As individuals age, they may need additional assistance to meet their needs. Unfortunately, many of these services, such as nursing home care or other assistance programs, can be quite expensive. In some instances, individuals may have to turn to Medicaid to help with these costs. Yet, obtaining Medicaid assistance can be a complicated process with strict financial guidelines. As a result, eligible elderly and disabled individuals might opt for a pooled income trust to help cover these expenses.

A Basic Overview of Pooled Income Trusts

A pooled income fund, sometimes referred to as a pooled income trust, is a charitable trust that enables donors to make tax-deductible gifts to a charity while also providing income to one or more beneficiaries for life. Contributions from multiple donors are combined and invested together, and each donor is allocated a specific number of units in the fund. Every few months, the beneficiaries will obtain a portion of the fund’s income based on the trust’s investments. Once the last beneficiary passes away, the donor’s share in the fund is transferred to the charity. This fund is established and managed by a qualified nonprofit organization. 

What Expenses Can and Cannot Be Covered by a Pooled Income Trust?

While each nonprofit managing a pooled income trust may have its own rules, generally, the following expenses are approved to be covered by this trust:

  • Groceries, clothing, and toiletries bought for the beneficiary
  • Furniture and electronics bought for the beneficiary 
  • Charges related to eating out, but only for the beneficiary’s meal
  • Utility expenses on a home owned by the beneficiary
  • Day trip expenses, caregiver costs, pet care expenses, home modifications, legal and administrative fees, vocational expenses, and burial expenses
  • Dental and medical services, hearing aids, eyeglasses, and health insurance premiums

Expenses Not Covered by a Pooled Income Trust

In comparison, items that a pooled income trust cannot pay for include:

  • Firearms, alcohol, and tobacco
  • Purchases that are not bought for the sole benefit of the beneficiary
  • Gifts for other individuals 
  • Invoices, receipts, and bills that are not in the beneficiary’s name
  • Rent or mortgage payments after the beneficiary has been in a nursing home for a certain period of time. 

To learn more about these expenses and to determine which ones will be covered by the trust, consider reviewing your case with an experienced elder law attorney.

The Benefits of a Pooled Income Trust

Pooled trusts offer individuals with disabilities a means to access essential healthcare benefits while using additional funds deposited into the trust to cover other expenses and services not included in those benefits. As a result, some of the primary benefits of a pooled trust include:

  • Not having to spend down funds quickly
  • Protecting funds for other needs to enhance a person’s quality of life
  • Being able to afford bills and still get the care they need
  • Qualifying and continuing to be eligible for SSI benefits and Medicaid

Contact Losavio & DeJean Today To Learn More About Pooled Income Trusts

At Losavio & DeJean, LLC, The Louisiana Elder Law Firm, our mission is to assist our clients in living well, independently, and securely for as long as possible. As an elder law and special needs planning firm for seniors and their loved ones and persons with disabilities, our legal team provides comprehensive counsel built on a foundation of experience and education. We also provide assistance in several areas, including Medicaid planning, retirement tax planning, and estate planning.

For further information about pooled income trust and if it is the right option for you or your family, contact Losavio & DeJean, LLC today and speak with our team.