Special Needs Pooled Trusts
A Special Needs Pooled Trust (SNPT) is way to set aside money for a beneficiary’s future use—without jeopardizing their Supplemental Security Income (SSI) and Medicaid benefits. It is called “pooled” because all beneficiaries’ separate accounts are invested together—reducing administrative costs and overhead for each.
Why create an SNPT? Because—
- Assets in the trust are not counted as the beneficiary’s when determining financial eligibility for Medicaid and
- Appropriate distributions from the trust are not considered income and aren’t taxed.
- Distributions can be used only for the beneficiary, for goods and services that enrich their quality of life and supplement their basic needs.
The MARC Special Needs Pooled Trust is the oldest pooled trust serving Massachusetts and the largest in Massachusetts and Rhode Island. Established in 1995, it now has more than 850 beneficiaries and almost $57 million in assets.
- The MARC Trust is a “first-party trust.” This means that each account is funded with the beneficiary’s own assets—which often come from savings, inheritance, or personal injury settlements.
The Third-Party Special Needs Pooled Trust, created in 2005, now has more than 30 beneficiary accounts. Those currently funded are valued at more than $2 million.
- “Third-Party” means that accounts are funded with assets from someone other than the beneficiary, such as family or friends. Funding can come from a variety of sources—including gifts, inheritances, or insurance policies.
SNPTs are closely regulated by federal and state law and must meet stringent requirements. For example, disbursements cannot be used for gifts or to benefit another person; and for SSI recipients, disbursements must be used to supplement basic needs, not for housing and food. In addition, SNPTs must be irrevocable; therefore, once assets have gone into the trust, they can only be disbursed by the trustee and only in ways that meet legal guidelines. (Keep in mind, however, that SNPTs do not have to be funded at the time they are created; they can be funded at some later time—for example, with gifts from family members or proceeds from an inheritance or insurance policy.)
Contact us to learn more about how these trusts work, or to discuss the merit of establishing a trust in your situation.