There are two types of Special Needs Trusts: Pooled and Private.
A Pooled Special Needs Trust (or a Pooled Trust) is managed by a non-profit organization. Money from all the participants is kept together for investment purposes, but the amount of money each person contributed and is entitled to is tracked on an individual basis. Depending upon the laws of your state, people of any age may be able to use a pooled Special Needs Trust account.
As long as you tell your benefits caseworker about the Pooled Trust and follow all the rules, using a Pooled Trust can protect your government benefits and allow you to get the most for your money.
A Private Special Needs Trust is a little different. It’s a disability trust that a local attorney in your state will prepare based on your individual needs. Typically, a private Special Needs Trust is used when a person has a large amount of money to deposit into the trust. In most cases, these trusts are set up with more than $250,000. To utilize a private Special Needs Trust there are some requirements: you must be under age sixty-five, classified as disabled, and your parent, grandparent or court-appointed guardian must create the trust.
Please note that timing is critical. You must create or join a Special Needs Trust before accepting your settlement proceeds. The terms of the trust cannot be changed once the money is deposited into the trust account. These types of special needs trust are considered irrevocable, and that means that once the trust is set up, it generally cannot be cancelled and the money cannot be taken out until the beneficiary dies, or all the funds have been spent.
You should also know that there is a chance that you will lose at least one month of your SSI eligibility even if you spend down your settlement money or use a Special Needs Trust. This is because Social Security typically considers the month you receive settlement money to be income for that month.
If you have any questions, you should talk to a qualified government benefits or disability planning advisor before you deposit or cash your settlement award. Remember, no matter which option you choose, you must tell your case worker about your settlement or you could lose your benefits.
In the end, if you think you a pooled Special Needs Trust would be best for you, you’ll need to contact a pooled special needs trust organization and set one up. If you set-up a pooled trust, you must tell the Garretson Resolution Group which organization you selected.