LAWSUIT SETTLEMENT PLANNING: POOLED V. SUPPLEMENTAL NEEDS TRUST
As a settlement approaches, an attorney must make critical decisions on how best to preserve the eligibility of government benefits of a special needs’ client.
A Supplemental Needs Trust enables a person under a physical or mental disability, or an individual with a chronic or acquired illness, to have, held in Trust for his or her benefit, an unlimited amount of assets. In a properly drafted trust, those assets are not considered countable assets for qualification for certain governmental benefits. These benefits may include SSI, Medicaid, vocational rehabilitation, subsidized housing, and other benefits based upon need. The Trustee uses the assets for supplemental and extra care over and above that which the government provides.
Another option is a Pooled Trust Account in which the assets are transferred into a qualified, non-profit charitable organization that manages a master trust for the benefit of many disabled individuals. Unlike a supplemental needs trust where the trustee is an individual (such as a family member), the Pooled Trust is run by a nonprofit association, and a separate account is maintained for each individual beneficiary. All accounts are pooled for investment and management purposes.
There are some benefits of a Pooled Trust over a traditional Supplement Needs Trust. A pooled trust is significantly less expense to create and manage than a stand alone special needs trust. Also, upon the death of the disabled individual, the balance in a pooled trust may be retained in the trust for the nonprofit association rather than being paid back to the state medicaid agency. https://theprobatepro.com/estate-planning/
Please do not hesitate to contact The Probate Pro as a resource for lawsuit settlement planning.