Pooled Special Needs Trusts Explained - YouTube

Hi, I'm Florida Medicaid planning attorney  here and in this video I want to explain the  

concept of a pooled special needs trust. What is a  pooled special needs trust? What is it? What is it  

used? How can it benefit my client, the eventual  Medicaid applicant? Okay, so first and foremost,  

the idea is if you want to qualify for Florida  Medicaid long term care benefits in the year 2020,  

you have to have less than $2,000 to what Medicaid  considers to be countable assets. And you have to  

earn from all sources combined, less than or  up to $2,349. So you take your your pension,  

your Social Security benefits, your rental income,  right, you add all this together. And if it's more  

than $2,349, you are not eligible unless and if  you have more than $2,000 in countable resources,  

you're not eligible, eligible unless you come  to an elder law attorney, such as myself to put  

together the strategies necessary to protect  those assets, and get to the long term care,  

home care, als care or paying for that skilled  nursing facility. All right, and we have a lot  

of tools at our disposal. And one of those tools  is a pooled special needs trust, primarily used  

for folks who have too much by way of assets. But  it can also be used for those who have too much  

income. And I'll explain that in a little bit.  But first and foremost, it's most often used for  

folks who have more than $2,000, they want to  qualify for benefits now without having to go  

broke first. All right. So typically, so you can  take any amount of money out of my clients account  

and transfer into a pooled special needs trust,  a pooled special needs trust is a professionally  

managed trust. There are several of them located  throughout Florida, I work with three of them that  

I've just had a very nice relationship with, and  I know do right by my clients. And for a fee, they  

will manage money that is in that trust. And they  will only use that money to pay for things that  

benefit my elder or my my client who is desiring  of Medicaid benefits. The reason why people want  

to use this service is because typically if you  have a significant amount of money, or really any  

amount over $2,000, and that is what's preventing  you from qualifying for Medicaid for Medicaid,  

you can't just give that money away. If you give  that money away, you're triggering what's called a  

five year look back period. I'll link to another  article and video that discusses that in more  

detail. But essentially, if you give money away,  it results in a period of ineligibility, you're  

penalized for giving the money the money away.  But pooled special needs trust have a special  

status under the federal law that the states have  to write, including Florida have to recognize as  

well. And the federal law says that if you take  any amount of money, and you transfer it into  

one of these duly created appropriately created  pooled special needs trust, that will not count  

as a gift. And the Medicaid recipient can obtain  their benefits. And the pooled special needs trust  

as essentially keeps them liquid so that when they  have a bill to pay, instead of asking a family  

member to pay the bill or not being able to pay it  because they've spent down on our money Otherwise,  

this is money that is set aside just for their  use, and its needs or wants, they'll pay utility  

bills, they'll pay medical bills, they'll pay  for a new big screen TV, they'll pay off the visa  

bill, you know, there are very few limitations  to what this money can be put towards. Now,  

we don't often use the pooled special needs trust  by itself, we're typically using it in conjunction  

with other Medicaid planning techniques. And  that's because the pools specialty Trust has  

several drawbacks. The first what I consider to be  a very minor drawback is the pooled special needs  

trust is not a free service. However, the fees  are, in my mind very reasonable. Typically there  

is a small entrance fee. So it might be between  500 and maybe 1200 dollars depending on the trust.  

And then the trustee is being paid annually.  on the low end, I see 1.5% on the high end,  

I see about 3%. So we're on the very low end, I  try to steer my clients toward the less expensive  

annual fee pooled trust providers. So if you  think about it, if you were to take your money and  

invest it with Merrill Lynch or UBS or Ameriprise,  those folks are charging 1% or one and a quarter  

percent to manage your money to have the service  of a pooled special needs trust for slightly more  

than that in my mind is very reasonable. So the  ongoing expense and Oh and by the way, the money  

is conservatively invested in Oftentimes that  expense is covered by the investment so it might  

even be a free service depending on how the stock  market's doing. The bigger drawback in my mind is,  

as the given the take the reason why Medicaid  allows you to take any amount of money and put  

it into the trust is because the bigger drawback  is after the Medicaid recipient passes away, the  

pooled special needs trustee is obligated by law  to notify Medicaid, Medicaid will then send a bill  

for everything that they've paid. So if you're  if the Medicaid recipients in a nursing home,  

that can be quite a lot of money, if they're  receiving care at home, it might be less but  

they receiving the pooled special just receives  a bill from Medicaid and medic and the pooled  

special needs trustee has to pay back in Medicaid,  every dollar and only if there's money left over.  

Can the pooled special needs trust dispersed to  named heirs kids, grandkids charities, what have  

you. So that's that's quite a drawback. It's not  great for estate planning. But it allows my client  

has access to liquidity, which is a significant  benefit during the course of their life. The  

other drawback is some not all or I should say  most but not all pooled special needs trust have  

a retention requirement, meaning not only do  they have to pay Medicaid back, but they will  

retain some amount of money as like their closing  fee. And then if there's money left over, do the  

heirs get anything. So the reason why I preface  this by saying we don't often use the pooled  

special interest by itself is because we use it  with another technique that doesn't have that  

payback requirement. And we try to find the right  balance. I always say that with Medicaid planning,  

there's no magic wand. Everything has pros and  cons to it. And with pooled special needs trust is  

no different. Now on an income, it with the income  issue. It to remind you, if you earn more than 20  

$22,349, you're not eligible for Medicaid unless  you take the amount over that. And every month put  

it into what's called a qualified income trust.  It's also called a Miller trust. But what a lot of  

people don't know is pooled special needs trusts  can serve the same function, they're authorized to  

also shelter income as well. So you can if you're  being told you need a qualified income trust,  

you can also use a pooled special needs trust. So  why would you do that you have a pooled special  

trust that charges a fee and you have a qualified  income trust that's typically managed by a family  

member who's not charging a fee. The difference  is a qualified income Trust has limitations on  

how the money coming out of the income trust can  be spent. And the limitations are it can only be  

spent on health and medical related expenses. So  if you're in an ALS or nursing homes typically  

isn't an issue because paying those bills is very  much a health or medical related expense. Not  

an issue. But for my clients who are looking for  home health care, they're looking for the Medicaid  

waiver program to pay for home health care at  home, that can be an issue because oftentimes,  

because Medicaid has all these wonderful health  insurance benefits that come with it, their health  

and medical expenses will be in fact quite well.  So if their income is significant, and you're  

putting all this money into a qualified income  trust, there may be significant limitations on  

how that money is going to be spent. In that  scenario, it will likely make more sense for  

my client to forego the income trust and instead  take their income overage and put it into a pooled  

special needs trust because the pooled special  needs trustee is not hamstrung the same way a  

qualified income trust trust is a pooled special  needs trustee can disperse that money for a lot  

much wider variety of medical health expenses of  course, but also paying bills and utilities and  

home maintenance expenses and traveling expenses  related traveling and entertainment and all these  

nice and all these nice things so it's a lot  more flexible with how it can pay out. So  

there's a lot more to it. Of course if you want  to learn more about pooled special needs trust  

and Medicaid planning in general, please call  set up a consultation. Thank you very much