Planning for a loved one with a disability means finding ways to protect their financial future while ensuring they remain eligible for government benefits. Many benefit programs, like Supplemental Security Income (SSI) and Medicaid, have strict asset limits. Receiving a financial gift or settlement could unintentionally disqualify someone from these programs. A pooled special needs trust (PSNT) helps avoid that risk by managing funds to keep benefits intact. This option offers professional oversight, allowing families to feel confident their loved one’s financial needs will be met both now and in the future.
What Is a Pooled Special Needs Trust?
A pooled special needs trust is a type of trust designed to protect assets for individuals with disabilities while preserving their eligibility for government benefits like SSI and Medicaid. Unlike an individual special needs trust, a PSNT combines funds from multiple beneficiaries into a single trust managed by a nonprofit organization. Each person has a separate account, but all assets are pooled for investment purposes to help maximize growth.
The nonprofit trustee is responsible for managing funds and making distributions in a way that does not interfere with public benefits. Money from the trust can be used for expenses that enhance the beneficiary’s quality of life, such as housing, therapy, education, and recreation. Because the nonprofit handles administration and compliance, families do not need to appoint a private trustee. A PSNT can be an affordable and effective solution for those who need long-term financial management.
Who Should Consider a Pooled Special Needs Trust?
A pooled special needs trust can be a good option for individuals with disabilities and their families who want to protect public benefits while ensuring financial stability. This type of trust is often beneficial for:
- Individuals receiving a financial settlement or inheritance – A PSNT allows them to keep their assets without losing Medicaid or SSI.
- Families without a private trustee – Managing a trust can be complex, and a PSNT eliminates the need for a family member to take on this responsibility.
- Parents planning for a child’s future – A PSNT provides long-term management, ensuring funds are used appropriately after parents are gone.
- People who need cost-effective trust management – Setting up an individual special needs trust can be expensive, while a PSNT offers a more affordable alternative.
Benefits of a Pooled Special Needs Trust
A pooled special needs trust offers several advantages for individuals with disabilities and their families. Some key benefits include:
- Preserves public benefits – Assets in the trust do not count toward Medicaid or SSI limits.
- Professional trust management – A nonprofit trustee handles investments, distributions, and compliance with government rules.
- Lower costs – A PSNT is generally more affordable than setting up an individual special needs trust.
- No need for a private trustee – Families do not have to find or appoint someone to manage the trust.
By pooling resources, beneficiaries gain structured financial support without the burden of individual trust administration.
Potential Drawbacks of a Pooled Special Needs Trust
While a pooled special needs trust offers many benefits, there are some limitations to consider:
- Less control over distributions – The nonprofit trustee decides how and when funds are used, which may not always align with a beneficiary’s preferences.
- Approval process – Requesting funds for certain expenses may require documentation and nonprofit approval, which some families find time-consuming or restrictive.
- Limited customization – Unlike an individual trust, a PSNT follows standard terms set by the nonprofit.
Families should weigh these factors when deciding if a PSNT is the right choice.
Is a Pooled Special Needs Trust Right for Your Family?
Deciding whether a pooled special needs trust is the best option depends on your family’s financial situation, long-term goals, and need for professional trust management. A PSNT can be a good fit if you want to protect government benefits while ensuring funds are managed responsibly. However, if you prefer more control over distributions, an individual special needs trust may be a better choice. We can help you determine the best way to provide financial security for your loved one with special needs.
Contact Our Experienced Irvine Pooled Special Needs Trust Attorneys
A pooled special needs trust can provide financial stability while protecting vital benefits. At OC Wills & Trust Attorneys, we help families explore their options and create plans that meet their unique needs. Contact us today to discuss whether a PSNT is right for your loved one’s future.
