When planning your estate, pooled trusts may come up as an option to protect a beneficiary, often a family member, that has special needs. Pooled trusts and how they may become a factor in Medicaid planning can be complex. It is crucial that you understand everything there is to know before making a decision on whether opening one may be the best option for your loved one.
At Stepp & Sullivan, our attorneys have over 70 years of combined experience helping our clients understand pooled trusts for Medicaid planning in Texas. It is important you consult one of our trusted lawyers to understand whether a pooled trust may benefit your family member while protecting their access to necessary benefits, such as Medicaid.
What Is a Pooled Trust?
A pooled trust, which is also referred to as a (d)(4)(C) trust, is a type of special needs trust. An individual special needs trust is created for the benefit of a specific individual, who is typically a family member. However, a pooled trust is established by a non-profit organization with individual beneficiaries creating accounts within the larger trust. In simpler terms, a pooled trust is made up of the assets of multiple people with special needs.
Due to the fact that a pooled trust accepts contributions from multiple beneficiaries, the trust is able to make more stable investments and provide additional management services. One of the most attractive benefits of utilizing a pooled trust is the fact that transfers into a pooled trust do not prevent a person with special needs from accessing government benefits.
What Are the Benefits of Using a Pooled Trust When Medicaid Planning?
There are many benefits to utilizing a pooled trust for a beneficiary with special needs who will likely rely on government benefits, such as Medicaid, after you have passed. One such benefit is that while the assets placed in a pooled trust are invested together, each beneficiary’s account remains their own. A beneficiary may work with a social worker or other trust advisor to tailor a funds distribution plan that best fits their lifestyle.
While each beneficiary’s situation is different, an individual who has a smaller amount in assets may appreciate the low cost of a pooled trust. Many people also view the fact that their funds will be used to help others with special needs as a benefit of pooled trusts. The funds in a pooled trust are used to supplement a beneficiary’s government benefits. The funds can also be used to pay for the following:
- Recurring bills
- Other necessary expenses
Beneficiaries in need of lowering their assets in order to qualify for or remain on Medicaid can easily transfer funds into a pooled trust without having to rely on a family member’s help.
Is There a Catch With Pooled Trusts in Texas?
Like most trusts that allow people with special needs to qualify for benefits, pooled trusts have a catch that should be considered before you move forward. Upon a beneficiary’s death, the state of Texas requires that the funds held in a pooled trust account be used to reimburse the government for any medical services provided while the beneficiary was alive.
In Texas, the state is reimbursed in the amount equal to the total amount of Medicaid paid on the individual’s behalf while they were alive. If you have other questions regarding whether pooled trusts for Medicaid planning are a good fit for your interests, consult a trusted Medicaid planning lawyer today.
Contact a Texas Medicaid Planning Lawyer Today
The skilled attorneys at Stepp & Sullivan are passionate about helping clients have a comprehensive knowledge and understanding of pooled trusts for Medicaid planning in Texas. We have several decades of experience helping Texans understand their best options when going through Medicaid planning. To discuss your next steps with a dedicated and trusted Medicaid planning lawyer, call us today at (713) 677-2635 or complete our contact form.