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

close these similar tools are distinct from each other, but the administration of these Trusts for
the beneficiary with a disability are almost indistinguishable.
The SupplementalNeedsTrust is an Estate Planning tool. Trust settlors use it to provide a gift or
benefit to a person with a disability in a manner that will allow for use of the assets for the
benefit of that individual without jeopardizing eligibility for assistance programs.
The SpecialNeedsTrust is an asset preservation tool used by an individual with a disability to
preserve the use and enjoyment of assets during the individual's own lifetime without
jeopardizing eligibility for assistance programs.
4. Alternatives to a Trust
As with all estate planning or asset preservation planning the first task is to determine the
planning strategies and tools that best meet the client's needs and goals. A Supplemental or
SpecialNeedsTrust may not be the best tool for a given situation.
a. Alternatives to a SupplementalNeedsTrust
For an estate planning client who might consider a SupplementalNeedsTrust for a loved one
with a disability, alternatives might include:
i. Informal Support
Many parents provide informal financial support to adult children. This is more common when
the child has a disability. A possible, if unreliable, estate plan could be to leave resources to a
child or children without a disability and create a moral expectation on that child or children to
continue providing informal financial support to the sibling with a disability. This does not
create a legal obligation on the inheriting child who can ignore the parents' request with
impunity and even a sibling with every intention of providing the informal support can become
incapacitated, disabled, financially insolvent or dead and be rendered unable to fulfill this
obligation.
ii.
Disinheriting
Many parents simply leave a child with a disability out of the estate planning altogether. This is
an effective way to retain eligibility for public assistance, but it misses the opportunity to
include the child with the disability as an equal member of the family and provide opportunities
for that child that would not otherwise be available.
3 Supplemental & Special Needs Trust Basics | Jeffrey W. Schmidt