
  • Berkshire Hathaway Structured Settlements
  • Liberty Life Assurance Company of Boston
  • MetLife
  • Mutual of Omaha
  • New York Life
  • Pacific Life
  • Prudential