Can you really trust a pooled trust?
You’ve decided to look into a pooled trust. Or, maybe the government recommended one to help you or a loved one qualify for Medicaid Home Care Benefits. This is a common reason for many to join this kind of community trust.
Pooled Trusts are managed by non-profit organizations as a service to the disabled and elderly. The goal is to make it possible for them to stay in their homes while receiving long-term medical care.
But if you don’t happen to be a lawyer, this option may seem complex or even alien to you. So, is it possible to feel comfortable with someone else “handling” your loved one’s funds? How can you trust a pooled trust?
Pooled trusts are permitted by law
Qualifying for Medicaid Home Care Benefits is regulated by the Federal and State governments working together to establish benefits and requirements. But qualifying for medicaid programs can be difficult for some people. Those with higher incomes than what is allowed may not qualify without the help of a Pooled Trust.
The word “pooled” refers to the fact that the income of many participants, or beneficiaries, are pooled together lending to stability and additional services. Family members join such trusts to meet Medicaid’s limited income requirements. As a special purpose trust that was created under federal law, this type of trust is required to “be established in accordance with strict rules.”
The Federal law was established in 1993 and is designed to help the disabled and elderly receive services and the government assistance they need. Particularly for those whose income exceeds specific state requirements and are seeking care at home. It allows them to put monthly income above Medicaid’s limits into this special type of trust. Money in the pooled trust is then used to pay monthly bills like rent or mortgage payments while Medicaid pays the home care portion.
Knowing that this trust is permitted by law, which dictates rigid requirements, should help in gaining your confidence in such an arrangement.
It’s a legal and binding document
The trust is established by a trust agreement, which is a legal document that contains instructions that the organization (trustee) will follow. This is how the trust will be administered and could include rules on how money is to be spent during your loved one’s lifetime. The rules stated within the document should also state what happens to any remaining amounts at the primary beneficiary’s death.
The fact that pooled trusts are bound by a legal document ensures accountability by the non-profit organizations who manage them.
Organizations (trustees) must abide by rules and regulations
Just like other businesses and organizations, trustees are bound to rules and regulations. To administer a trust, the organization, typically nonprofit, is required to follow all Federal and State laws governing such trusts. They are formed and certified in accordance with each state’s nonprofit statutes.
These organizations are fully acquainted with how to administer these types of trusts. Although this lends to their credibility and trustworthiness, you should take the time to vet out those in the beneficiary’s state.
But the choice is yours
All that said, not all non-profit organizations (trustees) are alike. It’s recommended that you investigate what they have to offer and how they may be different. This will help you to establish trust in someone handling your loved one’s income. You’ll want to be sure that the organization takes the time to explain their services and addresses all your concerns.
You may have many of your own questions, but here are some examples of what to ask.
Track record – This tells a lot about the organization and their past success (or shortcomings).
- How long have they been administering such trusts?
- Do they come highly recommended?
Costs – The costs involved can vary from one organization to the next.
- What are the initial costs?
- What are the recurring costs and what do they cover?
Customer service – This can also vary by organization. Think about what you are expecting.
- How will the organization attend to your loved one’s needs?
- What does their customer service look like?
- Do they exercise good communication skills?
- What additional services do they provide?
Procedures/policies/process – What they do and how they do it is important for you to understand.
- Who specifically manages the funds and how are the funds managed?
- Are balances available at any time for viewing by beneficiaries?
- Do they incorporate technology into their processes?
- How do they ensure accuracy and efficiency?
- How do they involve the family in any decisions?
Home care benefits realized
Long-term home health care benefits for the disabled and elderly can be realized when joining a pooled trust to qualify. For those who would otherwise not meet income limitations, this type of trust is really a blessing. Without it, long term care at home might be difficult, or impossible.
If you are uncomfortable or don’t understand how a pooled trust works, don’t be afraid to seek advice from an attorney. Ask for referrals. Ask questions.
Make it a point to educate yourself. As with any important decision, choosing the right organization is key to peace of mind and getting successful results. Learn as much as you can before taking the plunge.