It’s inspiring to consider how many lives have been improved, or even saved, and how many minds have rested more easily thanks to special needs trusts. They’re designed to allow people with special needs to benefit from an inheritance and still receive the help that only the polity can provide.
“Pooled” trusts sometimes get less attention than other trusts, even other special needs trusts. Each kind has potential advantages and disadvantages. Vitally important, complex legal entities that change along with changing laws, think about finding skilled legal counsel when considering special needs trusts.
The sunny side of the pool
An advantage of pooled trusts is their potential to neatly settle the problem of finding a competent and long-lived trustee. They pool money and care, but also legal and financial expertise.
A properly run pool can access experts who know local, state and federal laws, ask the right questions, know how to find and use resources. Even if a pool were to be forced to close, the question of its customers’ needs would likely be answered carefully.
Families with limited resources may be able to find pools that suit their needs better than other alternatives. Also, unlike other kinds of trusts, beneficiaries themselves can establish a pooled trust themselves, and there’s no age limit.
Finally, a good pool can be operated by dedicated people with a deep appreciation for traditions and values that are shared by the beneficiary and their family.
Possible disadvantages of pooled trusts
By law, pooled trusts are managed by non-profits organizations. The organization may manage it very well (at first, for example) or poorly and it may even dissolve entirely. What happens then is difficult to predict with confidence. Also, assets placed in a pooled trust cannot always be simply withdrawn, so the initial decision is usually critical.
While other trusts might be able to absorb an inheritance of land or jewelry, a pooled trust needs assets to be first sold for their proceeds. And if the beneficiary passes away, most trusts can pass their remaining assets to another family beneficiary, while pooled trust are likely to keep the assets.
Some pooled trusts can be very expensive, with set-up fees, annual fees and other expenses. These costs must be well understood before committing to a pool.