The Pros and Cons of a Pooled Trust

The Pros and Cons of a Pooled Trust

The Pros and Cons of a Pooled Trust

Everyone knows that long-term care is expensive, and it's not likely to get more affordable in the near future. Figuring out how to pay for a nursing home or another form of long-term care has become a nagging concern for countless families. What happens if you have too much income or too many assets to qualify for Medicaid, but not enough savings to foot the entire bill for long-term care?

If you're wise, you'll consult with an expert and come up with a careful plan as far in advance as possible. Paying for care can be a daunting prospect, but there's a bright side there are many options available, especially if you plan ahead. One of these options may be a Pooled Special Needs Trust. It's a large, master trust run by a nonprofit organization, and it is made up of many sub-trusts established for those who have a disability and rely on public benefits (like Medicaid) to pay for long-term care. Assets placed in the trust are not included in the formula for calculating Medicaid eligibility, and those assets are used to supplement the benefits provided by Medicaid. A Pooled Trust is not appropriate for everyone, though. Here are a few pro's and con's:

Pro's

A pooled trust can be a more affordable option than establishing a separate, traditional Special Needs Trust.

A pooled trust removes concerns about finding a qualified and appropriate trustee. The trust is managed by the nonprofit organization. When you establish a Special Needs Trust, on the other hand, you're responsible for finding a trustee who knows the rules and will efficiently and effectively administer the trust on behalf of the beneficiary.

Pooled trusts are managed by experts, which can sometimes mean greater efficiency.

Con's

A pooled trust is managed is a large, master trust made up of several sub-trusts. This means that management and investment decisions aren't necessary tailored to the unique needs of beneficiaries in the way that a separate, traditional Special Needs Trust would be.

Assets placed in a pooled trust are not returned to the family after the death of the beneficiary. Instead, the trust uses those assets to reimburse the state for public benefits paid to the beneficiary during his or her lifetime.

A qualified estate planning attorney can tell you more about the advantages and disadvantages of Pooled Trusts, and help you plan for the possibility of long-term care.

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