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POOLED TRUST



Pooled trusts have become useful planning tools for parents of children with disabilities. They exist in many states, including California, Indiana, Arizona, Texas, and New Jersey. To find out if a pooled trust exists in your state, contact your State Arc.

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1. GENERAL.

(a) Pooled Trusts are authorized under OBRA-93.

(b) These Trusts are funded with the assets of a disabled person.

(c) The 551 definition of "disability" is used.

2. POOLED TRUST REQUIREMENTS.

(a) Pooled Trust must be established and managed by a non-profit organization.

(b) There must be a separate account for each beneficiary.

(c) Funds are pooled for investment and management.

(d) The account is solely for the benefit of the disabled individual.

(e) The Trust must be established by a parent, grandparent, legal guardian, or court.

3. DEATH. On death, the funds remaining in the Pooled Trust must be retained by the Trust or reimburse Medicaid.

4. TYPE OF PAYMENT.

(a) There is no expressed limit on the amount or type of payment.

(b) It may be wise to limit payments to "in-kind" payments.

(c) In-kind payments do not reduce public assistance.

5. ADVANTAGES.

(a) Corpus is not counted as an asset.

(b) A person can be over 65 at the time of the establishment of a Trust.

(c) A disabled person can establish his own Trust.

(d) The Community Trust already exists and does not have to be created.

(e) The Community Trust requires only a joinder agreement.

6. An example of Community Trusts are a Trust administered by Plan New Jersey and managed by U.S. Trust Company.

7. TAXATION.

(a) The Grantor Trustee rules apply to income tax.

(b) The Trustee must track each sub-account.

(c) Gift tax issues must be explored.

(d) If there is a pooled income fund, the remainder interest may be tax deductible.

8. LOOKBACK.

(a) It is unclear whether the lookback is 36 months or whether the transfer into the Pooled Trust is an exempt transfer. Hopefully, HCFA will give us further guidance soon.

Sample Profile

Special Needs Trust

Guardianship

Planning Tool

New Jersey Governor's Initiative

Disabled Home Page

finalcare Home Page