This article is a section taken from MA for People Who Are Age 65 or Older or People Who Are Blind or Have a Disability (MA-ABD), a part of the revisions and additions to the Minnesota Health Care Program Eligibility Policy Manual.
Special Needs Trusts
A Special Needs Trust is a trust established for the sole benefit of a person under age 65 who is certified disabled. The property held within a trust that meets all the requirements of a Special Needs Trust is an excluded asset.
A trust must satisfy all of the following statutory requirements in order to be excluded as a Special Needs Trust. If a trust does not meet all of the requirements, the trust is not an excluded asset.
It is established on or after August 11, 1993.
Beneficiary Age Limit for Establishing a Special Needs Trust
The trust is established before the beneficiary turns age 65. A special needs trust established before the beneficiary reaches age 65 remains an excluded asset after the beneficiary reaches age 65.
Special needs trusts established before December 13, 2016, must be established by the beneficiary’s parents, grandparents, legal guardian, or a court. Special needs trust established before December 13, 2016, cannot be established by the beneficiary.
Special needs trusts established on or after December 13, 2016, include trusts established by the beneficiary on their own behalf.
It is funded with the income or assets of the beneficiary. A special needs trust may also contain assets of other people.
The beneficiary must meet the disability criteria of the Supplemental Security Income (SSI) program at the time the trust is established. A person with a disability established by the Social Security Administration (SSA) or State Medical Review Team (SMRT) meets this qualification.
The trust does not meet the criteria for the exclusion if the beneficiary’s disability began after the trust was established.
If SSA or SMRT did not determine the beneficiary’s disability at the time the trust was established, SMRT must determine whether the beneficiary was disabled according to SSI disability criteria at the time the trust was established.
Sole Benefit Requirement
The trust must be established for the sole benefit of the beneficiary. The trust provisions must state that disbursements from the trust must be for the sole benefit of the beneficiary at the time the trust is established and any time in the future.
Trusts that allow for payments to a spouse or dependents during the lifetime of the beneficiary do not meet this requirement even if the beneficiary does not currently have a spouse or dependent.
DHS Remainder Beneficiary
The trust must contain a provision stating that, upon the death of the beneficiary, Minnesota Department of Human Services (DHS), or “the State” receives all amounts remaining in the trust, up to an amount equal to the total amount of Medical Assistance (MA) paid on behalf of the beneficiary.
- Trust provisions allowing payment of administrative expenses and fees are acceptable if the trust also contains a provision that the expenses and fees must be reasonable.
- Trust provisions are also acceptable if the trust clearly states reasonable and necessary administrative expenses may be paid only if DHS is provided with advance notice and approves such expenses.
Trusts that include provisions that allow for payment of the following expenses prior to repayment to the State do not qualify as a Special Needs Trust:
- Payment for last illness and funeral, outstanding debts or other payments
- Payment of administrative expenses or attorney and trustee fees if the trust does not require such payment(s) to be reasonable
Evaluation of Trust Assets
Trust assets, including any income generated by the trust assets that is retained by the trust, are considered excluded assets as long as the trust is established, or any additions occur before the beneficiary reaches age 65.
A special needs trust cannot be added to after the beneficiary reaches age 65. Additions to the trust after the beneficiary reaches age 65 are not considered excluded assets. The value of any non-excluded assets added to the trust after the beneficiary reaches age 65 are considered available to the beneficiary.
Disbursements from the trust made directly to the person or to someone acting on the person’s behalf, such as a guardian or legal representative, are counted as unearned income in the month received.
Payments made by the trustee for the benefit of the person, but not made directly to the person, are not counted.
Special Needs Trust Verifications
Verification of a Special Needs Trust is required. A copy of the trust instrument and most recent trust accounting along with a completed Special Needs/Pooled Trust Referral Form (DHS-4759) must be sent to the DHS Special Recovery Unit (SRU).
Annual Reporting by Trustees
The trustee of a Special Needs Trust with a beneficiary who is an applicant or recipient for MA is required by state law to submit an annual trust accounting directly to the SRU. The person is not required to provide this information as part of the renewal process.
If the person or the person’s authorized representative or trustee provides this information to the county, the information must be forwarded to the SRU.
Minnesota Statutes, section 256B.056, subdivision 3b
Minnesota Statutes, section 501C.1205, subdivisions 3 and 4
United States Code, title 42, section 1396p(d)
CREDIT: The content of this post has been copied or adopted from the Minnesota Healthcare Programs Eligibility Policy Manual, originally published by the Minnesota Department of Human Services.
This is also part of a series of posts on Minnesota Healthcare Eligibility Policies.