Medical Assistance for People Who Are Age 65 or Older and People Who Are Blind or Have a Disability

2.3.3.2.7.9.5 Pooled Trusts

A pooled trust is a type of irrevocable trust established and managed by a non-profit association that “pools” the assets of multiple individuals from separate sub-accounts for investment and management purposes. A pooled trust agreement consists of an overarching “master trust” established by a non-profit association and a “joinder agreement” that contains provisions specific to the sub-account beneficiary. A pooled trust is established for the sole benefit of a beneficiary who is certified disabled. The principal or corpus of a trust that meets all the requirements of a pooled trust is excluded.

Trust Requirements

A trust must satisfy all of the following legal requirements in order to be excluded as a pooled trust.

Date Established

It is established on or after August 11, 1993.

Beneficiary Age Limit

There is no age limit for a person to establish a pooled trust; however, a transfer of funds into a pooled trust for a person who is age 65 or older must be evaluated under the transfer policy. See Medical Assistance for Long-Term Care Services (MA-LTC) Other Asset Transfer Considerations .

Trust Management

A non-profit association establishes and manages a pooled trust. A separate account, known as a sub-account, is maintained for each beneficiary of the trust, but for purposes of investment and management of the trust, the funds are pooled.

Established By

A pooled trust must be established through the actions of the beneficiary, beneficiary’s parents or grandparents, legal guardian or a court.

Funded By

A pooled trust is funded with the income or assets of the beneficiary. A pooled trust may also contain assets of other people.

Disability Standard

The beneficiary must meet the disability criteria of the Supplemental Security Income (SSI) program at the time the trust is established. A person with a disability established by the Social Security Administration (SSA) or State Medical Review Team (SMRT) meets this qualification.

The trust does not meet the criteria for the exclusion if the beneficiary’s disability began after the trust was established.

If SSA or SMRT did not determine the beneficiary’s disability at the time the trust was established, SMRT must determine whether the beneficiary was disabled according to SSI disability criteria at the time the trust was established.

Sole Benefit Requirement

The trust sub-account must be established and used for the sole benefit of the disabled beneficiary. Disbursements must also be used for the beneficiary’s sole benefit and may not be used on items that are otherwise covered by public assistance benefits, with the following exceptions:

The trust may allow reasonable compensation for a trustee or trustees to manage the trust.
The trust may also allow reasonable costs associated with investment, legal, or other services rendered on behalf of the beneficiary with regard to the trust.

A trust is not excluded as a pooled trust if it includes a provision that allows for either of the following:

Benefits to other people or entities during the beneficiary's lifetime, or
Termination of the trust prior to the beneficiary's death and payment of the trust corpus to another person or entity, other than repaying the State.

DHS Remainder Beneficiary

The trust must provide that, upon the death of the beneficiary or earlier termination of the trust, to the extent that amounts remaining in the beneficiary's sub-account are not retained by the trust, the Minnesota Department of Human Services (DHS) or "the State” receives such remaining amounts, up to an amount equal to the total amount of Medical Assistance (MA) paid on behalf of the beneficiary. A remainder amount of up to ten percent of the value of the beneficiary's sub-account at the time of death may be retained by the trust.

Allowable Administrative Expenses

The trust may pay the following types of administrative expenses from the trust before repayment of DHS as the remainder beneficiary:

Taxes due from the trust to the State, other states, or federal government because of the death of the beneficiary
Reasonable expenses for the administration of the trust estate, such as an accounting of the trust to a court, completion and filing of documents, or other required actions associated with termination and wrapping up of the trust.

For these administrative expenses, the trust must provide that:
- The DHS Special Recovery Unit (SRU) must receive advance notice and must approve any payment of administrative expenses before such expenses are paid, and
- The administrative expenses must be reasonable.

Prohibited Expenses and Payments

A trust that provides for payment of any of the following expenses before repayment of DHS is not excluded as a pooled trust:

Taxes due from the estate of the beneficiary other than those arising from inclusion of the trust in the estate;
Inheritance taxes due for residual beneficiaries;
Payment of debts owed to third parties;
Funeral expenses; or
Payments to residual beneficiaries, other than the trustee.

Evaluation of Trust Principal and Additions to the Trust

Trust Principal

The trust principal, including any income generated by the trust that is retained by the trust, is considered excluded.

Additions to the Trust

Additions to the trust principal made directly to the trust are excluded; however, an addition or transfer of funds to a pooled trust for a person who has reached age 65 must be evaluated under the transfer policy. See MA-LTC Other Asset Transfer Considerations.

Income not irrevocably assigned to the trust is not considered to be made directly to the trust and is therefore counted as income to the beneficiary. A court order irrevocably assigning income to the trust is required to show an irrevocable assignment. If an assignment is revocable, the payment is income to the beneficiary because the beneficiary is legally entitled and eligible to receive it, unless another income exclusion applies. Note that certain payments to a beneficiary are not assignable by law. Send a HealthQuest if you have questions about assignability of income to a trust.

Evaluation of Trust Disbursements

Funds from a beneficiary’s sub-account must be disbursed for the sole benefit of the beneficiary, and may not be used on items that are otherwise covered by public assistance benefits.

Disbursements of cash from the trust made directly to the beneficiary or to a person acting on the beneficiary’s behalf are counted as unearned income in the month received.

Disbursements made by the trustee to a third party that result in the beneficiary receiving non-cash items, are not counted. Disbursements that do not count as income may include, but are not limited to those made for educational expenses, therapy, transportation, professional fees, medical services not covered by MA, phone bills, recreation, and entertainment.

Consider disbursements to be for the sole benefit of the beneficiary if the trustee makes payments of any sort from the principal or income of the trust to another person or entity such that the beneficiary derives the primary benefit from the payment.

Purchased goods that require registration or titling, such as a vehicle or real property, must generally be registered or titled in the name of the beneficiary, the trustee, or the trust.

Pooled Trust Verifications

For a person of any age who transfers funds to a pooled trust sub-account, a copy of the master trust, joinder agreement and any accompanying documentation are required verifications. These documents should be sent along with a completed Special Needs/Pooled Trust Referral Form (DHS-4759) to the DHS Special Recovery Unit (SRU) at dhs.srutrusts@state.mn.us.

Annual Reporting by Trustees

The trustee of a pooled trust with a beneficiary who is an MA applicant or enrollee is required by state law to submit an annual trust accounting directly to SRU. The beneficiary is not required to provide this information as part of the renewal process.

If the person or person’s authorized representative or trustee provides this information to the county, that information should be forwarded to SRU.

Legal Citations

Minnesota Statutes, section 256B.056, subdivision 1a

Minnesota Statutes, section 256B.056, subdivision 3b

Minnesota Statutes, section 501C.1205, subdivisions 3 and 4

United States Code, title 42, section 1396p(d)