When do you need a pooled special needs trust to protect a personal injury victim settlement?
Special Needs Trusts
Clients who receive needs based public benefits such as Medicaid and SSI require special planning to protect eligibility for those programs. A special needs trust is one common planning tool used to keep eligibility intact post settlement of a personal injury matter. There are two types of special needs trusts that can be created: 1) Stand Alone (42 U.S.C. 1396p (d)(4)(A)) or 2) Pooled Trust (42 U.S.C. 1396p (d)(4)(C).
More and more frequently, a pooled special needs trust is being utilized to preserve eligibility after settlement given the ease with which one can be set up and the relatively low cost. A pooled special needs trust is established by a non-profit trustee pursuant to 42 U.S.C. 1396p (d)(4)(C). Under that provision of the United States Code, there are four requirements for creation of a pooled trust. First, it must be established by a non-profit who acts as trustee. Second, the trustee must maintain a separate account for each beneficiary, but funds may be pooled for investment purposes (hence the name of pooled trust). Third, each sub-account must be established solely for someone disabled under the Social Security definition. Lastly, any funds that remain at death may either be retained by the non-profit for charitable purposes or used to reimburse the applicable state Medicaid agency or agencies.
Pooled trusts are different from “stand alone” SNTs under 42 U.S.C. 1396p (d)(4)(A) in two primary ways. First, there is no age restriction for use of the pooled trust whereas with a stand-alone SNT there is an age limitation of sixty-five. If you are over sixty-five, you can only create a pooled trust. Second, with the pooled trust, the beneficiary joins an already established master trust so there is no need for a customized trust document like a stand-alone SNT or the expenses that come with it.
What Sets SSNPT Apart?
The Foundation for Those with Special Needs, Inc. (FTWSN), created the Settlement Solutions National Pooled Trust (SSNPT). The SSNPT was created for the singular purpose of assisting injury victims remain eligible for needs based public assistance benefits. SSNPT has been reviewed by the Social Security Administration and found to be in compliance with the requirements for a pooled trust under section 1917 (d)(4)(C) of the Act and the relevant provisions of the POMS. The founders of the Settlement Solutions National Pooled Trust saw a need for a pooled trust that understood the special needs of injury victims and catered to those needs. SSNPT’s mission is to treat every trust beneficiary with the dignity and respect they deserve. Moreover, the SSNPT has a superior solution to other pooled trusts available to personal injury victims. It offers many specialized benefits that aren’t available with other pooled trusts in the marketplace.
SNPT has one of the lowest fee structures nationally with a one-time fee at inception of $500.00 and a 1.5% annual fee. The annual fee includes trustee fees and asset management fees. That is important as many trusts hide the asset management fees so they might offer a lower trustee fee but when you add the trustee fee with the asset management fees it is much greater than expected. Also, SSNPT pulls its trustee fees on a quarterly basis as opposed to in arrears as many trusts do. This is very important as it allows more assets to accumulate interest held in the sub-account for the benefit of the beneficiary. SSNPT’s retained funds policy is the friendliest policy to the plaintiff. The trust will distribute all monies at death to the heirs, less a small retained amount (10% or $10,000 whichever is less) and less the amount due to Medicaid pursuant to their payback rights. This is an important consideration when setting up a pooled trust. Many pooled trust will retain all assets at death and don’t allow for any money to be distributed to heirs after death. If a client dies prematurely, a 100% retained funds policy can create a windfall to the non-profit trustee.
Lastly, from the funds retained by the non-profit in situations where the amount due to Medicaid exceeds the balance left in the trust, the Foundation gives back to the civil justice system through contributions to other non-profits and charities who protect the civil justice system as well as all of our civil rights.
In addition, SSNPT works with two partners that provide tremendous benefits to its trust beneficiaries. The first partner is True Link Financial. True Link manages the assets held in the trust and provide cutting edge investment solutions for trust beneficiaries. Also, True Link provides trust beneficiaries with a Visa debit card solution to use for routine monthly expense. Having access to this card means trust beneficiaries can use it instead of making a distribution requests each month for recurring qualified monthly expense. The second partner is TEAM. TEAM is a provider that allows family members to be paid as caregivers for their loved ones who are part of the trust. If a family member wants to be a caregiver, the trust pays them using TEAM who withholds taxes and also provides benefits such as workers’ compensation coverage and group health.
Another unique option is a Medicare Set Aside (MSA) sub-trust for clients whom are dual eligible (Medicare & Medicaid). An unfortunately often ignored issue is the fact that MSAs are an available resource for Medicaid beneficiaries. If an MSA is established for someone that is dual eligible but it isn’t held inside an SNT then that client will lose Medicaid coverage. The pooled trust sub-account can be set up to hold the MSA thus making it non-countable for purposes of qualifying for Medicaid and/or SSI. The SSNPT provides a complete solution for those that are dual eligible with separate sub-accounts for the non-MSA and MSA funds. The MSA funds are administered using a professional MSA administrator which does charge an additional fee beyond the annual trustee fee charged by the trustee. All fees come from the non-MSA sub-account as Medicare regulations don’t allow the MSA to pay administration costs out of the funds set aside.
In summary, the SSNPT provides a cutting-edge solution to the settlement marketplace for those on needs-based benefits and those that are dual eligible. It is a low-cost trust which provides a tremendous amount of service to its beneficiaries. Since it caters to the personal injury marketplace, there is a national network of attorneys available to prepare the necessary legal documents for joining the trust and providing proper notices to the government agencies. This makes for a seamless solution for both trial counsel and injury victims.