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

• The period of ineligibility only begins with the month after the submission of a Medical
Assistance Application where the applicant can show eligibility. This means the
applicant must have assets at or below the appropriate asset limit and he or she must
be receiving nursing home, assisted living or home and community‐based long term care
services that Medical Assistance would be authorized to pay for
• The period of ineligibility can only be eliminated if all assets are returned by the
recipient to the transferor. No credit is given for a partial return of assets.
The SSI program also imposes a period of ineligibility for transfers for less than fair market
value. The look‐back (or transfer reporting) period for SSI is 36 months prior to the initial filing
for a claim and any time after SSI eligibility has been establish. The period of ineligibility begins
on the first day of the month after the month of the transfer. The period of ineligibility can be
from 1 month to 36 months and is calculated by dividing the total uncompensated transfers by
federal benefit rate (currently $710.00).
5. At The Beginning
a. SpecialNeedsTrustEstablishment
The federal statute authorizing SpecialNeedsTrusts says they must be "established ... by a
parent, grandparent, legal guardian of the individual, or a court[.]" 42 U.S.C. 1396p(d)(4)(A).
i. Parent or Grandparent
The concept that a parent or grandparent of a SpecialNeedsTrustbeneficiary should have the
authority to "establish" a Trust based purely on an ancestral relationship, when he or she may
have no interest in the beneficiary’s legal or financial matters, is odd. With no contractual,
fiduciary or personal obligation or even commitment to the child or grandchild, why should a
parent or grandparent have the ability to create an express Trust for someone else? Because
federal law says so. As a result, a parent or grandparent can sign a SpecialNeedsTrust
agreement and "seed" it (see the next paragraph), have no more involvement in its creation or
administration, and the Trust can be valid. This does not include any other relative of the
beneficiary; only parents or grandparents, not siblings or children or uncles or aunts or cousins.
The Social Security Administration has issued guidelines in its Programs Operation Manual
(POMS) requiring strict compliance with the statutory requirements for a SpecialNeedsTrust in
order to preserve eligibility for SSI benefits. POMS PS 01825.026. For a SpecialNeedsTrust to
be "established" by a parent or grandparent, that parent or grandparent not only needs to sign
the Trust agreement and name the Trustee, but he or she must also make the first contribution
to the Trust property. This can be accomplished with an initial small deposit (as little as $10) to
fulfill the form over substance act of "seeding" the Trust. This action completes the three basic
requirements for a Trust: an agreement, a Trustee and a Trustres.
7 Supplemental & Special Needs Trust Basics | Jeffrey W. Schmidt