What is a (D)(4)(c) Special Needs Trust and can it be transferred to a Pooled Special Needs Trust?

July 16, 2024

By: William Lindahl, Executive Director

A (D)(4)(C) Special Needs Trust, also known as a Pooled Trust, is a type of trust designed to benefit individuals with disabilities without jeopardizing their eligibility for government assistance programs such as Medicaid and Supplemental Security Income (SSI). This trust is established and managed by a nonprofit organization that pools the resources of multiple beneficiaries for investment and management purposes, while maintaining separate accounts for each beneficiary’s needs.

The key characteristics of a (D)(4)(c) Pooled Trust include:

  • Establishment by Nonprofit or 501 (c)(3) Charity: A (D)(4)(c) Pooled Trust must be established and managed by a nonprofit organization.
  • Pooling of Resources: The funds of all beneficiaries may be pooled together for investment purposes, but separate accounts are maintained for each individual to track their contributions and disbursements.
  • Maintaining Eligibility: Assets held in the trust do not count towards the resource limits for federal benefits, thus preserving the beneficiary’s eligibility for Medicaid and Supplemental Security Income (SSI).

Regarding the transferability of a Special Needs Trust to a Pooled Special Needs Trust, it is possible under certain circumstances. An existing Special Needs Trust, such as a (D)(4)(A) or Individual Special Needs Trust, may be transferred to a (D)(4)(C) Pooled Trust if:

  1. The transfer is permitted under state law and by the managing nonprofit organization.
  2. The original trust document does not prohibit such a transfer.
  3. The transfer aligns with the best interests of the beneficiary and complies with all relevant federal and state regulations concerning Special Needs Trusts.

However, before making any transfers, it is crucial to consult with an attorney who specializes in special needs planning to ensure compliance with all legal requirements and to evaluate the implications for the beneficiary’s current and future benefits.