Pooled Special Needs Trusts in California

Coordinated Settlement Planning for Claimants Who Rely on Needs-Based Benefits

Personal injury proceeds paid directly to a claimant can affect eligibility for Supplemental Security Income and Medi-Cal. Before funds are distributed, we help claimants and plaintiff attorneys assess whether a pooled trust should be considered as part of the settlement plan.

At Sage Settlement Consulting, we coordinate the financial, trust, lien, and benefit-preservation components of a settlement. The appropriate structure depends on the claimant’s disability status, age, current benefits, source of funds, immediate expenses, and long-term needs.

Call (855) 288-7243 to discuss pooled trust coordination before settlement proceeds are distributed.

How a Pooled Special Needs Trust Works

A pooled special needs trust is a first-party trust authorized under 42 U.S.C. Section 1396p(d)(4)(C). Established and managed by a nonprofit association, it can hold assets belonging to a person with a disability, including qualifying personal injury settlement proceeds.

Each beneficiary has a separate account, while funds are pooled for investment and management purposes. A trustee administers distributions according to the trust terms and applicable benefit rules, so the beneficiary doesn’t have unrestricted control over the account.

The California Department of Health Care Services states that a pooled trust can be established for a person with a disability of any age. Age alone doesn’t determine eligibility. Trust counsel and benefit professionals must review the individual’s circumstances and the requirements of each applicable program.

Comparing Pooled Trusts with Other Settlement Structures

Funding source, age restrictions, administration, distribution authority, and post-death recovery provisions can determine whether one structure is more appropriate than another.

Options that may be considered include:

• Pooled first-party special needs trust: Holds the beneficiary’s assets in a separate account administered through a nonprofit pooled trust and may be available at any age.
• Individual first-party special needs trust: Holds the beneficiary’s assets and is generally established for a person with a disability who is younger than 65.
• Third-party special needs trust: Holds assets contributed by someone other than the beneficiary, such as a parent or grandparent, rather than the claimant’s settlement proceeds.
• ABLE account: Provides a tax-advantaged account for eligible disability-related expenses, subject to eligibility, balance, and contribution rules.
• Structured settlement annuity: Provides scheduled payments and may be coordinated with an appropriate trust when the settlement plan calls for both structures.

First-party trusts generally contain provisions addressing reimbursement of state Medicaid programs after the beneficiary’s death. In a pooled arrangement, the nonprofit may retain some remaining funds under the trust terms, while other amounts may be subject to Medi-Cal payback. Trust counsel should explain how these provisions apply to the selected trust.

California Medi-Cal Liens Must Be Addressed Before Trust Funding

Under California Probate Code Section 3604(d), a court order directing settlement proceeds to a special needs trust must provide for the prior satisfaction of statutory liens held by the California Department of Health Care Services and other listed state agencies.

California rules may also require notice to the California Department of Health Care Services when a trust is established or terminated. Trust documents, lien resolution, funding instructions, and the settlement disbursement plan must therefore be coordinated.

Qualified California trust counsel provides legal advice and prepares the documents, while the trustee makes fiduciary and distribution decisions. We organize information and coordinate among the claimant, plaintiff attorney, trust counsel, trustee, and other settlement professionals without assuming their legal or fiduciary responsibilities.

How We Coordinate California Pooled Trust Planning

We begin with the claimant’s current benefits, expected proceeds, and outstanding liens. We then consider immediate expenses, long-term care needs, family support, and goals for future distributions.

Our coordination can address:

• Government benefit preservation considerations involving Supplemental Security Income and Medi-Cal
• Access to a national network of trust attorneys and nationally chartered corporate trustees
• Coordination of trust funding with structured settlement annuities
• Lien resolution, Medicare Set-Asides, and Probate coordination when relevant
• Qualified settlement funds when the resolution process requires a separate settlement vehicle

We also provide Spanish-speaking claimants with translated informational materials, access to a fluent Spanish-speaking case manager, and a Spanish-language assistance line. These resources allow claimants and families to participate in planning in their preferred language.

Coordinate the Trust Before Settlement Proceeds Are Distributed

Early planning gives the settlement team time to address benefit-preservation, trust, lien, and funding questions before proceeds reach the claimant. As part of our nationwide settlement planning services, we coordinate with California claimants, families, attorneys, trust counsel, and trustees.

Call (855) 288-7243 to discuss coordinating a potential pooled special needs trust with Sage Settlement Consulting.