Searching for a Pooled Trust
Pooled trusts must adhere to strict state rules, so to keep things manageable, most pooled trusts only take residents that reside in the same state. To find a special needs pooled trust in your state, try contacting one of these organizations:
- Academy of Special Needs Planners: www.specialneedsanswers.com
- The Arc: www.thearc.org
- The Center for Special Needs Trust Administration, Inc.: www.sntcenter.org
- The National PLAN Alliance: www.nationalplanalliance.org
If you find a pooled trust that you’re interested in, it’s time to ask some detailed questions about how the trust will provide for your loved one.
Investigating Your Options
Pooled trust are unregulated -- no government agency oversees them to make sure they are managing assets wisely and honestly and there is currently no certification or accreditation process for pooled trust programs. So you must investigate the quality of these trusts yourself.
Pooled trusts vary considerably in terms of the services they offer. All offer trust management, investment services, and expertise in federal benefit resource and eligibility rules. The programs tend to differ in:
- the nature of the supplementary services offered
- the relationship between the beneficiary and the trust manager fees, and
- what happens to money in the account when the beneficiary dies.
For this reason, it’s very important to read the materials from any program you are considering and meet with a program representative to discuss the details of the program. Before you sign any papers, the program representative should carefully explain the process, including fees and the scope of services.
In the course of this process, you’ll want to pay close attention to your feelings about the place you’re dealing with and the people you encounter. For instance, if you get a polished presentation, you may be put off if you are more comfortable with “just plain folks”—or you may be impressed by the professionalism. If you are more confused than enlightened, it may be a sign to shop for a different program.
Here are some questions to ask before entrusting your loved one’s inheritance to the program:
- Does the trust program have the financial or volunteer support of one or more well-known disability organizations?
- Does the board of directors include people with expertise or experience in disability, legal, and financial matters?
- Does the program use the services of a reputable bank, trust company, or other financial institution as a trustee or for account management?
- Does the trustee’s investment strategy make sense to you?
- Does the program give you clear and comprehensive information about how the trust operates, including its fees and services, or do you feel confused?
- Are you satisfied that the program will always know about your loved one’s special needs?
- Do program staffers answer your questions in easy-to-understand language?
- Are staff members knowledgeable about federal and state benefits, laws that affect planning, and the reporting requirements imposed by SSI and Medicaid after the trust is active?
- How happy are other families who use the pooled trust? Ask the program for evaluations it’s received, and talk to other families directly if possible.
- Does the trust document provide for a trust advisor or trust advisory committee who has the power to replace the trustee, if necessary?
- Does the program’s annual report make it clear that the program is operated in a businesslike manner? (If you’re not comfortable deciphering the report, ask someone who is.)
- Is the trust financially self-sufficient, or does it depend on third-party funding that might decrease or, in the case of government funding, be withdrawn altogether? You want to be sure that the program could continue in the absence of those funds.
Keep Tabs on the Trust
When selecting a pooled trust, keep in mind that the quality of the trust may change over time, For example, when you investigate and join a pooled trust, it may have all the services you want, an active and diverse volunteer board, and fees that meet your expectations. However, years later when you die and your loved one’s inheritance is transferred to the trust, the trust could have withdrawn most services, replaced members of the board, or substantially increased its fees.
After money or property is transferred to the trust, there are not a lot of options for the beneficiary or his or her legal representatives. At that point, it will be difficult, if not impossible, to switch pooled trusts or to move out of a trust that no longer is performing adequately. The beneficiary can end up stuck in a pooled trust that at one time did great work but by the time of funding has become a terrible institution.
So, after you sign up with a pooled trust, periodically check to make sure it still meets your requirements. If it does take a turn for the worse, you should be able to change your estate plan to redirect your loved one’s inheritance to another trust.
Learn much more about Special Needs Trusts on Nolo.com.
Also, Special Needs Trust: Protect Your Child’s Financial Future, by Stephen Elias and Kevin Urbatsch (Nolo) provides all of the information and forms you need to make your own special needs trust.