July 2, 2024


Liz Yoder, CFP®

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Pooled Special Needs Trusts Evaluation: 2024 ASNP Conference

During the Academy of Special Needs Planners Conference held in April 2024, Renée C. Lovelace, a seasoned certified elder law attorney since 1997 and a long-term caregiver for a relative with special needs, addressed the current pivotal moment for pooled special needs trusts. She emphasized the importance of discerning and assessing these trusts properly for legal professionals.

In her talk, Lovelace expressed, "Our goal is to deepen understanding. It's crucial to safeguard pooled trusts." She highlighted that numerous pooled trusts provide invaluable advantages but pointed out the devastating impacts recent disasters could have on their continuation and the laws involved.

A noteworthy incident she mentioned was a class action lawsuit against a Florida-based special needs trust fund organization. The Center for Special Needs Trust Administration faces allegations for misappropriating funds upwards of tens of millions from disabled clients, with over $100 million missing from the trust assets.

Lovelace underlined the indispensable role of pooled trusts in the world of disability planning, recognized since the Omnibus Budget Reconciliation Act of 1993. She described them as lifesavers and vital supports that enrich lives and provide a financial safety net. She acknowledged that while finding an experienced trustee might be challenging, pooled trusts often emerge as the optimal solution, owing to their capabilities.

However, a concerning issue she raised is the lack of robust regulations within the pooled trust sector. "After 30 years, the absence of comprehensive standards is puzzling," she remarked. She advocated for the creation of an auditing system and the establishment of industry-wide best practices.

Lovelace also shared insights on evaluating pooled trusts, acknowledging that not everyone possesses expertise in this field. Yet, she provided guidance on how attorneys could efficiently collect and analyze information to make informed decisions.

She amusingly compared choosing a pooled trust to buying a banana, illustrating the necessity for transparency beyond that seen in most organizations. She reasoned that detailed disclosure of operations is essential for providing clarity and confidence to clients considering a pooled trust.

Lovelace expressed concern over potential hesitancies toward pooled trusts, citing their benefits such as expertise in public benefits and enhanced life quality against drawbacks like relinquishing control and the possibility of mismanagement or fraud.

With an ever-growing number of pooled trust options, the complexity of selecting the most suitable one increases, necessitating a thorough understanding of various laws and regulations.

Lovelace concluded with recommendations for resources and tools to facilitate the evaluation of pooled trusts, including a numerical tool by CPT Institute and highlighted the Arc of Texas Master Pooled Trust's toolkit as an exemplary model.

In her closing thoughts, she stressed the importance of establishing thorough audit processes to ensure integrity, likening it to basic preventive measures against theft by "locking the doors."

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