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Self Funded Trusts
The Self Funded Payback Trust enables an individual to place assets — savings, investments, real estate, insurance payments or settlements, etc. — in a protected mechanism which will result in the individual being able to maintain or become eligible for Medicaid benefits. The funds in the Trust can then be used to supplement the lifestyle of the individual with a disability or who is elderly by providing extras to meet personal needs, leisure-time activities, training, clinical services, and transportation.
Pay Back trusts are most often created as a result of an inheritance or a personal injury settlement. In these cases the court with responsibility for the personal injury case or the descendants' estate can order that the funds be deposited directly into a pay back trust.
Who generally participates in this trust?
Individuals who have received an inheritance, personal injury settlement or Social Security lump sum back payment can use this trust to protect their assets without losing their entitlement benefits. Individuals who have become disabled later in life can use this trust option to protect their assets and become eligible for entitlement benefits. Senior citizens, who are facing a move into a nursing home and a spend down of their assets, can transfer all of their funds into a Pooled Self Funded Payback Trust without penalty from Healthcare and Family Services.
Individuals may choose to create an Individual or Pooled Self Funded Payback Trust.
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Pooled Self Funded Payback Trust
(OBRA D4C)
In a pooled self funded trust assets are commingled, all returns on investments are credited proportionately to each individual account. Expenditures made for an individual are charged to that individual's account. Distributions from the assets are made to fund the supplemental goods or services as defined by the individualized Life Care Plan disbursement agreement.
The Trust is governed by a volunteer Board of Trustees who, establish policies, contract for fiduciary management and generally control and manage the assets of families who participate in the Self Funded Trust. This Board is representative of families with dependents who are disabled, legal/banking professionals and a balanced compliment of members from organizations which serve the best interests of people who are developmentally disabled, mentally ill and/or physically disabled.
What are the advantages of the pooled "payback" trust?
- We serve as a coporate trustee which benefits families when there is no family available or who choose not to act in this role.
- Permits the use of some of the money for charitable purposes after the death of the individual.
- Provides for professional oversight of expenditures.
- Provides increased earnings by virtue of the larger pool of funds.
- Maintains eligibility for state and federal benefits.
In what situations would this make sense for my family?
Families with smaller amounts of money they plan to set aside for their family member with a disability or who is elderly find this type of trust meets their needs. In addition, families with no one to act as trustees use this type of trust or families who also don't want to manage the disbursements of Trust funds.
Get more information about:
Third Party Funded Trust
Tandem Trust Info
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