How Will You Protect Your Disabled And In-Need Loved Ones?

Families with children or family members with disabilities or special needs want to provide for those children or family members without draining their assets, estate and the inheritances of their other children and family members.

Supplemental Needs Trusts and Special Needs Trusts are established for disabled individuals who are receiving publicly funded benefits such as Medical Assistance (Medicaid) and Supplemental Security Income (SSI). Supplemental Needs and Special Needs Trusts allow parents and family members to benefit their children and family members with disabilities or special needs by supplementing and managing their resources while maintaining their eligibility for public assistance benefits.

If the Special Needs or Supplemental Needs Trust is properly drafted, funded and administered, the assets within the trust will not be deemed available to the disabled or special needs child or family member and will not disqualify the disabled or special needs child or family member from receiving public benefits such as Medical Assistance and Supplemental Security Income. Supplemental Needs and Special Needs Trusts allow the trustee to distribute assets for goods and services that public benefit programs do not already provide. The trustee of a Special Needs or Supplemental Needs Trust can pay for the needs unique to the disabled person that are not provided for by public assistance programs such as education, special medical procedures, entertainment and travel.

Special Needs Trusts
Special Needs Trusts are funded with the disabled or special needs person or family member’s own assets, such as through an inheritance or injury settlement they received. If the disabled person or person with special needs receives these proceeds directly, he or she will no longer qualify for government benefits. Therefore, the proceeds should be distributed or paid directly into a Special Needs Trust to be used for the disabled person’s benefit.

A Special Needs Trust must be established by the disabled or special needs person’s parent(s), grandparent(s), legal guardian, conservator or the court. Upon the trust beneficiary’s death, any remaining assets and funds in the trust must be used to first pay back the state of Minnesota for public benefits received and any remaining funds are distributed as directed by the trust document.

Supplemental Needs Trusts
Supplemental Needs Trusts are funded with assets belonging to someone other than the person with the disability or special needs or their spouse, such as by that person’s parent(s) or grandparent(s). A Supplemental Needs Trust is established by someone other than the person with the disability or special needs, the spouse of the person with the disability or special needs or anyone obligated to support the person with the disability or special needs. The funds of a Supplemental Needs Trust are available to pay for the trust beneficiary’s lifetime needs that are not provided for by public assistance programs. At the trust beneficiary’s death, the remaining assets and funds in the trust are distributed as directed by the trust document, and there is no requirement to pay back the government for benefits received by the trust beneficiary. As a result, a Supplemental Needs Trust can be an especially important part of a family’s estate plan.