What Lawyers Needs to Know Before Recommending a Pooled Trust
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10/19/2021
What Lawyers
Needs to Know
Before
Recommending a
Pooled Trust
Megan Brand, Stephen Dale, Eric
DeGroot, and Yolanda Mazyck
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What Lawyers Needs to Know Before
Recommending a Pooled Trust
•The use of a pooled special needs trust (PSNT) can be an
excellent tool that greatly enhances the life of your clients on
means tested benefits. There are many factors that need to be
thoroughly reviewed with your client in order to determine if a
trust will be a good fit. Further, not all PSNTs are created
equally and the merits of each PSNT need to be weighed to
determine the best choice for your client. Clients who are ill-
prepared for the limitations on the use of proceeds in a pooled
special needs trust may find themselves in a difficult spot or
unhappy with the results. This session will examine the key
considerations to examine when counseling your client on their
decision re: a PSNT account.
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Eric DeGroot
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What Attorneys Should Know
When Counseling Clients on
Joining a Pooled Trust
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If you don't know where
you are going any road
will take you there?
Cheshire Cat
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Things to • The goal of this presentation is to develop a team
approach to the creation of the Special Needs
consider Trust and on going administration.
• Clients benefit from getting a clear
before understanding of the benefits and limitations of a
opening a •
Special Needs Trust
Setting expectations will improve the overall
trust account satisfaction of the Beneficiary
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• * Client’s age and life expectancy
Things to • * Is the client likely to survive and benefit from
the trust?
consider • * Has the client received Medicaid for a long
time?
before • * Are there other disabled family members who
opening a could benefit from the trust fund proceeds post‐
death?
trust account • * Does the client have dependents such as a
spouse or children?
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• * Does the client have a formal disability
Things to •
determination?
* Does the client have dependents such as a
consider spouse or children?
• * Does the client have outstanding pre‐trust
before debts?
opening a • * Does the client have adequate community
support to assist them with documentation
trust account requirements?
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What are • What are your clients intentions for the use of the trust proceeds?
* Does the client want to pay off debts? Can these be paid prior to funding?
your clients' • Does the client wish to purchase exempt assets such as burial, a car or a home immediately
after funding?
intentions • Consider possible delays cause by the nature of the transfer to the SNT:
• Court transactions such as guardianship approval etc.
* Does client express a desire to access cash, do they have access to a credit card?
for the use of • Does the client wish for others to benefit from the proceeds:
• Consider outright gifts and impact on public benefits.
the trust Does the client desire the trust to pay their shelter costs and food cost?
Is the client subject to ISM reductions of their SSI?
proceeds?
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• Don’t go it alone. Identify the members of your
Consider team and the role each person will play.
Creating a •
•
Make a plan for spending:
Many pooled trust organizations usually have a
Spending budgeting tool they use for their clients.
A proactive review of these resources can benefit
Plan •
the client before funding takes place.
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Stephen W. Dale
Golden State
Pooled Trust
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• Mr. Fader, you sure ask a lot
of damned questions for
There are a someone from New Jersey!
Great Many
Questions • Roseanne Roseannadanna,
• Correspondent Weekend
to be Asked Update Saturday Night Live ,
1978
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Stability
Factors to Transparency
Consider when
Recomending a
Pooled Trust Accountability
Mobility
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Stability
Read Renee Lovelace's “Dark Side of Pooled
Trusts”
Is the structure of the pooled trust stable?
Is the underlying nonprofit stable?
Are the investments prudent?
Risk tolerance
Who is in charge of the investments and what is the
cost?
Are the fees being charged practical?
Charging too little may be worse than
charging too much.
How much is the trust dependant upon volunteers?
Some well‐intentioned pooled special needs trusts
fail because of poor administration or management.
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Stability
• Length of time the PSNT and/or affiliated
organization has been in operation?
• How many people are served by the PSNT?
• What are the assets under management?
• Is the PSNT engaging in an annual audit?
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Transparency
What are the fees?
• Administrative fees
• Investment fees
Are there extra charges?
How is policy created?
• Is it charged monthly, quarterly, annually?
• Fees for additional services such as set‐up,
case management?
• Minimum and Maximum fees?
• Tax Preparation fee?
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Transparency
How are requests made by the How long does it take to process a distribution request?
beneficiary?
• May be dependent on approval needed and type of
• Are they accessible for my beneficiary? distribution (Ex: Vehicle takes longer than a monthly
• (Ex: in writing only? Or via Phone, Text, E‐mail, cable bill)
Mail, Fax, in person?)
Logistics of Distributions
What is the approval process?
• Staff involvement or approval authority. • How “creative” is the PSNT in their distributions?
• Board/Committee involvement. • Do they make purchases in person?
• Do staff have access to a credit card or do they rely only
• Is there an Appeal process?
on checks?
• Do they allow reimbursements to others?
• Are they utilizing TrueLink cards or other pre‐paid debit
cards for distributions?
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Accountability
• Is the trust accountable to
someone?
• Does some third party have
the power to ask questions?
• Does it make sense to turn
over these precious assets
with no oversight by the
family? (sometimes yes)
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Accountability
• What is the Mission/vision of the organization?
• What is the Board structure?
• Do I know or recognize the board members?
• What is the board involvement in requests?
• Are they providing general oversight, oversight for
specific requests?
• Or are they reviewing every request?
• Are they aligned with the Guidelines for PSNTs which were
developed in 2016 by the National Pooled Trust Standards
Committee?
The Guidelines for Pooled Trust Organizations can be found at:
http://www.nationalplanalliance.org/Final%20Guidelines%20For%20Pooled%2
0Trust%20Organizations%20v1_2016‐2017.pdf evaluating a pooled trust can
use the guidelines as a guide in evaluating and interviewing the PSNT.
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Mobility
A basic premise of the disability community rights
movement is giving persons with disabilities
and their families choices.
Many pooled special needs trusts have no mechanism to
allow the movement of the funds from the pooled trust
to another trustee.
This can be very problematic if all the planning is done
by a joinder agreement.
Some pooled trusts have liberal policies to allow
beneficiaries and families to move their account to
another pooled trust .
By design, some pooled trusts do not allow movement of
accounts, or require a court order.
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Mobility
• The beneficiary may move out of state
• The trust beneficiary should consider the portability of
the trust when they are considering the type of trust.
• A stand‐alone first party trust would need to be
approved in each state the beneficiary resides and the
trust termination provisions and state payback at the
time of the beneficiary’s death can be the biggest
obstacle to approval of the trust agreement in the new
state.
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Mobility
• The beneficiary may move out of state
• Conversely, a PSNT can port from one PSNT to another and
this is codified in the POMS at SI01120.199.F.2:
• 2. Exception for early termination clauses in Section 1917(d)(4)(C)
trusts
• For pooled trusts established under Section 1917(d)(4)(C), an early
termination clause does not need to meet the above criteria if the clause
solely allows for a transfer of the beneficiary’s assets from one Section
1917(d)(4)(C) trust to another Section 1917(d)(4)(C) trust. The early
termination clause must contain specific limiting language that precludes
the early termination from resulting in disbursements other than to the
secondary Section 1917(d)(4)(C) trust or to pay for the expenses listed in SI
01120.199F.3 in this section and SI 01120.201F.4.
• An attorney reviewing the PSNT should ensure that the early
termination provisions of the PSNT and the PSNT policy
allow for porting from one state to another.
• https://secure.ssa.gov/poms.nsf/lnx/0501120199
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Mobility
• In some cases, it may be best to create
a self settled trust, and have the
pooled trust administer it.
• This may be especially prudent if there
may be a situation where the trust
needs to be transferred to a non‐
pooled trustee.
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What is the policy regarding
retained assets in the trust?
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What is the • Many pooled special needs trusts require that
some or all of the assets remaining in the trust
policy upon the death of the beneficiary be retained by
the non‐profit that oversees the trust and is either
regarding redistributed to other recipients or pay for the
general operating costs of the non‐profit.
• Some do allow remaining assets to be distributed
retained to heirs or family.
• Keep in mind; for self settled trusts in some states
assets in the the State Medicaid Agency will have a lien on the
assets upon the death of the beneficiary that in
trust? many cases will be greater than the account
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Yolanda’s
Section
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A POOLED
TRUST
AS A
CENTER OF A
POOLED TRUST
INFLUENCE
AS A
CENTER
OF INFLUENCE
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I I'm trying to free your mind, Neo.
N But I can only show you the door.
F You're the one that has to go
L through it.
U Morpheus, The Matrix
E
N
C
E
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What else can the PSNT do for me?
Public Policy:
• PSNT organizations can be a great influence on public
policy. A recent example of this was the POMS issued by
SSA on 4/30/18.
• PSNT organizations can also have an impact on both
legislative and litigation efforts affecting people with
disabilities and those who are beneficiaries of trusts. Lewis
v. Alexander, 685 F.3d 325 (3rd Cir. 2012).
• PSNT organizations have also been instrumental in
legislation and litigation re: individuals over the age of 65
joining the pooled trust.
• See also Brand, Hanson 2013 Funding Pooled Trust
Subaccounts for Beneficiaries Age 65 and Older 2015
Update. Stetson SNT Conference
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POOLED SPECIAL NEEDS TRUSTS (PSNTs):
We’ve Come a Long Way Since 1993
• The Nonprofit’s Commitment to Service
• Person Focused
• Umbrella of Social Service Network
• Understanding People, Disabilities and Systems
• Many PSNTs can be a one‐stop shop for your clients.
• Consider some of the other Services the Nonprofit Administering the PSNT may provide:
• 3rd party pooled trust
• Trustee for stand‐alone first and third party trusts
• Representative Payee
• Case Management/Trust Advisory
• Training and Public Awareness Partners
• Quality of Life Planning and Budgeting
• Guardian of the Person/Conservator/Guardian of the Estate
• Contract or Grant work (Example: Case Management through the state for I/DD Services or through
special funding)
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PSNTs as Change Agents: Impacting Legislation
• PSNT organizations can be a great influence on
public policy. A recent example of this was the
POMS issued by SSA on 4/30/18.
• PSNT organizations can also have an impact on
both legislative and litigation efforts affecting
people with disabilities and those who are
beneficiaries of trusts. Lewis v. Alexander, 685
F.3d 325 (3rd Cir. 2012).
• PSNT organizations have also been instrumental
in legislation and litigation re: individuals over
the age of 65 joining the pooled trust.
• See also Brand, Hanson 2013 Funding Pooled Trust
Subaccounts for Beneficiaries Age 65 and Older
2015 Update. Stetson SNT Conference
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PSNTs As Educators: Sharing, Expanding and Increasing Awareness
• Many PSNTs are active in educating their
communities. Just as the services of the
PSNT in your community may differ, so do
the education and forum for educating.
• Most offer user‐friendly informational
platforms for families, agencies,
organizations and businesses committed to
hiring and supporting people with
disabilities.
• PSNT’s are in a good position to educate you
and your clients about trust administration,
the importance of estate planning for
people with disabilities, serving as rep
payee and many other topics.
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Our Collective Experience:
Evaluating Engagement of a Pooled Trust
• By their very nature, PSNTs provide services to
more trust beneficiaries than any other trustee.
Due to the numbers, the PSNTs can begin to see
trends in Social Security, Medicaid and other
areas regarding people with disabilities.
• In addition, many PSNT administrators, especially
the Executive Directors and senior level staff, are:
• members of the National PLAN Alliance,
• attending national conferences (such as
Stetson!),
• participating in the pooled SNT listserv,
• communicating with one another regarding
distributions, Medicaid, Social Security,
investments, taxes and all of the other areas
that affect their PSNT and their trust
beneficiaries.
• *One of the best ways to find a PSNT out of
your state is to ask the PSNT in your state.
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Still
Not
Sure?
Ask
We are
Happy
To
Clarify
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Megan Brand
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What can I do for my
PSNT?
“Ask not what your PSNT can do for you, but what you
can do for your PSNT.”
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What can I do for my PSNT?
• PSNTs rely heavily on volunteers.
• experienced board members to serve on the board of directors and on
committees.
• Attorneys who are skilled in Medicaid, Social Security, Taxes, Trust
Administration, Fiduciary Services and other areas are extremely
beneficial to the PSNT.
• A financially stable PSNT relies on various sources of income in addition to
the fees that they charge for their services.
• Donations from you and those in your community make for stronger
PSNTs.
• The donations may also support ancillary services such as
Representative Payee or Guardianship and these services may ultimately
benefit your clients.
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What can I do for my PSNT?
• There are also many ways in which attorneys can provide direct
services to the PSNT.
• An attorney may help with general legal work of the PSNT,
• with drafting the PSNT and amendments,
• with litigation efforts such as the 65 and older work or other
matters.
• The attorneys providing services to the PSNT may agree to do this
work at reduced rate or even pro bono.
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What can I do for my PSNT?
• PSNT is often in the position of referring its trust
beneficiaries to attorneys for the following:
• Legal advice at the time a person joins the PSNT. (Some
PSNTs require this.)
• When the beneficiary needs representation regarding
their trust, their SSA or Medicaid benefits or any
disagreement they may have with the PSNT.
• To transition to a new PSNT. (Ex: move out of state)
• When guardianship or conservatorship is necessary.
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What can I do for my PSNT?
• The best way you can support the PSNT in your community is to refer you clients to it.
Consider the following:
• PSNTs likely administer trusts for more individual beneficiaries than anyone else in your
state.
• This sheer volume often comes with experience, expertise and ability to perform on a
quantity of scale.
• They are also able to administer their trust and services on a mass scale and typically
have good policies and procedures
• The set‐up of the trust is often much faster in time‐sensitive cases
• When the asset size makes sense for more economical administration
• There are no family members or others who want to take on the liability/responsibility of
serving as trustee
• When a conservatorship or conserved funds are dwindling, and Medicaid is imminent.
•
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Summary
PSNT organizations can be of great value to you and your
clients.
However, not all PSNTs are created equally and must be
reviewed and examined carefully to determine if they will
meet the needs of your client.
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