If you are a parent, grandparent, family member or friend of someone who has special needs or suffers from a chronic disability, you may be concerned about their financial future and wonder how you can protect them so they can receive medical care and enjoy the best quality of life possible, even after you pass.
Minnesota offers “special needs trusts” or SNTs, which are trusts designed to protect the financial well-being of individuals with disabilities or special needs. This type of trust allows disabled individuals to receive funds or assets without jeopardizing their eligibility for certain government assistance programs.
Key features of SNTs in Minnesota
- Their purpose is exclusively to protect disabled individuals by allowing them or someone else to put money or assets in a trust to enhance their quality of life.
- They exist to supplement a disabled individual’s government benefits rather than replace them.
- They are unique in allowing disabled individuals to receive funds and assets in addition to the benefits they already receive from the government, like Medicaid.
- They require a trustee who manages and distributes the funds on behalf of the beneficiary.
A note on trustees
The creator of the special needs trust must carefully choose the trustee who will manage the trust. In addition, the trustee has a fiduciary duty to act in the beneficiary’s best interests and follow the instructions outlined in the trust document.
Every state has its own eligibility requirements for establishing a special needs trust, and Minnesota is no different. The following criteria must be met:
- The beneficiary must have a disability as defined under state and federal laws
- The individual must be under the age of 65 when the trust is funded
- The trust must be irrevocable, meaning it cannot be changed or revoked.
A special needs trust is an essential tool in estate planning that allows a person to set aside funds or assets for a special needs individual to provide financial protection for them without jeopardizing their eligibility for government benefits.