Many parents and other caregivers in Minnesota provide support for someone with a disabling medical condition. Individuals born with conditions like Down syndrome or autism may have lifetime care needs that exceed those of neurotypical children. Countless others may acquire disabling medical conditions due to injury or illness.
Those trying to provide support for an individual with a disabling medical condition may decide to create a special needs trust to help them have the most support and the best possible standard of living even after a caregiver dies. These are the three main options for those trying to leave resources for a dependent with special needs.
An ABLE account
When family members want to leave resources for someone with a long-term disability, an ABLE account is an option. Typically, the beneficiary must have a disability before turning 26. Assets that belong to a third party or the beneficiary can fund an ABLE account, although there are limits to funding. Typically, people can only contribute $15,000 per year from any specific source. The beneficiary can also contribute up to $12,060 if they earn their own income. The beneficiary or a third party can control the account, but there may be a requirement to repay medical assistance later.
A third-party supplemental needs trust
Someone other than the disabled individual can establish a supplemental needs trust. They must also provide the funding. The beneficiary typically cannot directly contribute assets to a third-party supplemental needs trust. There are pool trusts operated by non-profit organizations and private trusts established by those with a relationship with the beneficiary. Supplemental needs trusts can help enhance someone’s standard of living and protect resources against medical coverage payback requirements.
First-party special needs trusts
A beneficiary has an option of funding a trust with their own resources. A first-party special needs trust is typically only available to those under the age of 65 without penalties. The beneficiary, their parents or their grandparent can establish a first-party special needs trust. The courts can also establish one on behalf of the beneficiary. There are pool trusts operated by non-profit organizations and private trusts as well. First-party special needs trusts are subject to medical assistance payback requirements but have no funding limits. They can be an excellent option if a beneficiary has too many assets to qualify for certain benefits.
Seeking legal guidance to more fully explore each of these three options can help people create the most effective protection for a loved one with special needs.