The law in Minnesota favors allowing a person under age 65 with a disability to own, but not control, extra assets that might help supplement the benefits that person receives from public assistance benefits. It is referred to as a safe harbor for funds held in trust.

If the person with a disability puts their own funds into the trust, it is referred to as a Special Needs Trust. These funds may come from an inheritance received, a settlement from a personal injury case, or funds raised by a community to benefit a person who has suffered an injury. A Special Needs Trust must be created by a parent, grandparent, or the court.

The other disability trust is a Supplemental Needs Trust. This trust must be funded with assets from a third party. Examples might be a parent or grandparent of the person with a disability who leaves a gift for their child in their Will. This trust is created by anyone other than the person with a disability or his or her spouse.

The funds in the trust are supplementary or secondary to public or governmental benefits and may provide for the disabled person to purchase more sophisticated medical, rehabilitative, or educational aids not provided by government assistance.

At death, any assets remaining in the Special Needs Trust must be reimbursed to the governmental agency from which benefits were provided during that person’s lifetime. Amounts in excess of the benefits received are distributed either to the disabled person’s estate or a non-profit designated by the creator of the trust.

The Supplemental Needs Trust, however, does not have a “payback clause.” Any assets remaining in the Supplemental Needs Trust at death are distributed to the named beneficiaries of which may be the disabled person’s estate or a non-profit designated by the disabled person.

Medical Assistance
Wills
Trusts
Probate
Guardianship/Conservatorship
Power of Attorney
Healthcare Directive
Real Estate

© 2011 Grathwol Law Office. All rights reserved.