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Effective: February 1, 2010 |
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19.25.35.25ar2 - Pooled Trusts (Archive) |
Archived: May 1, 2010 |
A Pooled Trust is a trust established for the sole benefit of a person of any age who is disabled and that contains a separate account for two or more persons who are disabled for the purpose of investment and management of funds in the accounts. The property held within a trust that meets all the requirements of a Pooled Trust is excluded from evaluation in Medical Assistance (MA) eligibility determination.
Evaluation of Assets Held in the Trust.
Pooled Trust Requirements
Pooled trusts include all of the following requirements:
l Date Created
Established on or after August 11, 1993.
l Beneficiary Age Limit for Establishing a Pooled Trust
There is no age limit for a person to establish a pooled trust.
Note: Evaluate the establishment of a pooled trust or any addition to a pooled trust on or after the client reaches age 65 as an asset transfer. See Transfers.
l Established by
The trust can, but is not required, to be established by a parent, grandparent, legal guardian, court or by a person with a disability.
l Management of Trust-Non-Profit Association Trustee
The trust must be managed by a non-profit association and contain separate trust accounts (referred to as sub-accounts) for two or more individuals.
A pooled trust maintains a separate sub-account for the client and the income or assets of all beneficiaries of the trust may be pooled together for investment and management purposes.
l Funded by
Funded with the income or assets of the client. The trust may also contain assets of other individuals.
A separate sub-account is maintained for each beneficiary of the trust, but, for purposes of investment and management of funds, the trust pools these accounts
Note: Evaluate any addition to the trust after the client reaches age 65 as an asset transfer. See Transfers.
l Disability Standard
The client must meet the disability criteria of the 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. See Disability Determinations.
The trust does not meet the criteria to be treated as a special needs trust if the client’s disability began after the trust was established.
Note: If the client’s disability was not determined by SSA or SMRT at the time the trust was established, the SMRT must determine whether the client was disabled according to SSI disability criteria at the time the trust was established.
l Sole Benefit of Client Distributions during Beneficiary's Lifetime
The client must be the beneficiary of his or her sub-account under the trust and the trust instrument must state that disbursements from the trust must be for the sole benefit of the client at the time the trust is established and any time in the future. Consider the trust as established for the sole benefit of a disabled client if the trust benefits no one but that individual, whether at the time the trust is established or any time in the future.
n Trusts that allow for payments to a spouse or dependents do not meet this requirement even if the client does not currently have a spouse or dependent.
n Disbursements from the client's sub-account to anyone who is not the client whether in cash or in kind are not considered for the client's sole benefit unless one of the following exceptions applies.
Exceptions: Consider the following disbursements to be for the sole benefit of the client:
q Disbursements by the trustee for the benefit of the client.
q Income taxes owed on income from trust investments or on income of the trust beneficiary assigned to the trust when an actual tax liability is established when tax returns are filed.
q Trust investment fees related to administration of the trust.
q Reasonable and necessary professional expenses including trustee, accounting and attorney fees related to managing the funds or property in the trust.
q Guardianship and conservatorship fees for the trust beneficiary when based on the fair market value for the services provided.
l DHS Remainder Beneficiary - Distributions Upon Trust Sub-Account Termination
The trust must specify that upon termination of the trust, DHS will receive all amounts remaining in the trust up to an amount equal to the total medical expenses paid through Medical Assistance (MA) on the client’s behalf.
Allow payment of administrative expenses and fees if the trust contains a provision stating that the expenses and fees must be reasonable or if the trust clearly states reasonable and necessary administrative expenses may be paid only if DHS is provided with advance notice and approves such expenses.
Trusts that include provisions that allow for payment of the following expenses prior to repayment to the state do not qualify as a Special Needs Trust:
n Payment for last illness and funeral, outstanding debts or other payments.
n Payment of administrative expenses or attorney and trustee fees if the trust does not require such payment(s) to be reasonable.
If a pooled trust instrument provides for revocation or dissolution of the trust or sub-account before the death of the client beneficiary and the trust is:
n Revocable, it must contain a clause that certifies DHS as the primary recipient of the funds remaining in the trust upon the death of the client.
n Revoked prior to the death of the client, the trust is no longer an excluded asset. Review the trust as an available asset when determining the client’s eligibility.
n Irrevocable, it must contain a clause that certifies DHS as the primary beneficiary upon the death of the client.
A trust funded by the client or the client’s spouse that does not meet all the criteria above is not a Pooled Trust and is not excluded. Evaluate the trust as a non-excluded Client-Funded Trust.
l Exclude the assets held in the trust, including any income generated by the trust assets that is retained by the trust. Income generated by assets held in the trust and retained by the trust is not income to the trust beneficiary.
l Count disbursements from the trust made directly to the client or to someone acting on the client’s behalf, such as, a guardian or legal representative as unearned income in the month received. Do not count payments made by the trustee for the benefit of the client, but not made directly to the client.
Request the following verifications when a trust meets all the requirements of a Pooled Trust:
l Application.
n Request a copy of the pooled trust master agreement and the client's joinder agreement.
n Complete the Special Needs/Pooled Trust Referral Form (DHS-4759).
n Send the completed DHS-4759 to the DHS Special Recovery Unit (SRU) with a copy of the trust instrument and the most recent trust accounting.
SRU - Trusts,
Minnesota Department of Human Services,
P.O. Box 64995,
St. Paul, MN 55164-0995,
(651) 431-3100 (select option 3-3).
Fax: (651) 431-7431.
l Annual Reporting by Trustees.
The trustee of a Special Needs Trust with a beneficiary who is an applicant or recipient for MA is required by state law to submit an annual trust accounting directly to the DHS Special Recovery Unit. Do not require the client to provide this information as part of the renewal process.
If the client or the client’s authorized representative or trustee provides this information to the county, forward the information to the DHS Special Recovery Unit (SRU).