Pooled Trust Program
Pooled trust programs are a convenient way to provide money to a person with disabilities without sacrificing government benefits. These trusts protect a person’s or family’s financial assets while still providing extra money to loved ones. A pooled trust must be set up and managed by a not-for-profit organization.
How does a pooled trust work?
Families set up a sub-account with a trust manager. The manager then pools all these sub-accounts together into one large account. This pooled trust is then managed as one account.
How can the funds be used?
Who can enroll in a trust?
A parent, grandparent or legal guardian of a person with disabilities can create a trust. Also, a court or any other person permitted by successor statute can establish an account for a person with disabilities. A trust can be opened while the parents or guardians are still alive, or as part of a will.
What can be put into a trust?
A nominal enrollment fee or initial contribution is needed to open a trust. This can be money or property, an inheritance through a will, from life insurance, from savings or other ways. Parents can fully fund the trust when it is established, or they can enroll in the trust and not fund it until later, for example, at their death. Or they may decide to fund it incrementally over time.
Who manages the pooled trust?
The trustee for The Arc of Mercer County’s pooled trust is The Shenango Valley Foundation. As trustee, The Shenango Valley Foundation is regulated by federal and state laws with what it can and cannot do. The Foundation handles the management of the account, including investing with financial institutions, keeping detailed records of each beneficiary’s account and property, and reporting account statements to each beneficiary. The trustee also makes all disbursements to or for the benefit of the beneficiary.
What are the benefits of using a pooled trust program?
An individual trustee could die, move away, or not fulfill the trustee role for some other reason. Trust programs offer continuity.
What are the disadvantages to using a pooled trust program?
Grandparents want the best for their children and grandchildren, and thus often worry about a grandchild with a disability who may need additional assets or assistance. Those in a position to leave money are often told not to leave their grandchild with disabilities anything because the child may lose government benefits. Avoid confusion and take a look below at some helpful planning do's and don'ts.
Do’s and Don’ts of Planning for Your Grandchild with Special Needs
If you're concerned about who will look after your loved one, you're not alone! Some families rely on other family members or friends, while others enter into formal arrangements with individuals or advocacy organizations such as The Arc. An advocate can offer advice and other assistance concerning an individual with disabilities, but cannot make legal decisions. Legal decisions are generally handled through a Guardianship.
What is a Guardianship?
A Guardianship is a court-approved legal relationship between a competent adult (known as a guardian) and a minor child or an adult who has been declared legally incompetent. It gives the guardian a defined degree of authority and a duty to act on behalf of the person in making decisions affecting that person’s life. The role of the Guardian is established by state law.
How do I decide if my child needs guardianship?
Appointing a guardian for someone is a serious matter. This legal status deprives the person of some rights and independence, and could potentially lead to the abuse of power. However, there may be reasons why a son or daughter with a disability may need a guardian. Some of the common reasons are:
What are the different types of guardianship?
Guardian of the Person or Property – the individual needs a guardian to decide personal issues, such as where to live, consent for medical treatment and signing for services. The court will usually identify specific decision-making areas and require periodic reports from the guardian about actions taken over the course of the year or other period.
Full Guardianship – this includes guardianship over all the person’s personal and property decision-making. It is usually a collection of all the powers and responsibilities and involves controlling every aspect of the person’s life. It is the most restrictive, although the person under a full guardianship still retains his or her basic civil rights. This type of guardianship is useful for individuals with a disability so severe that they are not capable of making informed decisions and should be used only after exploring the alternatives, including limited guardianship. Courts are most familiar with full guardianship as it is the most common.
Limited Guardianship – offering a middle ground, this guardianship is for persons with developmental disabilities who are competent, but need some supportive assistance to make certain choices, such as where to live. Limited Guardianship provides only specific powers to the Guardian, rather than relinquishing complete control over life decisions for the person with special needs. These powers or rights often include the right to enter into a financial contract, choose an educational program, receive medical care, enter into marriage and so forth. Each power is delivered to the Guardian in an “all or nothing” fashion, that is, with complete authority to make decisions in a selected area. For this reason, courts in many states authorize a mix of guardianships. For example, a person may need full guardianship of the estate but only limited guardianship over personal matters.
Temporary Guardianship – some states allow guardianship for a limited time. The court may issue a “protective order” or temporary guardianship when a legal problem arises from a specific situation, giving another person, a public guardian or corporate guardianship program* the authority to handle that specific situation. When the problem is resolved, the order usually ends with no permanent guardianship. For example, medical or other treatment may be necessary because of questionable ability to consent, but once the treatment is provided, the guardianship is reviewed to determine if it should be removed.
* These guardianships should be explored with a knowledgeable attorney as they generally involve state resources or incorporated agencies.
Is leaving money to siblings on behalf of a person with disabilities a good or bad idea? Many attorneys advise parents of a child with disabilities to disinherit that child and leave their inheritances to the child’s siblings. If they receive any money, they will lose their government benefits, so why leave them anything at all? The sibling can use that money to look after and provide for the child with disabilities during his or her lifetime, but they are not obligated to do so.
These inheritances are called “Morally Obligated Gifts.” The sibling is morally obligated to provide funds, but not legally obligated. Distributions to siblings are now their monies and not those of the child with special needs. Money can be stolen, mismanaged and attached through divorce, bankruptcy or lawsuit. Money may never be used on behalf of the child with special needs as originally intended.