A pooled income trust is a charitable trust created and maintained by a qualified non-profit organization. The trust receives contributions from people, families, or other entities and then invests the contributions to provide dividends for the trust’s beneficiaries. Beneficiaries will then obtain income distributions during their lives. However, after they have passed away, the trust will distribute the remaining assets to the charity. While a pooled income trust has many benefits, some still question whether it is the right fit for them. That is why, in the blog post below, we will review what a pooled income trust is and how to know if it is right for you.
What Is a Pooled Income Trust?
A pooled income trust is a type of special needs trust that is set up and managed by a non-profit organization. Individual beneficiaries open accounts within the larger trust, and their funds are combined together and invested collectively with the funds of other individuals. Since these trusts accept contributions from many individuals, the trusts can often make stable investments and offer additional management services that different types of trusts may not be able to afford. However, within the pooled trust, each beneficiary’s account will remain its own.
How Are Pooled Trusts Used?
If an individual is coming into an inheritance, obtaining money from a settlement, or if the person has accumulated too much money in their bank account, a pooled trust can allow these funds to be transferred into a trust where the funds will be managed for their benefit. This option is often more desirable than having to spend down their money or turning over the funds before qualifying for benefits.
When Do Individuals Consider a Pooled Trust?
One of the most significant advantages of a pooled trust is being able to qualify for Medicaid and other governmental benefits despite having excess monthly income. However, there are also other benefits of joining a pooled income trust:
- A pooled income trust can help individuals protect their money for supplemental needs that can enhance a person’s way of life and ensure they receive dental and medical services, home modifications, and assistive technology.
- A pooled income trust provides various management services, including making reliable and balanced investments.
- A pooled income trust is more affordable than other types of trusts.
Acceptable Contributions To a Pooled Income Trust
In general, you can contribute any type of liquid asset to a pooled income fund, including the following assets:
- Stocks
- Cash
- Mutual Funds
However, some pooled income trusts may also permit other donations, including non-cash assets (life insurance), tangible property (cars, real estate, fine art), tax-exempt securities, and certain types of restricted securities or privately held stocks.
Is a Pooled Income Trust Right for You?
Although each person’s situation is unique, a pooled income trust is often a good option for someone who wants assistance with saving and protecting excess income or those who need help paying for services as they age. These individuals may also prefer the low cost of a pooled trust and working with a non-profit that is attuned to the needs of those living with special needs. However, to better understand if a pooled income trust is right for you, consider speaking with an experienced Louisiana elder law and estate planning attorney about this trust’s benefits and rules.
Contact Losavio & DeJean Today To Learn More About Pooled Income Trusts
As you get older, you may require long-term healthcare. Although discussing this can be difficult, it is important to plan for your future needs and the expenses that may be part of this planning. Working with an experienced elder law and estate planning lawyer can help you assess your eligibility for Medicaid and plan for the future.
If you want to discuss these plans in more detail or review pooled income trusts further, contact Losavio & DeJean, LLC, The Louisiana Elder Law Firm, today to learn more.