The Listen to Lawrence Letter: How does a Pooled Trust work?

DAVIDOWLAW Blog Post

Dear Clients and Friends,
Have you ever heard of a “pooled trust?”  I get a lot of questions about them, like the one that follows.
CLIENT QUESTION:
I am reaching out on behalf of my grandfather. I am wondering if your services and firm focus on pool trusts or can provide more information into what exactly pool trusts entail.
MY RESPONSE:
In the context of Medicaid, we use “pooled trusts” every day.   A “pooled trust” is a trust created and maintained by a charity, where many people will “pool” their money, subject to the rules of the particular trust.  It is a pot of money but you will have a separate fund in your name within it.   We don’t create these trusts for you, they are already in existence; we just help you work with them.
Okay, what am I really talking about?   “Pooled trusts” are a tool we commonly use when our clients seek Community Medicaid and have an income overage.   Community Medicaid provides assistance outside a nursing home, such as paying for a home care aide.   To be eligible for Community Medicaid you cannot have more than $954 (2022 figure) of income per month.   If you have more monthly income, then you can still be eligible if you spend down your overage on your health care or pay the overage to a “POOLED TRUST.”  The latter is what all our clients do.
Wait a minute!   What’s the difference if you have to pay your overage for health care expenses or to a pooled trust?  Do you lose it either way?  The answer is surprisingly no!   Once the income is in the pooled trust, you can then send all your bills to the trust and the trust will pay them. The trust can basically pay every bill you have, except bills that Medicaid should be paying. The trust will pay your property taxes, insurance, maintenance, rent, and all your electric, gas, oil, water, etc. bills.   I call this legal laundering of the money.   Other than a small administrative fee, all the money that goes to the trust can be returned to you by paying your bills.
One caveat.  If you do not have enough monthly bills to get all your income back, then money will accumulate in the trust.  If you have a big bill later, then you can submit the bill later and the trust will pay it.  Does your house need new windows?  However, if you die with money in the trust, then the trust and/or charity will keep the money.
I hope this helps! Please forward this information to your friends and relatives to share these informative answers to some very commonly asked questions.
And, if anyone you know would like to receive this
Listen to Lawrence Letter, just have them email me at
info@davidowlaw.com and I’ll add them to the list!
As always, please send me your questions. If you are thinking about it, others are probably too, so my answers will no doubt help you and many others.
Let’s stay connected.
Stay safe!
Until next time…
peace, health and happiness,
Lawrence Eric Davidow