Probate & Trust Law Section Conference Manual ... - Minnesota CLE

1. Supplemental&SpecialNeedsTrust Basics ‐ Introduction
There isn’t much that’s “basic” about Supplemental and SpecialNeedsTrusts; you have to know
more than just what words to include on the form. You have to look beyond the law of Trusts
to understand how to set up, administer and close these odd creatures of estate and special
needs planning. These materials will get at the shifting policies and regulations that manipulate
the drafting and (especially) the administration of these invaluable tools for people with
disabilities and explore when and how to use them.
The drafting and administration of Supplemental and Special Needs Trusts is intimately
intertwined with the eligibility and benefit rules of the public assistance programs they are
implemented to maintain. Practitioners must, absolutely must, have a solid understanding of
Social Security Disability Insurance (SSDI), Supplemental Security Income (SSI), Medical
Assistance (in all its forms) and Medical Assistance waiver programs to be successful special and
supplemental needs planners. You cannot simply plug names into a form and even hope to
provide a successful outcome for your client without being able to assess the availability of
programs and provide detailed advice about how one qualifies for those programs.
2. Statutory Authority
Both Supplemental and SpecialNeedsTrusts are creatures of Statute so the first and most
important rule for drafting and administration must be, comply with the Statute. We therefore
start with the Statutes:
a. SupplementalNeedsTrust Authority
"SupplementalNeedsTrusts" in Minnesota generally refer to Trusts created by third parties for
the benefit of an individual with a disability as set forth in Minn.Stat. 501B.89, subd 2 and
arising out of the long practice of creating such Trusts that were ultimately approved by the
decision in Carlisle. Leona Carlisle Trust, 498 N.W. 2d 260 (Minn.Ct.App 1993).
b. SpecialNeeds and Pooled SpecialNeedsTrust Authority
"SpecialNeedsTrusts" in Minnesota generally refer to Trusts created with assets that belong to
the individual with a disability under the authority of 42 U.S.C. 1396p(d)(4)(A) or (C). In other
jurisdictions and even in Minnesota, the names Supplemental and Special are often used
interchangeably to the great confusion of practitioners and clients.
3. Special&Supplemental: The Same But Different
Supplemental and SpecialNeedsTrusts are different at the beginning, nearly identical in the
middle and then different at the end. In other words, the drafting and methods to open and
2 Supplemental & Special Needs Trust Basics | Jeffrey W. Schmidt