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Pooled Trusts in Medicaid Planning

01.06.16 written by

Various types of trusts are used for a number of estate planning matters.  The most common type of trust is a Revocable Living Trust, and also Irrevocable Trusts exist which can be used for estate tax planning matters as well.  However, a little-known type of trust called a “Pooled Trust” is a trust that can be very beneficial when helping clients with Medicaid planning.  A Pooled Trust is a trust which is operated by a charitable organization, and three of them are in existence in the State of Ohio.  The closest Pooled Trust is called the Community Fund Management Foundation in Cleveland, Ohio.

This type of trust, when used in the Medicaid planning area, allows an individual with a disability to transfer his or her own assets to this organization to establish a Pooled Trust for that disabled beneficiary.  The disabled beneficiary can then use the funds in this trust to pay for various supplemental types of services, while allowing them to obtain or retain eligibility for various governmental benefits, such as Medicaid.

An example of how this type of trust may be beneficial is as follows: 

Let’s say we have a disabled individual who is 85 years old and whose only assets are $25,000.00.  That disabled individual is in need of long-term nursing home care.  However, in order to obtain that care, that individual’s assets can only be $1,500.00.  Therefore, that individual purchases an irrevocable long-term burial contract for $10,000.00.  His assets are reduced to $15,000.00.  He still needs to get his assets below $1,500.00 in order to qualify for Medicaid, which will then be able to pay for his care in the long-term nursing facility.  He then uses $3,500.00 to purchase various pieces of furniture that he will need in the long-term facility, as well as some appliances and television.  Therefore, he then has $11,500.00 remaining.  That individual then uses $10,000.00 to establish a Pooled Trust with the Community Fund Management Foundation and reduce his assets to $1,500.00.  He then applies and is eligible for Medicaid to assist with his long-term nursing home expenses.

The $10,000.00 in the Pooled Trust can be used over time for his supplemental services.  Those supplemental services are items or services which will not be paid by insurance or some sort of government program but will improve the person’s quality of life.  Some examples of those expenses which can be paid from the $10,000.00 Pooled Trust include:

  • paying the difference between a semi-private and a private room,
  • vacation expenses,
  • internet, cable TV services, music CDs, and computer
  • magazines and newspapers subscriptions,
  • purchase of furniture or clothing,
  • certain types of therapies which will not be paid by insurance, Medicare, Medicaid, or any other governmental program,
  • dental work, and
  • hearing aids not paid for by any other means.

Upon the death of the disabled beneficiary, if there are any funds remaining in the Pooled Trust,  those funds will be paid to the State of Ohio for reimbursement for any medical assistance expenditures the State of Ohio made on behalf of the disabled beneficiary.  If there are any funds still remaining after that time, then the disabled beneficiary may elect what person or organization is to receive those remaining funds.

If a disabled individual is in a situation where they are in need of nursing home care and would like to preserve some assets for any supplemental services they may need in the future but which they are unsure of at this time, they should consider using a Pooled Trust.
If you have any questions regarding Pooled Trusts and how they relate to your particular situation, you should contact your local elder law attorney.

NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.

James F. Contini II, Esq.
Certified Specialist in Estate Planning,
Trust & Probate Law by the OSBA
Krugliak, Wilkins, Griffiths & Dougherty Co., LPA
158 North Broadway
New Philadelphia, Ohio 44663
Phone:  330-364-3472
Fax:  330-602-3187