People with disabilities living on Supplemental Security Income (SSI) have few opportunities to retain assets or save more than the $2,000 ($3,000 for a couple) asset limitation. Beyond the income provided by SSI, eligibility for health care provided by Medicaid is frequently tied to SSI or subject to strict asset limitations as well·. In 1993, the ability to set up a Special Needs Trust was created by the Omnibus Budget Reconciliation Act. This recognized the fact that individuals and families were being driven into poverty because they were forced to spend down resources in order to become eligible for public health insurance and income supports.

However, these trusts come with a price- loss of control of finances by the individual with the disability. While this loss is problematic in many ways (not the least is the major step backwards on the road to independent living), one of the most disconcerting aspects is the potential for abuse.

One of the core tenants of the Special Needs Trust is that the individual with the disability is not allowed to have ready access to the money. A trustee must be appointed to manage the funds. The individual beneficiary of the trust should direct requests made to the trustee; yet ultimately, the trustee has complete control over all money placed in the Special Needs Trusts. In many situations, this is not a problem as a trusted family member handles the funds responsibly. However, the following story illustrates the reason for concern.

Joan was 38 years old when she was injured by a drunk driver in a car accident that paralyzed Joan from the neck down. Joan received a $500,000 settlement from the driver's insurance. Knowing that she would have substantial medical expenses that would quickly exceed the settlement, Joan set up a Special Needs Trust and made her husband, Bob, the trustee. Bob, without Joan's knowledge, quickly spent all the money for goods he claimed were for Joan's benefit. Joan disagreed, but because Bob legally controlled the Trust funds, she had no right to question his spending spree. Joan filed for divorce and now lives on $600 a month from SSI.

One way that a situation like Joan's can be avoided is to set up an account in a Pooled Special Needs Trust with a qualified non-profit. See the 2006 April EQUITY Feature Article for more information on Pooled Trusts and how to judge whether the non-profit organization managing the trust is capable of meeting your needs.

Reasons for Choosing a Pooled Special Needs Trust (d)(4)(C):

1. Limited Funds. For individuals that do not receive large inheritances or settlements, Pooled Trusts may be the only option to retain or build assets. If assets are from $5,000- $250,000, most attorneys recommend a Pooled Trust.
2. Professional Management. Establishing an account in a Pooled Trust not only side-steps the issue of selecting a trustee, professional management can offer investment advice.
3. Pooled Special Needs Trusts are available to people over the age of 65. Self-settled Special Needs Trusts are not.

Unfortunately, abusive financial situations like Joan's are not uncommon. A new project at the World Institute on Disability is seeking brief stories about people with disabilities who have faced abuse. These pieces will be compiled and issued as: CAPE, Curriculum on Abuse Prevention and Empowerment, a training guide for disabled people, family members and services providers. Contact Marsha Saxton, CAPE marsax@wid.org marsax@wid.org for more information on how to have your story published.