Why Pooled Trusts?

Pooled special needs trusts (“SNT”) can be first-party or third-party funded, and revocable or irrevocable, but the “pooled” part is especially important.

A pooled SNT, less known as “d(4)(c) trusts”, from a non-profit such as Alabama Family Trust makes an SNT even better. The term “d(4)(C)” stems from the subsection of the law which exempts certain SNTs that are established for the sole benefit of a disabled individual. Assets in a pooled SNT are not counted as resources of the beneficiary under Medicaid and Supplemental Security Income programs.

Federal law also mandates that pooled SNTs can only be managed by 501(c)(3) non-profit entities and that SNTs for beneficiaries 65+ must be managed by 501(c)(3) non-profit entities. The Alabama Legislature created the Alabama Family Trust to meet the federal requirements to have a pooled SNT for disabled Alabamians.

Advantages of pooled trusts

Shared investment costs
Because the trust funds are pooled, making management more efficient, the administrative costs are less than the usual for-profit trust options. Also, Alabama Family Trust fees apply ONLY to the interest earned, not the full principal invested in the pooled trust.

Multiple Protections From Fraud and Misuse
Seniors are scammed out of some $3 billion annually according to the FBI. Since a securities rule change in February 2018, financial advisors ask clients to name a “trusted contact” for accounts in case they suspect fraud or mental decline.

For adults 65+, a pooled SNT provides extra financial decision oversight from the administrator and the investment company managing the funds.  Scammers (family or not) have a much more difficult time getting through the network of support that surrounds a pooled SNT.

When a SNT is set up at Alabama Family Trust, each individual beneficiary’s funds are put in a sub-account. The trust beneficiary and/or representative complete a risk assessment to determine their investment risk tolerance for their individual account. Warren Averett Asset Management provides investment options in a range of risk levels so that even though the funds are in a pooled trust, the sub-segment of an individual beneficiary’s funds risk level is consistent with their risk tolerance. 

On an ongoing basis, the experienced Alabama Family Trust staff helps representatives make sure that trust funds are used for expenses that Medicaid or SSI will not cover.  As a result, trust funds last longer and give peace of mind that funds won’t be spent in a way that will jeopardize the beneficiary’s financial eligibility to receive means tested government benefits.

Check out our website for more information or ask your attorney to give us a call to discuss your specific situation.

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Direct: 205-313-3915  |   Toll-free: 1-844-238-4630
2820 Columbiana Road, Suite 103 Vestavia Hills, AL 35216

The Alabama Family Trust staff is working remotely due to the pandemic, but we are available with only a phone call or email.

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